Reopening Trades Roar As The Dow & Russell Rule The Week

Like the king of the jungle, the markets roared throughout the week & moved higher into Friday’s close riding on optimistic reopening expectations staring directly in the face of civil protests throughout the US and the continued growth of the coronavirus pandemic throughout the world. On Friday, further confirmation came forward that the reopening steps that we are taking may be causing a rebound that is moving at a quicker than expected pace and the market surged. The reaction and resulting positive move in today’s markets was specifically fueled by the May Employment Situation Report which came in with much better than expected results. Nonfarm payrolls were confirmed to have jumped by 2.509M, nonfarm private payrolls also jumped by 3.094M while the unemployment rate dropped significantly down to 13.3%. So it would seem that the massive stimulus measures provided throughout the shutdown and steps towards reopening are producing positive results of some kind and it could be leading for more growth.

As for the balance of the reports for the week they came in as follows: on Monday, we received the following reports: The ISM Manufacturing Index Report for May moved up to 43.1% but still below expansion levels as reopening continues, The Construction spending report confirmed a decrease of 2.9% month/month in April while total residential spending was decreased by 4.5% & total nonresidential spending declined by 1.8%. On Tuesday, we did not receive anything of significance. On Wednesday, the ISM Non-Manufacturing Index report confirmed a jump to 45.4% in May from the 41.8% in April while the ADP Employment Change Report confirmed that ~2.76M private-sector jobs were lost in May significantly lower than the ~9M that was expected. The New orders for manufactured goods report also met expectations dropping 13% month/month in April. All of these led to helping investors shine further light at the end of the tunnel that you could go brighter as reopening measures push forward across the US and world. On Thursday, we received further negative macroeconomic data including the Initial claims report for the week ending May 30, which confirmed a decline by 249k to 1.877M while the Continuing claims report for the week ending May 23 confirmed a rise by 649k to 21.487M. These reports indicate that we are experiencing a sluggish hiring environment during the reopening process. Adding to this sobering picture, we received the revised report by the BLS that indicated nonfarm business sector labor productivity declined by .9% in Q1 while unit labor costs rose more than expected by 5.1%. The U.S. trade deficit also increased to $49.4B in April. On Friday, we also received the Consumer credit reported which a contraction by $68.7B in April.

MARKET LEADERS & RESULTS

The Dow & the Russell ruled overall this week. The Dow ended the week soundly above the 27k mark again at 27,110.98 representing a weekly increase of 6.8% and is now only down 5% YTD. The Russell 2000, which was down ~35% this year, closed at 1507.15 representing a weekly increase of 8.1% and is now only down 9.6% YTD. The S&P 500 closed at 3193.93 grabbing its own 4.9% weekly gain and is now down 1.1% YTD. The Nasdaq Composite closed at 9,814.08 on Friday while setting a new record intraday high, representing a weekly 3.4% upward move & is now up 9.4% YTD. One could possibly be bold enough to ask “What shutdown?” or maybe not…

The energy sector up +15.4%, the financials sector up +12.2%, & the industrials sector up +10.5% were the outright leaders this week as all 11 sectors ended in the green. From the financials and the Dow 30, we saw shares of Goldman Sachs (GS) closed trading at $217.92/share up from the $196.49/share last Friday, American Express (AXP) closed at $109.73/share up from the $95.07/share last Friday, Visa (V) closed trading at $199.61/share up from the $195.24/share last Friday & shares of Morgan Stanley (MS) closed at $49.53/share up from last Friday’s close of $44.20/share.

The FAANG’s ended slighty up overall this week.  Facebook (FB) closed at $230.77/share, +1.98% Friday, ($225.09/share a week ago), Amazon (AMZN) closed at $2,483/share, +.91% Friday, ($2,442.37/share a week ago and is up approx. 40% since mid-march), Apple, Inc. (AAPL) closed at $331.50/share, +2.85% Friday, ($317.94/share a week ago), Netflix (NFLX) closed at $419.60/share, +1.27% Friday, ($419.73/share a week ago) & Alphabet (GOOG) closed at $1,438.39/share, +1.86% Friday, ($1,428.92/share a week ago.)

COMMODITY MOVES

Oil prices closed at $39.50/bbl & up 11.8% again this week seeing a nice jump from last week’s close of $35.33/bbl and still off close to 37% from the high this year. Chevron (CVX) moved up this week to close at $100.81/share ($91.70, last wk) and Exxon (XOM) moved up closing at $53.08/share ($45.47, last wk.) 

Gold prices moved lower again this week closing at $1,683/0z. down from $1,730/oz & silver prices moved lower to $17.59/oz from $18.02/oz last Friday. North American silver and gold producer Hecla Mining Company (HL) ended the week at $3.18/share down from last Friday’s close of $3.32/share. First Majestic Silver (AG) closed at $9.72/share lower than the $10.01/share close last Friday.

MONEY UPDATE

The U.S. Dollar Index weakened again to end the week at 97 down from 98.31 last week.  The 2-yr Treasury yield closed at .21% up 6 basis points from the .15% mark last Friday, the 10-yr yield closed at .90% moving up 25 basis points from .65% last week while the 30-yr yield ended at 1.672% up from 1.413%.  

NEXT WEEK

We are looking forward to another full week of summer trading with further significant macroeconomic reports and the following stocks in view. 

Here are the following significant economic data reports that we are eyeing next week:

• The Federal Reserve rate decision on Wednesday
• The consumer sentiment on Friday.

STOCKS IN VIEW

• Shares of Atossa Therapeutics (ATOS) closed at $3.36/share on Friday up 25.84% (jumping up from $2.38/share last Friday) after reaching a high of $3.48 during Friday’s intraday trading as interest continues to swell around their breast cancer treatment programs and their COVID-19 drug candidates. 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 it has begun the development of a second COVID-19 program using 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. Shares of ATOS closed $2.27/share after spiking to an intraday high of $2.55/share on 1.54M shares of trading volume. Learn More. Also, please review Maxim’s update titled “Less may be More for an Antiviral – Positive In Vitro Data for AT-H201 Against COVID-19” and their BUY RATING/$4 Target Price here. The 52-week high is $3.48/share established on Friday this week.

• INVO Biosciences (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 for 20 days from May 26 and closed trading at $2.40/share up 4.35% Friday and up from $2.19 last Friday. INVO Bioscience’s 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. On Friday last week, INVO effected a 1-for-20 reverse stock split. It will be exciting to see how this company moves forward and how the stock performs with less 8 million shares issued outstanding post the reverse and the company now showing up on low float lists. Steve Shum, Chief Executive Officer of INVO Bioscience, stated, “As we continue to improve our commercialization activities and expand the awareness of our FDA-cleared INVOcell device both domestically and abroad, we also set the objective to improve the capitalization structure of the company in order to enhance our public company visibility and attract a larger audience of investors. Today’s announcement is an important step in that process.”  Keep an eye on INVO shares (closed at $2.40/share Friday) as they also added cash on the balance sheet raising convertible debt (conversion price is $3.60/share) to foster growth initiatives in the back half of this year. 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 way…Recently, 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 INVO Bioscience’s  (INVO) FDA cleared infertility treatment called INVOcell 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! 

   

• Shares of Fate Therapeutics (FATE) closed at $28.21/share on Friday as it pulled back 6.09% from its recent 52-week high of $37.24 but up from its 52-week low of $12.59. 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 American Airlines (AAL) shot up ~77% this week closing at $18.59/share  as it confirmed its plans to increase its US-based schedule this summer and reported increased demand as reopening steps to continue to be taken in all 50 states. I will not be stepping inside one of those flights anytime soon as I will continue to avoid getting infected by the coronavirus, but I am excited to see others will be as the economy is coming online.

Thanks again for your attention this week. Please also enjoy the weekend and 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

On the macroeconomic side of the coin, a number of negative economic reports continued to come in throughout the week reflecting the damage of the shutdown and as reopening steps were just getting underway across all 50 states now,  however Friday produced the surprise and most positive report of the week as the May Employment Situation Report came in much better than expected. Nonfarm payrolls jumped by 2.509 million, nonfarm private payrolls jumped by 3.094 million, and the unemployment rate dropped significantly down to 13.3%. As or the balance of the reports for the week they came in as follows: on Monday, we received the following reports: The ISM Manufacturing Index Report for May moved up to 43.1% but still below expansion levels as reopening continues, The Construction spending report confirmed a decrease of 2.9% month/month in April while total residential spending was decreased by 4.5% & total nonresidential spending declined by 1.8%. On Tuesday, we did not receive anything of significance. On Wednesday, the ISM Non-Manufacturing Index report confirmed a jump to 45.4% in May from the 41.8% in April while the ADP Employment Change Report confirmed that ~2.76M private-sector jobs were lost in May significantly lower than the ~9M that was expected. The New orders for manufactured goods report also met expectations dropping 13% month/month in April. All of these led to helping investors shine further light at the end of the tunnel that you could go brighter as reopening measures push forward across the US and world. On Thursday, we received further negative macroeconomic data including the Initial claims report for the week ending May 30, which confirmed a decline by 249k to 1.877M while the Continuing claims report for the week ending May 23 confirmed a rise by 649k to 21.487M. These reports indicate that we are experiencing a sluggish hiring environment during the reopening process. Adding to this sobering picture, we received the revised report by the BLS that indicated nonfarm business sector labor productivity declined by .9% in Q1 while unit labor costs rose more than expected by 5.1%. The U.S. trade deficit also increased to $49.4B in April. On Friday, we also received the Consumer credit reported which a contraction by $68.7B in April.

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