“The Bigs Pull Markets Forward Despite COVID-19 Growth & Negative Economic Data” – Vista’s Weekly Recap

This week, we saw the number of worldwide coronavirus cases grow to more than 2 million while the number of worldwide deaths jumped to 140,000. The number of people that have recovered from coronavirus is up to 550,000. In the US we now have over 680,000 cases up from 450,000 last Friday and 30,000 (doubling since last week) US citizens have now past away due to COVID-19. In response, as we all well know, the world and specifically the US continue to rollout social distancing, lockdown and shutdown initiatives to contain and hopefully win against the coronavirus. The economy has been roughly been brought to a halt and now US jobless claims are now up to 22 million as we added another 5.2M this week.

On the positive side, the Paycheck Protection Program, part of the $2.2 trillion coronavirus relief package, has continued to roll out and I hear has now completely allocated a “first round” of financing ($350B limit) but there may be more assistance on the way for the small business community. We also saw the Fed provide significant emergency lending capacity for businesses and municipalities to keep the markets going. We are also now seeing state and federal politicians speak about plans to get us all back to work, so hopefully, life will at least get back to a new normal in the not so distant future.

On the world’s mission to discover effective treatments or prevention of COVID-19, we now have seen a number of companies advancing their work. Johnson & Johnson (JNJ) & Moderna (MRNA) continue to press forward with vaccines that reportedly could be brought to the market in 2021. Gilead (GILD) also reported that coronavirus patients were recovering quickly after receiving treatment via their antiviral medication, Remdesivir & Atossa Therapeutics (ATOS), which hit intraday high of $3.11/share (up from a recent low of $.76/share) this week prior to closing at $2.07 on Friday, announced a new drug development program called COVID-19 HOPE. (HOPE is an acronym for AT-H201in COVID-19 patients for Pulmonary Evaluation.) The program uses a novel combination of two drugs that have been previously approved by the FDA for other diseases. The intended primary function of the drug combination AT-H201 is to essentially mimic the function of the antibodies formed from a vaccine by blocking the ability of the virus to enter the target cells; a vaccine that may not be available for more than a year. There are five known key steps the coronavirus must take to signal the cell to open up and let the virus in. AT-H201 is being designed to function like a “chemical vaccine” by blocking all five of those steps, similar to what antibodies would be expected to do when a vaccine is administered. With AT-H201, the virus should be unable to enter the cell because its “keys” that would otherwise open the door into the cell surface, are disabled. Atossa expects that its AT-H201 drug combination can be developed more quickly than a traditional vaccine. Atossa has filed comprehensive provisional patent applications related to AT-H201 and intends to apply to the FDA under its Coronavirus Treatment Acceleration Program for approval to commence a clinical study. Learn more here. 

With all of this in mind, the coronavirus’ grip on the markets this week again loosened a bit as we saw another rebound in the large caps although the midcaps and small caps suffered again now both down -24.31% YTD & -26.33% YTD respectively. The major indices ended as follows:  

• The Dow ended the week at 24,242.49 representing a weekly gain of 2.2% and is now down -15.1% YTD
• The S&P 500 closed at 2874.56 for a weekly gain of 3% and is now down -11%
• The Nasdaq Composite closed at 8,650.14 on Friday, representing a weekly +6.1% upward move and is now only down -3.6% YTD, an amazing turnaround that has been led by the likes of Amazon (AMZN), Apple (AAPL), Alphabet (GOOG) & Microsoft (MSFT)
• The Russell 2000 closed at 1,229.10 representing a weekly -1.4% decline and is now down a -26.3% YTD. The smalls are trailing as usual and may be set to rip forward.

The FAANG’s results ended the week up across the board.  Facebook (FB) closed at $179.24/share, +1.7% Friday, ($175.19/share a week ago), Amazon (AMZN) closed at $2,375/share, -.1.38% Friday, ($2,042.76/share a week ago), Apple, Inc. (AAPL) closed at $282.80/share, +.72% Friday, ($267.99/share a week ago), Netflix (NFLX) closed at $422.96/share, -.3.69% Friday, ($370.72/share a week ago) & Alphabet (GOOG) closed at $1,283.25/share, +1.57%, ($1,211.45/share a week ago.)

Oil prices pulled back this week to end at $18.20/bbl down significantly from last week’s close of $22.87/bbl. Global growth concerns and the lack of need for many of us at the pump continue to plague these prices.  Chevron (CVX) & Exxon (XOM) moved up a little this week to close respectively at $87.17/share ($84.31, last wk) and $43.22/share ($43.13, last wk.)

Gold prices closed at $1,695/0z. slightly down from $1,697/oz & silver prices closed higher at $15.30/oz down from $15.70/oz last Friday. 

The U.S. Dollar Index strengthened to end the week at 99.78 up from 99.5 last week.  US Treasury yields were mixed week over week. The 2-yr Treasury yield closed at .2o% down from .22%, the 10-yr yield closed at .65% down from .73%, & the 30-yr yield ended at 1.265% down from 1.35%. 

Here’s a summary of this week’s economic reports: On Monday, we did receive any significant economic reports. On Tuesday, the Import and Export Prices for March report came in where import prices dropped -2.3% & export prices dropped -1.6% in March. On Wednesday, we received the following reports: the retail sales report confirmed a decrease of -8.7% month/month in March. When you excluding autos from the calculation we see that sales decreased by -4.5%, the industrial production report confirmed a decrease of -5.4% month/month in March while total capacity utilization was 72.7%, the New York Fed’s Empire State Manufacturing Survey dropped 57 points to -78.2, the NAHB Housing Market Index for April fell to 30 (it was 72 in March), business inventories dropped by -.4% in February & the Mortgage Bankers Applications Index rose +7.3% wk/wk. On Thursday, we received the following reports: The Initial claims report for the week ending April 11 came in at 5.245M down sharply by 1.37M from the week before while continuing claims for the week ending April 4, were 11.976M rising 4.53M from the week before,  The Housing starts decreased by -22.3% month/month in March to a seasonally adjusted annual rate of 1.216M while building permits moved lower by -6.8% month/month to a seasonally adjusted annual rate of 1.353M & The Philadelphia Fed Index for April cascaded down to -56.6. On Friday, the Conference Board released the U.S. Leading Economic Index (LEI) for March, which declined -6.7%.

Consider taking a look at the following stocks again this week:

 Atossa Therapeutics (ATOS),  INVO Bioscience (INVO), & Neubase Therapeutics (NBSE). Here are some quick updates on each of these companies:

•  Atossa Therapeutics’ (ATOS) founder, Chairman, and CEO, Steven Quay, M.D., PhD., was recently interviewed by Fox News before the market opened regarding his COVID-19 Hope Trial where he is seeking to study the use of two approved drugs to rapidly find a viable coronavirus treatment. Here’s the link to the interview in case you missed it: https://video.foxnews.com/v/6147410883001#sp=show-clips. On Thursday this week, ATOS announced a new drug development program called COVID-19 HOPE. HOPE is an acronym for AT-H201in COVID-19 patients for Pulmonary Evaluation. Learn more here. 

• INVO Bioscience (INVO), a medical device company that provides novel solutions in assisted reproductive technologies to the reproductive health care community worldwide with its lead product, INVOcell, is a novel medical device, which is used in infertility treatment that enables egg fertilization and early embryo development in the woman’s body, announced its financial results for the year ended December 31, 2019, which was highlighted by a 199% increase of their topline revenues in 2019 while gross margins also grew to approximately 91% compared to approximately 82% in 2018. The growth was driven primarily by increased product sales in the U.S. as the Company’s U.S. commercialization partner, Ferring International Center, S.A. (“Ferring”), began to ramp their marketing activities as well as from recognizing $714,286 of the $5,000,000 Ferring seven-year U.S. exclusive licensing & distribution fee. Learn more. The Company further reported that the U.S. clinic locations which are trained to offer INVOcell have nearly tripled since their January 2019 agreement with Ferring & confirmed that each clinic location will vary in terms of implementation time and growth. Ferring has established a website, www.invocell.com, which provides information for patients and health care professionals, in addition to providing a tool to search for clinic locations that offer INVOcell. Steve Shum, CEO of INVO stated recently, “The growing awareness of INVOcell can be seen through the overall heightened social media activity and the increasing number of inbound inquires our team is experiencing. We have also witnessed certain early-adopting clinics becoming increasingly more active with promoting INVOcell as the preferred infertility solution, over IVF, with its lower cost, more natural approach, and equivalent success rates. Equally important, INVOcell has allowed these practices to substantially increase their capacity and hence treat more patients as a result of improved efficiencies, particularly within the lab. We expect to see the 2018 Society For Assisted Reproductive Technology (SART) data published in the coming weeks ahead, at which point we will have a full two-years (2017 and 2018) of published retrospective data on INVOcell usage in the marketplace, which we believe will significantly enhance our marketing and commercialization efforts by further validating the success of the INVOcell technology. As previously highlighted, we also received approval to begin our planned clinical trial to evaluate the modified INVOcell system for the effectiveness of achieving fertilization, implantation, embryo development, clinical pregnancy, and live birth after 5-days of continuous vaginal incubation, which will also further validate the technology and support the now growing volume of retrospective data reflecting real market usage of the technology.”

• Shares of Neubase Therapeutics (NASDAQ: NBSE) closed this week at $8.17/share up +5.17% after hitting a new all-time high of $8.64/share this week. 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 announced positive preclinical data from its pharmacokinetics studies in non-human primates (“NHPs”) and in vitro pharmacodynamics data in patient-derived cell lines. NeuBase believes these data validate the key advantages of the proprietary NeuBase peptide-nucleic acid (“PNA”) antisense oligonucleotide (PATrOL™) platform and support the Company’s decision to advance the development of its Huntington’s disease (“HD”) and myotonic dystrophy type 1 (“DM1”) programs, as well as the potential expansion of its therapeutic pipeline into other indications. Dr. George Church, professor of genetics at Harvard Medical School and member of the National Academy of Sciences, stated, “Given the activity and broad biodistribution observed in these studies and the potential for easier target definition, I believe the PATrOL™ technology may have a potent impact on the future of drug development and treatment of genetic diseases.” 

In the meantime, I believe that we will continue to see volatility in the markets that will continue to produce opportunities, but with the recent widespread move one will have to be a bit more selective again. The markets are indeed rebounded significantly and the 10% swings have subsided and understanding around the coronavirus situation seems to be trending in a positive way. We are also due to receive the following significant economic data reports next week:

• About 20% of the companies in the S&P 500 reporting first-quarter results.
• Existing home sales on Tuesday
• The April preliminary Purchasing Managers’ Index (PMI) on Thursday
• The consumer sentiment on Friday

Please enjoy the 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 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.

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:

• About 20% of the companies in the S&P 500 reporting first-quarter results.
• Existing home sales on Tuesday
• The April preliminary Purchasing Managers’ Index (PMI) on Thursday
• The consumer sentiment on Friday