Energy Sector, FAANGs, & Reopening Sentiment Led Markets To Rise Into Mother’s Day Weekend

This week, we saw the number of worldwide coronavirus cases grow to more than 3.9 million from 3.3 million while the number of worldwide deaths jumped to 272,778 from 235k. The good news is that 1,306,204 cases have now recovered. In the US, we now have over 1.3M cases up from 1.1M cases last Friday and 77,727 (up from 64,867 last week) US citizens have now past away due to COVID-19 with 182,305 cases that have recovered. Even with the worldwide spread of COVID-19 still advancing, we continue to grow our collective understanding and it is now at the point where we are now finding more tolerable ways to live with it while we search for vaccines and treatments.  It is also believed that we will now speed up our progress as we are not seeing the reinfections as once was believed to be the case based on recent research & experience in South Korea. Yes, there seems to be light at the end of this dark tunnel and we are getting closer to it! As a result, we are seeing many of our local economies taking more steps toward reopening and the markets are reflecting this new positive sentiment as it is swinging upwards again as we reflect on Mother’s Day Weekend.

As for the market results this week we saw all indices mover higher with Nasdaq actually move back into the positive year-to-date territory. The Nasdaq Composite closed at 91,21.32 on Friday, representing a weekly +6% upward move and is now back in green territory up +1.7% YTD. The Dow ended the week at 24,331.32 representing a weekly increase of 2.6% and is now down -14.7% YTD. The S&P 500 closed at 2929.80 for a weekly gain of 3.5% and is now down -9.3% YTD. The Russell 2000 closed at 1,2329.64 representing a weekly +5.5% increase and is now down a -20.3% YTD. The smalls are still trailing but it is good to see 3 consecutive weeks of gains.

The energy sector ran up +8.3% this week leading all sectors. Oil prices led this move ending at $24.71/bbl & up significantly since last week’s close of $19.77/bbl as reopening hopes and production cuts by the likes of Chevron helped fuel the move. Chevron (CVX) moved up this week to close at $89.47/share ($89.44, last wk) and Exxon (XOM) moved up closing at $46.18/share ($43.14, last wk.)

The FAANG’s charged forward again. Facebook (FB) closed at $212.35/share, +.52% Friday, ($202.27/share a week ago), Amazon (AMZN) closed at $2,379.61/share, +.51% Friday, ($2,286.04/share a week ago and is up approx. 40% since mid-march), Apple, Inc. (AAPL) closed at $310.13/share, +2.38% Friday, ($289.07/share a week ago), Netflix (NFLX) closed at $435.55/share, -.22% Friday, ($415.27/share a week ago) & Alphabet (GOOG) closed at $1,388.37/share, +1.15% Friday, ($1,320.61/share a week ago.)

On the macroeconomic side of the coin, a number of negative economic reports continued to come in reflecting the damage of the shutdown, and reopening measures are just beginning. Here’s a summary of this week’s economic reports: On Monday, we received the Factory Orders report which confirmed, and at no real surprise with the shutdown in full power, we saw a decrease of 10.3% month/month in March. On Tuesday, we received the ISM Non-Manufacturing Index for April which came in at the contraction level of 41.8% down from 52.5% in March. The Trade Balance report for March confirmed a deficit to $44.4B rising from an upwardly revised $39.8B in February. Exports were down $20.0 billion from February while imports were down $15.4 billion. On Wednesday, we received the ADP Employment Change report which confirmed a net loss of 20.236M nonfarm payrolls in April while the weekly MBA Mortgage Applications Index bumped up +.1%.On Thursday, we received the Weekly Initial Jobless claims report which came in at 3.169M representing a 677k decrease from the prior week while continuing claims for the week ending April 25 jumped again by 4.636M to 22.647M. China’s imports dropped more than expected in April however there was a rise in exports. Nonfarm business sector labor productivity dropped 2.5% in Q1. Unit labor costs rose by 4.8%. Consumer credit came back in at $12.1B in March. On Friday, the April nonfarm payrolls report confirmed a decrease by 20.5M while April private-sector payrolls decreased by 19.52M & the April unemployment rate was 14.7%, however, April’s average hourly earnings rose 4.7%. The Wholesale inventories report also showed a decrease of -.8% in March.

Gold prices closed at $1,709/0z. slightly up from $1,707/oz & silver prices closed up at $15.65/oz from $15.17/oz last Friday. North American silver and gold producer Hecla Mining Company (HL) ended the week at $2.66/share up +5.98% after rereporting Q1 earnings on Thursday. Phillips S. Baker, Jr., Hecla’s President, and CEO stated, “Our rapid and early response to COVID-19 protected our workers, operations, and the communities in which we operate. With our key mines operational, we expect the second half of the year to be strong as Casa Berardi resumes normal operations, Lucky Friday ramps-up to full production, and Greens Creek continues to deliver. Our Nevada operations have performed well and have taken a step forward with a third-party processing agreement for a bulk sample of refractory ore and positive results from the hydrological study which could result in continuing production through the end of the year and beyond.”

The U.S. Dollar Index weakened to end the week at 98.78 down from 99.03 last week.  US Treasury yields ended mixed week over week with further liquidity/stimulus measures being weaved into the market by the Fed. The 2-yr Treasury yield closed at the same mark at .14% down 6 basis points .2o%, the 10-yr yield closed at .68% up from .64%, & the 30-yr yield ended at 1.384% up from 1.25%.  

NEXT WEEK

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

• The inflation number report on Tuesday
• The consumer sentiment report on Friday
• The retail sales report on Friday.

STOCKS IN VIEW

•  Atossa Therapeutics’ (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 positive interim results from its Phase 2 study of oral Endoxifen to treat breast cancer in the window of opportunity between diagnosis of breast cancer and surgery. A statistically significant (p = 0.031) reduction of about 74% in tumor cell proliferation was achieved over the 22 days of dosing. Proliferation was measured by Ki-67, a recognized standard measurement of breast cancer cell proliferation.is positioned to possibly begin making several announcements surrounding the potential progress of their NY COVID-19 HOPE Study which is currently pending IRB approval and will not commence without IRB and all necessary regulatory approvals, including FDA. Review Maxim’s BUY RATING & $4/share Target Price here. The 52-week high is $3.25/share and closed at $1.64/share on Friday near 50-Day Moving Average.

• Shares of Neubase Therapeutics (NASDAQ: NBSE) closed this week at $8.74/share up from last Friday’s close of $7.67/share up +1.05% after hitting its recently established new all-time high of $8.85/share recently. Investment banks BTIG, HCW, Oppenheimer & Guggenheim maintain analyst coverage with BUY ratings on NBSE that include a price target that ranges in a $13-$15/share target price range. NBSE recently. NeuBase, a preclinical-stage biotechnology company focused on developing next-generation therapies to treat rare genetic diseases caused by mutant genes announced Thursday that they had closed of a previously announced underwritten public offering of 6,037,500 shares of its common stock (inclusive of 787,500 shares that were sold pursuant to the underwriters’ full exercise of their option to purchase additional shares of NeuBase’s common stock), at a price to the public of $6.00 per share. The net proceeds to NeuBase from the offering are expected to be approximately $33.3 million, after deducting the underwriting discounts and commissions and other estimated offering expenses payable by NeuBase. NeuBase intends to use the net proceeds from this offering for working capital and general corporate purposes and to advance the development of its product candidates and expand its pipeline. Oppenheimer & Co. Inc. and BTIG acted as the joint book-running managers for the offering, and Chardan and National Securities Corporation, a wholly-owned subsidiary of National Holdings, Inc. (Nasdaq: NHLD), acted as the co-managers.

• Shares of Fate Therapeutics (FATE) closed at $28.84/share up 3.78% on Friday. FATE, a clinical-stage biopharmaceutical company dedicated to the development of programmed cellular immunotherapies for cancer and immune disorders, announced the retirement of Amir Nashat, Sc.D., Managing General Partner at Polaris Venture Partners, from the Company’s board of directors. Dr. Nashat was the longest-tenured member of the Company’s board, having served since the founding of Fate Therapeutics in 2007. In addition, Robert Hershberg, M.D., Ph.D. was appointed to the Company’s board of directors. Dr. Hershberg brings to Fate Therapeutics extensive executive leadership in the pharmaceutical industry with particular expertise in corporate strategy, business development, and drug development in the field of immuno-oncology. Learn more.

• Shares of Ford (F) jumped +7.6% on Friday to close at $5.24/share after it was reported that its China ventures saw sales growth in April.

• Shares of INVO Biosciences (INVO) ticked up on Friday closing up +3.64%. INVO has made a number of moves to build out its organization while focusing its efforts to increase access to its INVOcell procedure globally. INVO’s lead product, the INVOcell®, is a patented medical device used in infertility treatment and is considered an Assisted Reproductive Technology (ART). ART includes all fertility treatments in which both eggs and embryos are handled outside of the body.

• Shares of Moderna (MRNA) closed at $59.25/share up +11.39% after they received FDA approval to proceed to a Phase 2 trial with its potential COVID-19 vaccine. candidate

Please enjoy the Mother’s Day weekend at home with the family, appreciate what you have, stay flexible in the markets to strike when the opportunity appears attractive, and plan and dream of what life may bring all of us in we can move forward safely through this reopening period together. 

Please also 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.

Economic Reports

Here’s a summary of this week’s economic reports: On Monday, we received the Factory Orders report which confirmed, and at no real surprise with the shutdown in full power, we saw a decrease of 10.3% month/month in March. On Tuesday, we received the ISM Non-Manufacturing Index for April which came in at the contraction level of 41.8% down from 52.5% in March. The Trade Balance report for March confirmed a deficit to $44.4B rising from an upwardly revised $39.8B in February. Exports were down $20.0 billion from February while imports were down $15.4 billion. On Wednesday, we received the ADP Employment Change report which confirmed a net loss of 20.236M nonfarm payrolls in April while the weekly MBA Mortgage Applications Index bumped up +.1%.On Thursday, we received the Weekly Initial Jobless claims report which came in at 3.169M representing a 677k decrease from the prior week while continuing claims for the week ending April 25 jumped again by 4.636M to 22.647M. China’s imports dropped more than expected in April however there was a rise in exports. Nonfarm business sector labor productivity dropped 2.5% in Q1. Unit labor costs rose by 4.8%. Consumer credit came back in at $12.1B in March. On Friday, the April nonfarm payrolls report confirmed a decrease by 20.5M while April private-sector payrolls decreased by 19.52M & the April unemployment rate was 14.7%, however, April’s average hourly earnings rose 4.7%. The Wholesale inventories report also showed a decrease of -.8% in March.

Investing & Inspiration

“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

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