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Descending Views Climb On Covid-19 Growth

By John F. Heerdink, Jr.


Overall the markets ended in negative territory this week succumbing to the widely reported and feared rise of COVID-19 cases, hospitalizations, slowing or delays of reopening steps in states like Florida, Texas, & in my home state of California, newly initiated 14-day quarantines in New York, New Jersey, and Connecticut for visitors traveling from “recent virus hotspots,” & a possible European restriction of Americans preventing us from traveling for a European vacation or otherwise. We also saw that Apple (AAPL) closed their previously reopened stores in Houston & Florida, Walt Disney (DIS) delayed their reopening of Disneyland past July 17, & Microsoft (MSFT) announced that it is closing all of their retail stores for good, which also sent a certain concerning message. These reports all picked up steam throughout the week painting somewhat of a negative slower growth picture for investors to consume and speculate on and the markets sold off accelerating on Friday. Worldwide coronavirus cases also moved up from 8.5M to 9.68M a week ago while we have now seen +491k deaths. In the U.S. we are almost at 2.5M reported cases and now +127K deaths have been reported up from 118k last week.

The macroeconomic schedule also brought forth the following reports this week that showed signs of a mixed bag of results confirming that reopening efforts have brought forth some improvements but it is still not a pretty picture. On Monday, we received the May existing home sales report which confirmed a 9.7% month/month drop bringing us to a seasonally adjusted annual rate of 3.91M. On Tuesday, we received the new home sales report for May confirmed a jump of 16.6% month/month to a seasonally adjusted annual rate of 676k. On Wednesday, we received the FHFA Housing Price Index report for April which confirmed a rise by .2% & the weekly MBA Mortgage Applications Index report which confirmed a drop by 8.7%. On Thursday, we received the initial claims report for the week ending June 20 which showed a drop by 60k to 1.48M while continuing claims for the week ending June 13 dropped by 767k to 19.522M. The Durable Goods Orders report for May confirmed a rise of 15.8% while excluding transportation, orders moved up by 4%. The 3rd estimate for Q1 GDP was flat at -5.0% & the GDP Price Deflator was flat at 1.4%. Personal consumption expenditure growth was falt as well. The advance goods trade deficit totaled $74.3B in May while advance retail inventories dropped 6.1% in May & advance wholesale inventories dropped by 1.2% in May. On Friday, the Personal income report confirmed a drop by 4.2% month/month in May as personal spending jumped 8.2%. The PCE Price Index moved up by .1%. The final University of Michigan Index of Consumer Sentiment for June came in at a slightly lower  78.1 while the final reading for May came in at 72.3.

In a peculiar and contrasting set of moves, the Volcker Rule restrictions were revised by regulators to allow banks to raise their investments in an array of venture capital funds, while the Fed put further restrictions suspending share repurchases and capped dividend payments in Q3.



MARKET RESULTS & MARKET LEADERS

Leading all sectors this week in the market decline was the energy care sector which ended down 6.5%, followed by the financials sector which was down 5.3%, & the communications services sector which was down 5.2%. 

The Dow ended the week at 25015.55 representing a weekly loss of 3.3% and is now down 12.3% YTD. The Russell 2000 closed at 1,378.78 representing a weekly drop of 2.8% and is now down 17.3% YTD. The S&P 500 closed at 3009.05 dropping 2.9% and is now down 6.9% YTD. The Nasdaq Composite closed at 9,757.22 on Friday representing a weekly 1.9% downward move & remains up 8.7% YTD. 

From the financials sector, which was down 5.3% this week, we saw shares of Goldman Sachs (GS) closed trading at $189.19/share down from the $201.63/share last Friday, American Express (AXP) closed at $93.42/share down from the $100.94/share last Friday, Visa (V) closed trading at $189.27/share down from the $192.20/share last Friday & shares of Morgan Stanley (MS) closed at $47.05/share up from last Friday’s close of $46.93/share.

The information technology sector fell .5% while the FAANG’s ended down across the board as follows: Facebook (FB) closed at $216.08/share, -8.32% Friday as reports that advertisers are revolting because Facebook is committed to flagging “newsworthy” political speech that violates their policy, ($238.79/share a week ago), Apple (AAPL) closed at $353.63/share off 3.07%, Amazon (AMZN) closed at $2,692.87/share, -2.24% Friday ($2,675.01/share a week ago), Netflix (NFLX) closed at $443.40/share off 4.83%, & Alphabet (GOOG) closed at $1,359.90/share, -5.65% Friday, ($1,431.72/share a week ago.)

COMMODITY MOVES

Gold prices closed at $1,779/oz. up from $1,751/0z. last Friday & silver prices closed at $17.97/oz. up from $17.86/oz. last week. North American silver and gold producer Hecla Mining Company (HL) ended the week at $2.96/share up from last Friday’s close of $2.85/share. First Majestic Silver (AG) closed at $9.39/share higher than the $8.63/share close last Friday.

Oil prices dropped 3.2% to end at $38.49/bb. Energy giant Chevron (CVX) moved lower again this week to close at $86.46/share ($90.63, last wk) and Exxon (XOM) moved down closing at $43.62/share ($45.98, last wk.) 

MONEY UPDATE

The U.S. Dollar Index weakened again to end the week at 97.45 up from 97.67 last week.

The 2-yr Treasury yield closed at .16% down 3 basis points from the .19% mark last Friday, the 10-yr yield closed at $.64 down 6 basis points from .70% while the 30-yr yield ended at 1.374% down slightly from 1.462% last Friday.  

NEXT WEEK

We will have only four days of trading as the markets will be closed on Friday to celebrate the Fourth of July however, the four days of trading will be filled significant macroeconomic reports and with the following stocks in view.


 

MACROECONOMIC DATA

  • The pending home sales report on Monday
  • The consumer confidence report on Tuesday
  • The June jobs report on Thursday

STOCKS IN VIEW

  • Shares of Atossa Therapeutics (ATOS) closed at $3.98 on Friday after closing at $3.18/share last Friday and touching a new 52-week high this week of $4.27. Interest continues to swell around their breast cancer treatment programs and their COVID-19 drug candidates the trading volatility to the upside this year up from $.76/share.  Atossa announced recently that it has begun the development of a second COVID-19 programusing its proprietary drug candidate AT-301, to be administered by nasal spray as is teaming with nasal spray specialist firm Summit Biosciences. AT-301 is Atossa’s proprietary formula intended for nasal administration in patients immediately following a diagnosis of COVID-19 but who have not yet exhibited symptoms severe enough to require hospitalization. Atossa confirmed that it is intended for at-home use to proactively reduce symptoms of COVID-19 and to slow the infection rate so that a person’s immune system can more effectively fight SARS-CoV-2 (coronavirus). Atossa also intends to conduct testing to determine whether AT-301 can be used as a prophylaxis to prevent or mitigate SARS-CoV-2, with the goal that it could become a “bridge to the vaccine” and be useful in the next phase of the coronavirus pandemic. CEO of Atossa, Dr. Steven Quay, MD, Ph.D., author, and physician-scientist, announced the availability of his 158-page book,Your COVID-19 Survival Manual: A Physician’s Guide to Keep You and Your Family Healthy During the Pandemic and Beyond, in paperback and eBook format on his website, www.DrQuay.com, beginning Monday, June 8, 2020. Proceeds from the book will go to military veterans performing COVID-19 relief work in their communities. Dr. Steven Quay, MD, Ph.D. was also interviewed on FOX 26 Houston this week and the show was titled “Company developing nasal spray to treat COVID-19.” Please view it here. Again as I mentioned yesterday, I believe it is worth the time as it sheds a great deal of light on the 4 stages of COVID-19 and their potential treatments.

  • Shares of INVO Biosciences (INVO) closed at $4.01/share up 6.65% today and up nicely from $3.55/share last Friday after hitting $4.40 in intraday trading.INVO has made a number of moves to build out its organization while focusing its efforts to increase access to its INVOcell procedure globally. On May 26, the company reversed its outstanding share count 1-20 and now has ~7.8M shares with 15% in the hands of insiders.  The shares are trading under the symbol INVOD until January 22 when it reverts back to INVO. Learn more about INVO by reading my interview: A Vista Partners Interview With Steve Shum CEO of INVO Bioscience Regarding Increasing Access To Care For Fertility Treatment. INVO filed an 8k after the close on Friday confirming that they received approximately $2.65 million in net proceeds from the financing, after deducting placement agent fees payable to the Placement Agent and investor counsel in connection with the transaction. See the 8k filing here.
  • Shares of Fate Therapeutics (FATE) closed at $31.72/share last Friday and this Friday closed higher at $33.81.Its recent 52-week high is $37.24 and its 52-week low of $12.59.  On June 11th, FATE announced that it closed an underwritten public offering of 7,108,796 shares of its common stock, which included 927,324 shares that were issued pursuant to the full exercise of the underwriters’ option to purchase additional shares, at a public offering price of $28.31 per share. Aggregate gross proceeds from this offering, including the exercise of the option, were approximately $201.3 million, prior to deducting underwriting discounts and commissions and estimated offering expenses. Fate Therapeutics, Inc. (FATE), a clinical-stage biopharmaceutical company dedicated to the development of programmed cellular immunotherapies for cancer and immune disorders. Are you still invested in Fate after meeting them via this newsletter and attending meetings over the last couple of years when it was in the $3-4 range?… Recently, Fate announced that the U.S. Food and Drug Administration (FDA) has cleared the Company’s Investigational New Drug (IND) application for FT538, the first CRISPR-edited, iPSC-derived cell therapy. FT538 is an off-the-shelf natural killer (NK) cell cancer immunotherapy that is derived from a clonal master induced pluripotent stem cell (iPSC) line engineered with three functional components to enhance innate immunity: a novel high-affinity, non-cleavable CD16 (hnCD16) Fc receptor; an IL-15/IL-15 receptor fusion (IL-15RF); and the elimination of CD38 expression. The Company plans to initiate a clinical investigation of three once-weekly doses of FT538 as monotherapy in acute myeloid leukemia (AML) and in combination with daratumumab, a CD38-directed monoclonal antibody therapy, for the treatment of multiple myeloma.
  • Shares of Neubase Therapeutics (NBSE) closed trading at $9.40/share up from last Friday where it closed at $8.44/share. We are following Neubase Therapeutics (NBSE) for a number of reasons including its development of a modular antisense peptide nucleic acid (PNA) platform with the capability to address rare genetic diseases caused by mutant proteins with a single, cohesive approach. NBSE was added to the Russell 3000 on Friday and more than 2.47M shares traded in the process. On June 29, the equity markets will open with the newly reconstituted Russell US Indexes.
  • Shares of Stereotaxis, Inc. (STXS) closed at $4.62/share down from the $5.47/share last Friday but it was added to the Russell 2000 & 3000 on Friday and more than 5.58 M shares to finalize the process. The 52-week range is $1.70 – $5.82/share. The global leader in innovative robotic technologies for the treatment of cardiac arrhythmias continues to gain traction as they recently completed a live broadcast of their bi-directional TeleRobotic procedures with physicians navigating catheters from hospitals more than 1700 km apart.
  • Shares of Aduro (ADRO) closed at $2.17/share down from $2.38/share last Friday.On June 2nd, Aduro Biotech, Inc.(ADRO) and Chinook Therapeutics, Inc., a privately-held clinical-stage biotechnology company focused on the discovery, development, and commercialization of precision medicines for kidney diseases, today announced that the companies have entered into a definitive merger agreement pursuant to which Aduro will acquire all of the outstanding capital stock of Chinook in exchange for shares of Aduro common stock representing approximately 50 percent of Aduro’s outstanding common stock immediately following completion of the transaction. The combined company is expected to have approximately $200 million in cash, cash equivalents, and marketable securities at closing, including $25 million in additional financing committed by Chinook’s existing investors. Following closing, which is expected to occur in the second half of 2020, Aduro will be renamed Chinook Therapeutics, Inc., and is expected to trade on the Nasdaq Global Market under the ticker symbol “KDNY”.

 

Thanks again for your attention this week. Please continue to share your thoughts, questions, & ideas as we move forward. I hope that you have a wonderful weekend and please enjoy the balance of the weekly newsletter’s videos, quotes, updates, and keep up the great work in helping our nation and world recover from the coronavirus epidemic.

Lastly, please take to heart the following nugget of knowledge from Warren Buffett that I will leave you to chew on this week and seek to pick your spots in the market selectively as always as we move forward.

 

“Remember that the stock market is a manic depressive.” – Warren Buffett

 

 

 

Markets

Symbol Name Last Price Change % Change

Big Movers

Symbol Name Last Price Change % Change

Bond Markets & US Dollar

The U.S. Dollar Index weakened again to end the week at 97.45 up from 97.67 last week.

The 2-yr Treasury yield closed at .16% down 3 basis points from the .19% mark last Friday, the 10-yr yield closed at $.64 down 6 basis points from .70% while the 30-yr yield ended at 1.374% down slightly from 1.462% last Friday.  

 

Symbol Name Last Price Change % Change

Economic Reports

The macroeconomic schedule also brought forth the following reports this week that showed signs of reopening measures that were having a positive effect in its early going. On Monday, we received the Empire State Manufacturing Survey for June which moved up to -0.2 after hitting record lows in April and May. On Tuesday, we received the retail sales report for May in the U.S. which jumped a stout 17.7% month/month and when you exclude autos sales, retail sales moved up 12.4% month/month. The total industrial production report confirmed a move higher by 1.4% month/month in May while the capacity utilization rate bumped up and came in at 64.8%. The NAHB Housing Market Index report for June confirmed a move higher to 58 up from 37 in May. The Business Inventories report confirmed a move lower by 1.3% in April. On Wednesday, we received the Total housing starts report confirmed a rise by 4.3% month/month in May to a seasonally adjusted annual rate of 974k units is currently down 23.2% year/year. The Total building permits report revealed a rise of 14.4% month/month to a seasonally adjusted annual rate of 1.22M while single-unit permits also rose across all regions of the US. We also saw that the weekly MBA Mortgage Applications Index listed 8%. On Thursday, the initial jobless claims report for the week ending June 13 came in above expectations at 1.508M, but lower than 1.566M which was realized in the week before, while continuing jobless claims for the week ending June 6 dropped by 62k to 20.544M. The Conference Board’s Leading Economic Index (LEI) report rose by 2.8% in May the first increase since January 2020. The Philadelphia Fed Index for June also rose to 27.5. On Friday, we received the current account balance for Q1, which trimmed to $104.2B= from $109.8B in Q42019.

 

Agriculture & Energy

 

 

Symbol Name Last Price Change % Change

Biotech & Healthcare

Overall it was mostly a down week in healthcare.

The S&P 500 healthcare sector closed lower at 1,137.37 up from 1,169.95last Friday.

The Ishares Nasdaq Biotechnology ETF (IBB) moved a lower this week closing at $135.16 vs. last Friday’s close of $137.85. The 52-wk range is $92.15 – $140.57.

The NYSE Arca Biotech Index (^BTK) closed at 5,711.22 down from the 5,828.80 level last week. The new 52-week high is 5,936.43.

Johnson & Johnson (JNJ) closed at $137.81/share slightly down from $143.83.

Atossa Therapeutics, Inc. (Nasdaq: ATOS), a clinical-stage biopharmaceutical company seeking to discover and develop innovative medicines in areas of significant unmet medical need with a current focus on breast cancer and COVID-19, announced recently that their manuscript of the results from in vitro testing of AT-H201, Atossa’s proprietary COVID-19 drug candidate, titled: “AT-H201 constituents collectively are the most potent inhibitors of SARS-CoV-2 infectivity in VERO cells identified and mechanistically act as a chemical vaccine: Human safety data support rapid clinical development as inhaled therapy for COVID-19,” S. Quay, S. Chen, J. Rea, and H. L. Remmel is now available at ResearchGate Preprint AT-H201 laboratory testing against SARS-CoV-2.
Click here to read the full story

Currently, it is estimated that only 1% to 2% of the estimated 150 million infertile couples worldwide are being treated, but help is on the wayRecently, The Morning Blend aired an interview on WTMJ-4 Milwaukee where Dr. Ellen Hayes, a Reproductive Endocrinologist and Infertility Specialist from Vios Fertility Institute, discussed information regarding their new research in health, pregnancy, and COVID19. Dr. Hayes also shares their research and a new offering of the FDA cleared infertility treatment called INVOcell that was developed by publicly-traded INVO Bioscience (INVO). The INVOcell technology, which continues to gain worldwide recognition and adoption, provides an in-vivo incubation solution that can help increase access and capacity to the large underserved global fertility market. The INVO Procedure is a revolutionary in vivo method of vaginal incubation that offers patients a more natural and intimate experience and more cost-effective. For the rest of 2020 Vios Fertility Institute is giving a special offer for INVOcell. The offer includes retrieval, monitoring, fresh embryo transfer for $6500, it normally costs $7200, which is still significantly less expensive than traditional lab-intensive IVF. Please watch the concise interview by clicking this link now! Keep an eye on INVO Bioscience (INVO) which was recently funded and saw their 1-20 reverse split take effect Tuesday, May 26, and is trading under the symbol INVOD. They now have ~7.8M shares in this newly minted low or tight float play. 

 

Symbol Name Last Price Change % Change

Consumer Goods & Trends

Shares of Coca-Cola (KO) closed at $43.57/share down from last Friday’s close of $46.02/share.

Shares of Disney (DIS) closed at $109.10/share down from last Friday’s close of $114.35/share.

Shares of Nike (NKE) closed at $93.67/share down from $95.78/share last Friday.

Symbol Name Last Price Change % Change

Financials & Fintech

The financials sector, which was down 5.3%, this week saw shares of Goldman Sachs (GS) closed trading at $189.19/share down from the $201.63/share last Friday, American Express (AXP) closed at $93.42/share down from the $100.94/share last Friday, Visa (V) closed trading at $189.27/share down from the $192.20/share last Friday & shares of Morgan Stanley (MS) closed at $47.05/share up from last Friday’s close of $46.93/share.

Symbol Name Last Price Change % Change

Materials & Natural Resources

Symbol Name Last Price Change % Change

Technology & Beyond

Symbol Name Last Price Change % Change

Investing & Inspiration

“Remember that the stock market is a manic depressive.”  Warren Buffett

“An investment in knowledge pays the best interest.” – Benjamin Franklin

“I believe the returns on investment in the poor are just as exciting as successes achieved in the business arena, and they are even more meaningful!” -Bill Gates

“Every portfolio benefits from bonds; they provide a cushion when the stock market hits a rough patch. But avoiding stocks completely could mean your investment won’t grow any faster than the rate of inflation.” – Suze Orman

“The tax on capital gains directly affects investment decisions, the mobility and flow of risk capital… the ease or difficulty experienced by new ventures in obtaining capital, and thereby the strength and potential for growth in the economy.” – John F. Kennedy

“If all the economists were laid end to end, they’d never reach a conclusion.
-George Bernard Shaw

“The riskiest thing we can do is just maintain the status quo. I get up at 4:30 in the morning, seven days a week, no matter where I am in the world. I think it is important for people who are given leadership roles to assume that role immediately. What I’ve really learned over time is that optimism is a very, very important part of leadership.” – Bob Iger, Former Ceo of Disney

“In the short run, the market is a voting machine. But in the long run, it is a weighing machine.” – Ben Graham

“In investing, what is comfortable is rarely profitable.” -Robert Arnott

“The fundamental law of investing is the uncertainty of the future.” -Peter Bernstein

“How many millionaires do you know who have become wealthy by investing in savings accounts?” -Robert G Allen

“Greed is all right, by the way. I think greed is healthy. You can be greedy and still feel good about yourself.”-Ivan Boesky

Michael Marcus taught me one other thing that is absolutely critical: You have to be willing to make mistakes regularly; there is nothing wrong with it. Michael taught me about making your best judgment, being wrong, making your next best judgment, being wrong, making your third best judgment, and then doubling your money.” -Bruce Kovner

“The policy of being too cautious is the greatest risk of all.” -Jawaharlal Nehru

“I talk about macro themes a lot because they are fun to talk about, but it is the risk management that is the most important thing. The risk control is all bottom-up. I structured the business right from the get-go so that we would have lots of diversification.” -Michael Platt

“Blaming speculators as a response to financial crisis goes back at least to the Greeks. It’s almost always the wrong response.” -Larry Summers

Symbol Name Last Price Change % Change

Tomorrow

We are due to receive the following significant economic data next week:

  • The earnings season continues this week with about one-third of the companies in the S&P 500 reporting Q1 results
  • The Q1 GDP estimate and the Federal Reserve rate announcement on Wednesday
  • The manufacturing Purchasing Managers’ Index (PMI) on Friday

Videos

Please consider viewing these interesting videos:



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