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Vaccines, Stimulus & IPO’s Ruled Investors Minds This Week As The Pandemic Raged On

By John F. Heerdink, Jr.

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Vaccines Stimulus & IPO's Ruled Investors

In the first part of the week investors once again embraced the optimism surrounding COVID-19 vaccines & the possibility of further economic stimulus. The indices also proceeded to achieve new record highs. The  COVID-19 vaccine progress and optimism surrounding it was particularly infectious and compelling as it was reported around the world wide web aggressively. The news even included reports that the first citizens in the UK had been vaccinated. Did anyone see the interview of the charming elderly Englishman that was the first one to receive the vaccination? If not, it is definitely worth googling it.

However, these great feelings, vibes, & good times were countered by mid-week with the sobering news that supply chain issues would most likely prevent the vast majority of the world from being vaccinated until 2022. In addition, news that the COVID-19 pandemic was continuing to grow out of control forcing further roll backs, lock downs, school closings, & and increasing alarming hospitalization rate took place and the negative sentiment further set in.

Heading in to the week we also had a belief that further economic stimulus might actually happen soon, but then the realization that we were facing yet another week of petty negotiations from our US politicians took root too. In fact, the so-called negotiations ended with them pushing the decision as verbal punches were thrown casting doubt on either side being serious about compromising for the greater good. 

Countering this negativity, but still a bit bewildering and outrageous, more IPO’s were in the news and being rolled out. In fact, a couple of household names went public this week as Airbnb (ABNB) & DoorDash (DASH) came out in style. Their businesses have benefited during the pandemic, espcially evident in their Q3 numbers, as we were forced to change the way we vacation (within driving distance) and/or “eat out” and the bankers said the market was ready for their IPO’s and they were correct. Airbnb (ABNB) moved up +2x its IPO price & DoorDash (DASH) jumped +85% out the gate to make their venture, private equity, bankers, founders and some shareholders quite happy and richer this week.

THE “MAC”

The macroeconomic schedule produced a number of reports as follows: On Monday, we received the Consumer credit report which confirmed a rise by $7.2B in October. On Tuesday, we received the Productivity report for Q3 which confirmed a rise by a seasonally adjusted annual rate of 4.6%. Unit labor costs were confirmed to have dropped at an annual rate of 6.6% as the economy continued to recover during this period. The NFIB Small Business Optimism Index report confirmed a drop to 101.4.
On Wednesday, the Job openings report confirmed a rise to 6.652M in October. The Wholesale inventories report also confirmed a rise by 1.8% in October. On Thursday, the Initial jobless claims report for the week ending December 5 confirmed a rise by 137k to 853k. Continuing claims for the week ending November 28 also rose by 230k to 5.757M. Total CPI and core CPI reports confirmed that both rose by .2% month/month in November. The Treasury Budget report also confirmed a $145.3B deficit in November. On Friday, the Total PPI was up .1% month/month in November while on a y/y basis, the total PPI was up .8%. The preliminary December University of Michigan Index of Consumer Sentiment moved up to 81.4.

LITTLE GUYS RULED

As suggested, over the course of the week the major indices achieved record highs, but faltered towards the end, except for the little guys on the Russell 2000 which actually continued on its bullish pace. The Russell ended at 1,892.45 (+1%) wk/wk (+21.9% over last 6 weeks) and is now up a more than respectable 14.6% YTD.

The balance of the indices finished in the red. The S&P 500 closed at 3,663.46 (-6%) wk/wk and is up 13.4% YTD. The Dow ended the week at 30,046.37 (-.6%) wk/wk & is up 5.3% YTD. The tech-heavy Nasdaq Composite also ended down for the week as it closed at 12,377.87 (-1%) and is up 38% YTD. 

Just the opposite of last week, we saw 9 out the eleven sectors ended in the red. However, the energy sector lead the way once again adding another 1.1% week-over-week (15.1% over 3 weeks) as oil prices rose again to end  at $46.58/bbl. Energy giant Chevron (CVX) closed at $92.45/share down from last Friday’s close of $93.28/shares cooling off al little from its recent run. The communications sector was the only other sector to end in the green closing up by .1%. The real estate sector  got hit the hardest as it fell 2.9 while the information technology sector also dropped 1.4%.

In the financials sector, we saw the shares of Goldman Sachs (GS) close trading at $239.99/share slightly up from last Friday’s close of $239.58/share, American Express (AXP) closed at $120.23/share off ~$5 from the $125.04/share close last Friday, Visa (V) closed trading at $206.24/share down from the $212.68/share last Friday & shares of Morgan Stanley (MS) closed at $63.32/share down from last Friday’s close of $65/share. JPMorgan Chase (JPM) closed at $119.56 down from $122.34/share last Friday & Citigroup (C) closed at $58.93/share slightly up from $58.62/share last week. PayPal Holdings (PYPL) closed at $214.06/share down from last Friday’s close of $217.77/share and Square (SQ) closed at $216.59 up substantially from last week’s close of $208.15/share.  

TECH HIGHLIGHTS

The highly weighted FAANG’s ended mixed week-over-week as follows: Facebook (FB) closed at $273.55/share, -.76% Friday down from $279.71/share a week ago as the FTC & 48 U.S. attorney generals officially filed lawsuits against Facebook as they seek to break them up as they believe they are violating antitrust law, buying up competitors and depriving  consumers of alternatives that would protect their privacy. Apple (AAPL) closed down -.67% on Friday at $122.41/share and slightly up from $122.25/share a week ago. Amazon (AMZN) closed at $3,116.42/share, +.48% Friday & down from $3,162.58/share a week ago, Netflix (NFLX) closed at $503.22/share, +.43% Friday, up from $498.31/share a week ago, & Alphabet (GOOG) closed at $1,781.77/share, +.36% Friday down from $1,827.99/share a week ago. 

Shares of Microsoft (MSFT) closed at $213.26/share down from last Friday’s close of $214.36/share,

Salesforce (CRM) closed at $222.42 down again from $225.86 last Friday. Recently, Salesforce (CRM) confirmed that they have acquired Slack Technologies (WORK) for a $27.7B cash and stock deal which many believe may present a major challenge to the momentum that Microsoft (MSFT) and Azure have enjoyed.

Peter Thiel co-founded software firm Palantir Technologies (PLTR) closed at $27.20/share up nicely from $23.85/share last Friday. 

Elon Musk’s EV company Tesla (TSLA) shares closed at $609/share up from $599.04 share last Friday as the company completed the sale of $5B of its common stock on Wednesday. 

ACROSS THE DOW 30

Johnson & Johnson (JNJ) closed at $152.95/share up from last week’s close of $150.27 & Pharmaceutical giant Merck (MRK) closed at $82.96/share closed up from last Friday’s close of $81.94/share.

Shares of Coca-Cola (KO) closed at $53.35/share slightly down from last Friday’s close of $53.85/share. Shares of Disney (DIS) closed at $175.72/share jumping up again from last Friday’s close of $154.14/share after announcing that they would be increasing the monthly Disney+ changes to $7.99/month and bullishly suggesting subscribers expectations through 2024. Shares of Nike (NKE) closed at $137.41/share up slightly from $137.19/share after recently boosting its dividend by 12% as earnings & are expecting to be trending positively.

Shares of Deere (DE) closed at $255.77/share up from last week’s close of $253.95/share & Caterpillar (CAT) closed at $179.291/share down from last Friday’s close of $182.21/share.  Walmart (WMT) closed at $147/share down from last Friday’s close of $148.91/share.

Boeing (BA) closed $230.33 cooled off  & down from last Friday’s close of $232.71/share.

GOLD & SILVER MARKETS

Gold prices closed at $1,840/oz. flat this week. This Friday silver prices closed at $24.04/oz. downfrom $24.29/oz. last Friday. Barrick Gold Corp. (GOLD) closed trading at at $22.90 down from last Friday’s close of $23.50/share 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 $5.09/share slightly down from last Friday’s close of $5.18/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 90.98 marginally up from 90.76 last Friday.

The 2-yr Treasury yield closed down 3 basis points at .11% this week, the 10-yr yield moved back down 8 basis points ending at .89% while the 30-yr yield ended at 1.626% down from 1.741% last Friday.

FRIDAY NIGHT ALERTS!

Late Friday night news was released that the FDA has approved Pfizer’s (PFE) ($41.12, -1.46%) COVID-19 vaccine for emergency distribution in the US!

However, the CDC has also warned that America’s COVID-19 death toll could top 3,000 a day for 2 months!

TRADING NEXT WEEK

We will have our last full week of trading before the 2 abbreviated holiday weeks that will end the year. 

NEXT WEEK’S KEY MACROECONOMIC DATA

The macroeconomic schedule will deliver host of reports including the Housing Starts report, the Retail Sales growth report, the Fed Funds Target Upper Bound repot, & the Markit PMI breakdowns report.

STOCKS IN VIEW NEXT WEEK

  • Shares of Fate Therapeutics (FATE) closed at $94.74/share up from last Friday’s close of $60.79 after hitting a new all-time high of $97.27  this week and enjoying nearly a $8.27 Billion market value. We started with this one folks over 3 years ago when it was in the $3 range. 
    • Fate is a clinical-stage biopharmaceutical company dedicated to the development of programmed cellular immunotherapies for cancer and immune disorders.
    • On Sunday, Fate presented a patient case study from the Company’s Phase 1 clinical trial of FT596, its universal, off-the-shelf, CD19-targeted chimeric antigen receptor (CAR) natural killer (NK) cell product candidate, at the 62nd Annual Society of Hematology Annual Meeting and Exposition and the street loved it. NK cells are the body’s first line of defense against viral infections and cancerous cells with an innate ability to rapidly seek and destroy transformed cells. NK cell therapy has the potential to 1) target multiple pathogenic antigens with measurably more efficient cytotoxicity, 2) be better controlled to reduce risk of cytokine storms and 3) be produced from a variety of sources without relying on patient-specific immune cells. Dr. Wayne Chu, Senior Vice President, Clinical Development of Fate Therapeutics stated, “The safety, pharmacokinetics and clinical activity observed following both the first and second single-dose treatment cycles of FT596 are compelling, especially when considering that the administered cell dose was significantly lower than the recommended cell dose of FDA-approved autologous CD19-targeted CAR T-cell therapies and that the heavily pre-treated patient was refractory to last prior therapy. We are excited the CAR component of FT596 has shown clinical activity at this low dose level, and we continue to enroll patients in dose escalation with FT596 as a monotherapy and in combination with rituximab. Our recent Phase 1 clinical data with FT516 in combination with rituximab, which demonstrate the potential of our novel hnCD16 Fc receptor to potentiate ADCC and drive complete responses, support our belief that the multi-antigen targeting functionality of FT596 may offer best-in-class potential for patients with B-cell malignancies.” 
  • Shares of Atossa Therapeutics (ATOS) closed at $.87 down from $1.48/share last Friday but raises $23 million in and equity offering.
    • 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.
    • This week Atossa announced the pricing of an underwritten public offering with expected total gross proceeds of $20.0 million before deducting underwriting discounts, commissions and other offering expenses payable by the Company. The shoe was exercised for a final total gross proceeds of $23M. The securities offered by the Company consist of (i) 14,575,000 Units, each consisting of one share of common stock (the “Common Stock”), and 0.75 Warrants (“Warrants”) to purchase one share of Common Stock at a price of $1.00 per Unit and (ii) 5,425 Units, each consisting of one share of Series C Convertible Preferred Stock (the “Preferred Stock”) with a stated value of $1,000 per share and convertible into 1,000 shares of Common Stock together with Warrants to purchase 750 shares of Common Stock at a purchase price of $1,000 per Unit. The Warrants will have an exercise price of $1.00 per share, will be immediately exercisable and will expire four years from the date of issuance.
  • Shares of INVO Bioscience (NASDAQ: INVO) closed at $3.02 down from $3.15/share last Friday.
    • 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 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.  
    • We expect that both Colliers and Roth Capital will beginning rolling analyst coverage as soon as next week as we are now past the 30-day mark (deal was Nov. 12th) as of today, Saturday Dec. 12th.
  • Shares of NeuBase Therapeutics (NBSE) closed trading at $7.68.
    • 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.
    • 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 $26.77 up from $24.85 last Friday after recently hitting a new all-time high of $29.69. Plug recently 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 making it a total 1.14B raised this fall. 

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.

“A bull market is like sex. It feels best just before it ends.” — Barton Biggs

Economic Reports

The macroeconomic schedule produced a number of reports as follows: On Monday, we received the Consumer credit report which confirmed a rise by $7.2B in October. On Tuesday, we received the Productivity report for Q3 which confirmed a rise by a seasonally adjusted annual rate of 4.6%. Unit labor costs were confirmed to have dropped at an annual rate of 6.6% as the economy continued to recover during this period. The NFIB Small Business Optimism Index report confirmed a drop to 101.4.
On Wednesday, the Job openings report confirmed a rise to 6.652M in October. The Wholesale inventories report also confirmed a rise by 1.8% in October. On Thursday, the Initial jobless claims report for the week ending December 5 confirmed a rise by 137k to 853k. Continuing claims for the week ending November 28 also rose by 230k to 5.757M. Total CPI and core CPI reports confirmed that both rose by .2% month/month in November. The Treasury Budget report also confirmed a $145.3B deficit in November. On Friday, the Total PPI was up .1% month/month in November while on a y/y basis, the total PPI was up .8%. The preliminary December University of Michigan Index of Consumer Sentiment moved up to 81.4.

Investing & Inspiration

“A bull market is like sex. It feels best just before it ends.” — Barton Biggs

“The investor’s chief problem — even his worst enemy — is likely to be himself.” — Benjamin Graham

“No profession requires more hard work, intelligence, patience, and mental discipline than successful speculation.” – Robert Rhea

“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

Videos

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