Energy, EV’s, Vaccines, & Lockdowns Led The Markets To Overall Mixed Weekly Results

The world wide web delivered a plethora of stories this week concerning promising vaccines, treatments & prognostications, both good and bad, as the coronavirus pandemic continued to surge. A Pfizer (PFE) & BioNTech (BNTX) partnership filed for emergency use authorization for their COVID-19 vaccine after their vaccine proved to 95% effective in the phase 3 trial, Moderna (MRNA) stated its vaccine is 94.5% effective while AstraZeneca (AZN) & Oxford’s partnership vaccine work in a phase 2 trail produced promising immune responses in elderly patients.

However, countering this optimism were the implementations of lockdowns, rollbacks and even curfews here in California in hopes of stemming further virus growth and the overloading of the hospital system as we await the availability of said vaccines, etc. but causing increasing concern regarding economic growth. Also, weighing on sentiment was the fact that we were once again unable to get a clear picture on additional US government stimulus measures as the political stalemate persisted. On top of that, on Friday, Treasury Secretary Mnuchin was reported to have declined to extend 5 emergency lending programs beyond the end of 2020, which are funded by the CARES Act, casting further doubt. At the end of the week, the markets ended mixed with the Nasdaq eking out a small win and the small caps on the Russell 2000 taking the number one spot with a 2.4% continuation gain, but the large caps and popular names in the tech sector lagged. 

On the macroeconomic side of the coin the schedule produced a group of mixed reports as follows: On Monday, we received the Empire State Manufacturing Survey report which confirmed a drop to 6.3 in November. On Tuesday, we received the October Retail Sales report which confirmed a weaker than expected number as total retail sales moved up .3% month/month while sales with out autos ended up just .2%. September retail sales growth were also adjusted lower to 1.6% from 1.9% & without autos, it was lowered to 1.2% from 1.5%. Industrial production rose 1.1% month/month in October while the capacity utilization rate moved up to 72.8% however output remains 5.6% lower than the pre-pandemic level in February. The NAHB Housing Market Index also rose to a new all-time high of 90 in November. Business inventories moved up .7% in September. Import prices ticked down .1% in October while export prices moved up .2% in October. On Wednesday, the Housing starts in October were confirmed to have risen by 4.9% month/month and a significant 14.2% year/year. They are now at a seasonally adjusted annual rate of 1.53M units. Building permits came in even at 1.545M. The weekly MBA Mortgage Applications Index report also confirmed a drop by .3%. Pn Thursday, the Initial claims report for the week ending November 14 moved up by 31k to 742k while continuing claims for the week ending November 7 dropped by 429k to 6.372M. The Existing home sales report confirmed a rise by 4.3% month/month in October to a seasonally adjusted annual rate of 6.85M. The Conference Board’s Leading Economic Index report rose .7% month/month in October. The Philadelphia Fed Index dropped to 26.3 in November.

MARKET RESULTS

The energy sector, which jumped substantially forward last week by 16.5%, led all sectors again this week with a 5% jump week-over-week as oil prices rose again to end at $42.17/bbl and the rotation continued. Energy giant Chevron (CVX) closed at $85.79/share again up from last Friday’s close of $83.03/share and is now up roughly 14 points in two weeks.

The sectors that provided the drag on the markets this week were as follows: the utilities (-3.9%), health care (-3%), & real estate (-1.7%) & the information technology sector (-.9%).

The little guys on the Russell 2000 closed at 1,785.34 (+2.4%) wk/wk (+15% over 3 weeks) and are now up a respectable 7% YTD, an amazing rise since the significant depths it reached in Q1 of this year during the COVID-19 induced implosion.

One are of the markets that provide significant alpha this week was firmly in the electric vehicle (EV) market which, in general, had a crazy good week as investors bid their shares up. Speculators were bidding shares of these companies up on the promise of  Biden’s bid to add new supportive new incentives, a statement from a group of major US utilities, Tesla, Uber, etc. that confirmed the launching of a new group to lobby for national policies to boost EV sales, and the news that Elon Musk’s EV company Tesla (TSLA) will be included in the S&P 500. It was a perfect storm to some degree for a melt up in these stocks. Tesla shares closed at $489.61/share up over $80/share from $408.50/share last Friday.  Chinese EV company Nio Limited (NIO) closed at $49.25 up from $44.56 last Friday. Three microchip EV stocks stole the show too as Texas-based Ayro, Inc. (AYRO) closed at $8.09/share +30.91% Friday, Oregon-based Arcimoto (FUV) closed at $17/share, +6.31% Friday after legging up nearly 70% on Thursday, and Vancouver-based Electrameccanica Vehicles Corp. (SOLO) closed at $10.81/share Friday, +12.14% after a +39.51% sup on Thursday. 

The tech-heavy Nasdaq Composite also managed a win this week as it closed at 11,854.97(+.2%) ticking up 32.1% YTD as the highly weighted FAANG’s results were mostly down week-over-week and ended as follows: Facebook (FB) closed at $269.70/share, -1.19% Friday down from $276.95/share a week ago, Apple (AAPL) closed down 1.1% on Friday at $117.34/share and down from $119.26/share a week ago. Amazon (AMZN) closed at $3,099.40/share, -.57% Friday & down from $3,128.81/share a week ago, Netflix (NFLX) closed at $488.24/share, +.74% Friday, up from $482.84/share a week ago, & Alphabet (GOOG) closed at $1,742.19/share, -1.23% Friday up from $1,777.02/share a week ago. 

The Dow ended the week at 29,263.48 (-.7%) & remains up 2.5% YTD. Around the Dow 30, Johnson & Johnson (JNJ) closed at $146.36/share down from last week’s close of $149.90. Shares of Coca-Cola (KO) closed at $52.67/share down from last Friday’s close of $53.45/share. Shares of Disney (DIS) closed at $141.07/share up again from last Friday’s close of $138.36/share after reporting that Disney+ subscribers are exceeding expectations and losses from parks were less than expected. Shares of Nike (NKE) closed at $132.98/share up slightly from $128.28/share last Friday as it boosts its dividend by 12% as earnings are expecting to be trending postively.

Shares of Deere (DE) closed at $258.56/share legging up again from last week’s close of $251.79/share. Pharmaceutical giant Merck (MRK) closed at $80.45/share closed down from last Friday’s close of $81.09/share & Caterpillar (CAT) closed at $172.23/share up from last Friday’s close of $171.71/share. Walmart (WMT) closed at $150.24/share slightly down from last Friday’s close of $1450.54/share. Shares of Microsoft (MSFT) closed at $210.39/share down from last Friday’s close of $216.51/share, Salesforce (CRM) closed at $258.04 down from $249.51 last Friday and will report Q3 results on Tuesday, Dec. 1 after the close. Boeing (BA) closed $199.62 jumping up again from last Friday’s close of $187.11/share as their troubled 737 Max got the nod from US regulators. 

The financials sector added .5% on to last week’s 8.3% jump.  In the sector we also saw the shares of Goldman Sachs (GS) close trading at $223.35/share up from last Friday’s close of $219.08/share, American Express (AXP) closed at $112.58/share down from the $114.99/share close last Friday, Visa (V) closed trading at $203.88/share down from the $210.48/share last Friday & shares of Morgan Stanley (MS) closed at $57.81/share up from last Friday’s close of $56.61/share. JPMorgan Chase (JPM) closed at $114.57 ticking up from $114.08/share last Friday & Citigroup (C) $51.65/share up from $48.66/share last week. PayPal Holdings (PYPL) closed at $192.67/share up from last Friday’s close of $188.62/share and Square (SQ) closed at $195.97 up substantially from last week’s closed of $177.19/share.

The S&P 500 closed at 3,557.54 (-.8%) wk/wk and is up 10.1% YTD. 

COMMODITY MOVES

Gold prices closed at $1,871/oz. down from $1,890/0z. last Friday & silver prices closed at $24.22/oz. down from $24.74/oz. last Friday. Barrick Gold Corp. (GOLD) closed trading at $24.28/share up .41% on Friday after recently confirming that it had increased its operating cash flow by 80% Q/Q to $1.9B.  North American silver and gold producer Hecla Mining Company (HL) ended the week at $5.15/share down from last Friday’s close of $5.33/share after recently establishing a new 52-week high of $6.79. Hecla recently announced Q3 2020 financial and operating results. Phillips S. Baker, Jr., Hecla’s President and CEO stated, “Because of our strong operating performance and higher prices, Hecla had record adjusted EBITDA, generated the most free cash flow in a decade and repaid our revolver in full. These accomplishments were achieved because of our workforces’ resiliency and our commitment to health and safety. With the Lucky Friday ramp-up ahead of schedule, the expected improvements at Casa Berardi, and our modest planned capital expenditures, we are well positioned to further strengthen our balance sheet, increase exploration activities, and pay our enhanced dividend.” 

MONEY UPDATE

The U.S. Dollar Index weakened to end the week at 92.30 up slightly from 92.73 last Friday.

The 2-yr Treasury yield closed closing at .15% down from .17%, the 10-yr yield dropped 6 basis points ending at .83% while the 30-yr yield ended at 1.523% down from 1.649% last Friday.

NEXT WEEK

We will have a shortened trading week as the Thanksgiving holiday arrives on Thursday and the markets will be closed that day but a trading session will be back on Friday. 

NEXT WEEK’S KEY MACROECONOMIC DATA

The macroeconomic schedule will deliver personal income and spending breakdowns, FOMC minutes, & building permits.

STOCKS IN VIEW NEXT WEEK

• Shares of Atossa Therapeutics (ATOS) closed at $1.54/share after recently announcing progress in their AT-301 administered by nasal spray being developed for at home use for patients recently diagnosed with COVID-19.

• • Atossa Therapeutics is 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.

  • Atossa recently announced blinded preliminary results from its Phase 1 clinical study using Atossa’s proprietary drug candidate AT-301 administered by nasal spray. AT-301 was found to be safe and well tolerated in this study at two different dose levels in both single and multiple dose forms over 14 days. AT-301 is being developed for at home use for patients recently diagnosed with COVID-19. There are currently no FDA-approved therapies to treat COVID-19 at home. Learn more now.

• Shares of INVO Bioscience (NASDAQ: INVO) closed at $3.25 up from $3.06/share.

• • INVO Bioscience recently announced the pricing of an underwritten public offering of 3,625,000 shares of its common stock at a public offering price of $3.20 per share. The gross proceeds to INVO Bioscience from this offering are expected to be approximately $11.6 million, before deducting underwriting discounts and commissions and other estimated offering expenses. INVO Bioscience has granted the underwriters a 45-day option to purchase up to an additional 543,750 shares of common stock to cover over-allotments, if any. The offering is expected to close on November 17, 2020, subject to customary closing conditions. Shares of their common stock  began trading on Friday, November 13, 2020 under the symbol “INVO” on the Nasdaq Capital Market. Roth Capital Partners acted as the sole book-running manager, with Colliers Securities LLC and Paulson Investment Company, LLC acting as co-managers for the offering. Learn More Now.

• • INVO Bioscience, Inc. (INVO), the developers of INVOcell®, the world’s only in vivo Intravaginal Culture System, has a mission to increase access to care and expand infertility treatment across the globe with a goal of improving patient affordability and industry capacity. Industry forecasts suggest that only 1% to 2% of the estimated 150 million infertile couples worldwide are currently being treated which presents and interesting opportunity. 

• • INVO recently announced a new joint venture as it has teamed up with Dr. Francisco Arredondo, MD, a respected and experienced board certified reproductive endocrinologist, and Dr. Ramiro Ramirez, MD, a physician and owner of several successful enterprises in Mexico, to establish a joint venture through its wholly-owned subsidiary INVO Centers, LLC, a Delaware limited liability company (“INVO Centers”), focusing on developing the Mexico market for INVOcell. The new jointly-owned operation, named Positib Fertility, S.A. de C.V. (“Positib Fertility”), is a Mexico registered company that will focus on establishing fertility centers dedicated to offering INVOcell, with the initial center to be located in the city of Monterrey, Mexico.

• Shares of Fate Therapeutics (FATE) closed at $52.65/share up from last Friday’s close of  $50.51 after recently hitting a new all-time high of $54.64 this week.
  
  • Fate is a clinical-stage biopharmaceutical company dedicated to the development of programmed cellular immunotherapies for cancer and immune disorders.

• • Last week, Fate reported their business highlights and financial results for the third quarter ended September 30, 2020. Scott Wolchko, President and Chief Executive Officer of Fate Therapeutics stated, “The clinical data across our iPSC product platform continue to solidify our conviction that multiple doses of iPSC-derived NK cells can be administered off-the-shelf in the outpatient setting, are well-tolerated, and can drive anti-tumor activity, including in combination with monoclonal antibody therapy. We have now expanded the scope of clinical investigation for FT516 to solid tumors as well as for FT596 to chronic lymphocytic leukemia after observing clinical activity in diffuse large B-cell lymphoma at the first dose level. In addition, we have initiated first-in-human investigation of the first-ever CRISPR-edited, iPSC-derived cell therapy FT538, which incorporates three engineered elements to enhance multiple mechanisms of innate immunity, in acute myeloid leukemia and multiple myeloma.”

• Shares of NeuBase Therapeutics (NBSE) closed trading at $8.31 up about even from the $8.35/share close last Friday.
  • NeuBase is developing the next generation of gene silencing therapies with its flexible, highly specific synthetic antisense oligonucleotides. The proprietary NeuBase peptide-nucleic acid (PNA) antisense oligonucleotide (PATrOL™) platform allows for the rapid development of targeted drugs, increasing the treatment opportunities for the hundreds of millions of people affected by rare genetic diseases, including those that can only be treated through accessing of secondary RNA structures. Using PATrOL technology, NeuBase aims to first tackle rare, genetic neurological disorders. NeuBase is continuing its progress towards developing treatment candidates in Huntington’s Disease (HD) and Myotonic Dystrophy (DM1) and is expected to release further data prior to year end 2020.

• •  This week, NeuBase announced the addition of Eriks Rozners, Ph.D. and Randy Davis, MBA to its scientific advisory board (SAB). Dr. Rozners, an expert in nucleic acid biochemistry, and Mr. Davis, a biotechnology industry veteran, bring extensive experience to NeuBase.

• • RBC Capital Markets recently initiated coverage of NBSE with an Outperform, Speculative Risk rating & a $16 price target. 

• We continue to like clean hydrogen solution provider Plug Power (PLUG) which closed at $24.36 up from $23.43 last Friday after hitting a new all-time high of $25.49 this week. This week Plug confirmed that they had sold 38M shares priced at $22.25/shares raising a whopping $845.5M which represented about 9.1% of the shares outstanding. 

• Buyout rumors are still surfacing around wireless home system provider, Sonos (SNOS), who recently lost sponsorship from Apple (AAPL) which is thought to be entering the market with their own products. The stock ended the week at $20.94/share up from $16.62 last Friday after hitting $22.37 this week. The move came after SONO reported better than expected Q4 and fiscal 2020 results on Nov. 18th.

Thanks again for your attention this week. Please continue to share your thoughts, questions, & ideas as we move forward. 

In the meantime, please enjoy the balance of the weekly newsletter’s videos, quotes, updates. 

As always, I will leave you with an insightful quote to help form your investment thesis this week.

“The most contrarian thing of all is not to oppose the crowd but to think for yourself.” — Peter Thiel

Economic Reports

On the macroeconomic side of the coin the schedule produced a mix of reports as follows: On Monday, we received the Empire State Manufacturing Survey report which confirmed a drop to 6.3 in November. On Tuesday, we received the October Retail Sales report which confirmed a weaker than expected number as total retail sales moved up .3% month/month while sales with out autos ended up just .2%. September retail sales growth were also adjusted lower to 1.6% from 1.9% & without autos, it was lowered to 1.2% from 1.5%. Industrial production rose 1.1% month/month in October while the capacity utilization rate moved up to 72.8% however output remains 5.6% lower than the pre-pandemic level in February. The NAHB Housing Market Index also rose to a new all-time high of 90 in November. Business inventories moved up .7% in September. Import prices ticked down .1% in October while export prices moved up .2% in October. On Wednesday, the Housing starts in October were confirmed to have risen by 4.9% month/month and a significant 14.2% year/year. They are now at a seasonally adjusted annual rate of 1.53M units. Building permits came in even at 1.545M. The weekly MBA Mortgage Applications Index report also confirmed a drop by .3%. Pn Thursday, the Initial claims report for the week ending November 14 moved up by 31k to 742k while continuing claims for the week ending November 7 dropped by 429k to 6.372M. The Existing home sales report confirmed a rise by 4.3% month/month in October to a seasonally adjusted annual rate of 6.85M. The Conference Board’s Leading Economic Index report rose .7% month/month in October. The Philadelphia Fed Index dropped to 26.3 in November.

Investing & Inspiration

“The most contrarian thing of all is not to oppose the crowd but to think for yourself.” — Peter Thiel

“Money is like a sixth sense – and you can’t make use of the other five without it.” – William Somerset Maugham

“Compound interest is the eighth wonder of the world. He who understands it, earns it. He who doesn’t, pays it.” — Albert Einstein

“The stock market is a device for transferring money from the impatient to the patient.” – Warren Buffett

“Thousands of experts study overbought indicators, head-and-shoulder patterns, put-call ratios, the Fed’s policy on money supply…and they can’t predict markets with any useful consistency, any more than the gizzard squeezers could tell the Roman emperors when the Huns would attack.” – Peter Lynch

“Investing puts money to work. The only reason to save money is to invest it.” – Grant Cardone

“Formal education will make you a living; self-education will make you a fortune.” – Jim Rohn

“You cannot save time for your future use however you can invest time for your future.” – John F. Heerdink, Jr. 

“We always live in an uncertain world. What is certain is that the United States will go forward over time.” – Warren Buffett

“Never test the depth of the river with both of your feet.” – Warren Buffet

“Know what you own, and know why you own it.” – Peter Lynch

“Liquidity is only there when you don’t need it.” -Old Proverb

“There is no such thing as no risk. There’s only this choice of what to risk, and when to risk it.” – Nick Murray

“If you want to be a millionaire, start with a billion dollars and launch a new airline.” – Richard Branson

“Fear incites human action far more urgently than does the impressive weight of historical evidence.” – Jeremy Siegel

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

“Spend each day trying to be a little wiser than you were when you woke up.” – Charlie Munger

“The entrance strategy is actually more important than the exit strategy.” – Edward Lampert

“The rivers don’t drink their own water; Trees don’t eat their own fruits. The sun does not shine for itself, And flowers do not spread their fragrance For themselves. Living for others is a rule of nature” – PopeFrancis

“It is impossible to produce superior performance unless you do something different from the majority.” – John Templeton

“Inaction and patience are almost always the wisest options for investors in the stock market.” – Guy Spier

“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