A Week of Market Records, Losses, & Volatility

It was a week that brought forth a record high on the Nasdaq pushing it north of 10,000 for the first time ever & the other indices were not too far off of their marks either in the early going. However, a number of negative views & new stories surfaced and volatility to the downside charged forth like a long lost & gloomy “friend” that you never really wanted to see again.

First, news of recent surge coronavirus cases began to be reported in a number of states as reopening steps were marching forward resulting in a few states to decelerate their steps adding uncertainty in the minds of investors. Next, we heard from the Fed which changed their rhetoric to a more cautious tone adding that the belief that interest rates will remain near zero until 2022. They also provided a somewhat bleak outlook where they stated that real GDP will contract deeply by 6.5% in 2020, job recovery may be slower than thought also causing doubt on the ability of the country’s economy to rebound quickly while giving the understanding that we in some manner of a recession.

These cloudy views were also ill-timed with a market had just experienced a technically charged V-shaped & frothy rebound where many sectors and valuations of many companies were a bit ahead of themselves as many speculated on the consistent reopening process.

This dim outlook managed to place pressure on all 11 sectors as all ended in the red this week. The energy sector led the downfall dropping by 11.1% while oil prices cooled off falling 8.3% to end at $36.24/bbl. Energy giant Chevron (CVX) moved lower this week to close at $92.39/share ($100.81, last wk) and Exxon (XOM) moved down closing at $47.17/share ($53.08, last wk.) 

The macroeconomic schedule also brought forth the following reports this week that showed signs of reopening measures that were having a positive effect in its early going.  On Monday, we received the following reports: On Monday, we did not receive any significant reports. On Tuesday, we received the NFIB Small Business Optimism Index report for May confirmed a rise to 94.9 from 90.9 in April. The April job openings report showed a decline to 5.046M from a revised 6.011M in March. The Wholesale inventories report showed a rise of .3% in April. On Wednesday, we received the Consumer Price Index Report for May confirmed a drop of .1% month/month while the Core CPI, excluding food & energy, also dropped by .1%. The weekly MBA Mortgage Applications Index Report showed a 9.3% move higher. On Thursday, we received the initial jobless claims report for the week ending June 6 declined by 355k to a 1.542M & continuing claims for the week ending May 30 dropped by 339k to an eye-popping 20.929M. The Producer Price Index for final demand report rose .4% month/month in May while the index for final demand, which excluded food & energy, dropped .1% leaving the year/year rates at -.8% & .3%. On Friday, we received the preliminary University of Michigan Index of Consumer Sentiment report for June which confirmed a positive move to 78.9. The Import prices report showed a rise of 1% in May while prices sans oil rose .1%. Export prices also moved higher by .5% in May and when you exclude agriculture prices move up .6%.

MARKET RESULTS & MARKET LEADERS

The Dow ended the week at 25,605.54, after seeing an 1800 point drop on Thursday, representing a weekly decline of 5.6% and is now down 10.3% YTD. The Russell 2000 closed at 1387.68 representing a weekly decrease of 7.9% and is now down 16.8% YTD. The S&P 500 closed at 3041.31 dropping 4.8% and is now down 5.9% YTD. The Nasdaq Composite closed at 9,588.81 on Friday while setting a new record during the week above 10K, representing a weekly 2.3% downward move &  remains up 6.9% YTD. 

From the financials sector, which was off sharply overall this week, we saw shares of Goldman Sachs (GS) closed trading at $201.78/share down from the $217.92/share last Friday, American Express (AXP) closed at $101.68/share down from the $109.73/share last Friday, Visa (V) closed trading at $192.26/share down from the $199.61/share last Friday & shares of Morgan Stanley (MS) closed at $46.28/share down from last Friday’s close of $49.53/share.

The FAANG’s ended slighty up overall this week.  Facebook (FB) closed at $228.58/share, +1.85% Friday, ($230.77/share a week ago), Amazon (AMZN) closed at $2,584.02/share, -.51% Friday, ($2,483/share a week ago and is up approx. 42% since mid-march), Apple, Inc. (AAPL) closed at $338.80/share, +.86% Friday, ($331.50/share a week ago), Netflix (NFLX) closed at $418.07/share, -1.76% Friday, ($419.60/share a week ago) & Alphabet (GOOG) closed at $1,413.18/share, +.67% Friday, ($1,438.39/share a week ago.)

COMMODITY MOVES

Gold prices closed $1,683/0z. flat for the week & silver prices closed at $17.59/oz flat for the week. North American silver and gold producer Hecla Mining Company (HL) ended the week at $3.10/share down from last Friday’s close of $3.18/share. First Majestic Silver (AG) closed at $9.26/share lower than the $9.72/share close last Friday.

MONEY UPDATE

The U.S. Dollar Index weakened again to end the week at 97.11 up from 97 last week. 

The 2-yr Treasury yield closed at .18% up 3 basis points from the .21% mark last Friday, the 10-yr yield closed at .70% moving down 20 basis points from .90% last week while the 30-yr yield ended at 1.458% down from 1.672%.  

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 retail sales report on Tuesday
• The housing starts and building permits on Wednesday
• The leading index on Thursday

STOCKS IN VIEW

• Shares of Atossa Therapeutics (ATOS) closed at $3.08/share on Friday after reaching a new high of $3.48 recently 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. CEO of Atossa, Dr. Steven Quay, MD, PhD, author and physician-scientist, announced the availability of his 158-page book, “Your COVID-19 Survival Manual: A Physician’s Guide to Keep You and Your Family Healthy During the Pandemic and Beyond,” in paperback and eBook format on his website, www.DrQuay.com, beginning Monday, June 8, 2020. Proceeds from the book will go to military veterans performing COVID-19 relief work in their communities. 

• 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 which closed at $3.31 this week after rwaching $3.89 intraday trading (significantly up from the $2.40/share close last Friday). They 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 last 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.  This week Fate closed at $30.75/share after announcing on June 11th that it had closed an underwritten public offering of 7,108,796 shares of its common stock, which included 927,324 shares that were issued pursuant to the full exercise of the underwriters’ option to purchase additional shares, at a public offering price of $28.31 per share. Aggregate gross proceeds from this offering, including exercise of the option, were approximately $201.3 million, prior to deducting underwriting discounts and commissions and estimated offering expenses. 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 Neubase Therapeutics (NBSE) closed trading this Friday at $8.44/share up 5.63%. We are following Neubase Therapeutics (NBSE) for a number of reasons including its development of a modular antisense peptide nucleic acid (PNA) platform with the capability to address rare genetic disease caused by mutant proteins with a single, cohesive approach, but it also because it may be added to a Russell Microcap index this month. Here’s the preliminary list of additions. Shares of NBSE hit a recent new all-time high of $9.63/share. Here are the following June dates for Russell indices inclusion for 2020:
  • June 12 & 19 – US index add & delete lists (reflecting any updates) posted to the FTSE Russell website after 6 PM US eastern time.
  • June 15 – “lock down” period begins – US index adds & delete lists are considered final
  • June 26 – Russell Reconstitution is final after the close of the US equity markets.
  • June 29 – equity markets open with the newly reconstituted Russell US Indexes.

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, the macroeconomic schedule brought forth the following reports this week that showed signs of reopening measures were having a positive effect in its early going.  On Monday, we received the following reports: On Monday, we did not receive any significant reports. On Tuesday, we received the NFIB Small Business Optimism Index report for May confirmed a rise to 94.9 from 90.9 in April. The April job openings report showed a decline to 5.046M from a revised 6.011M in March. The Wholesale inventories report showed a rise of .3% in April. On Wednesday, we received the Consumer Price Index Report for May confirmed a drop of .1% month/month while the Core CPI, excluding food & energy, also dropped by .1%. The weekly MBA Mortgage Applications Index Report showed a 9.3% move higher. On Thursday, we received the initial jobless claims report for the week ending June 6 declined by 355k to a 1.542M & continuing claims for the week ending May 30 dropped by 339k to an eye-popping 20.929M. The Producer Price Index for final demand report rose .4% month/month in May while the index for final demand, which excluded food & energy, dropped .1% leaving the year/year rates at -.8% & .3%. On Friday, we received the preliminary University of Michigan Index of Consumer Sentiment report for June which confirmed a positive move to 78.9. The Import prices report showed a rise of 1% in May while prices sans oil rose .1%. Export prices also moved higher by .5% in May and when you exclude agriculture prices move up .6%.

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