Sunday, May 3, 2020

Stocks Flat As States Begin to Reopen; COVID-19 Still Wreaking Havoc on Lives, Markets

This installment of the WEEKEND WRAP is going to be one of the shortest since the onset of the coronavirus crisis because noting much of consequence occurred, other than the "breakthrough" with Gilead Science's remdesivir clinical trial.

Turns out, remdesivir, as was already known, has little effect on the virus and doesn't reduce mortality at all. The study was purposely shortened to include only the data that shows the drug reduces the time to recovery by about 30%. Big deal. You take it - at $1000 a dose - and you recover in ten days rather than 14, at a cost of some $6-8000. Yeah, great. Four fewer days with a bad cold and a big pharmacy bill.

Hydroxychloroquine with zinc supplements and healthy doses of Vitamins C, D3, and Quercetin (or red wine, onions, green tea, apples, berries) before infection will likely prevent one from contracting the virus, and, the same combination after infection (if started early) will shorten the duration and severity.

Proven.

Mainstream media and government won't allow this information to even be considered.

The release of the remdesivir story was timed to coincide with the release of first quarter GDP, which was a very disappointing -4.8 percent. It's worth noting that many mainstream economists, like those from Bank of America and Goldman Sachs, downplayed the first quarter and thought it was going to come in as a positive number, proving, once again, that expert opinions should be treated in a similar manner to online stock touts. Both are better avoided and trusting in your own gut.

Most states have at least partially re-opened their economies, lead by Georgia, Florida, Tennessee and other Southern and some Midwestern states, notably Iowa, the Dakotas, Kansas, Nebraska, Oklahoma, Missouri, Texas). Some eight states never actually issued lockdown orders in the first place.

Meanwhile New York, New Jersey, Connecticut, Massachusetts, Virginia, Michigan, California, and others are still operating under lockdown restrictions.

This Wired.com article from April 30 offer some accurate state-by-state reporting.

Stocks finished the week about where they started (see below).

Treasuries closed out the week with the 2-year note yielding 0.20%, the 10-year, 0.64%, and the 30-year, 1.27%. There was limited movement. The 2-year down two basis points, the 10-year up four, and the 30-year up 10. The curve steepened 10 basis points to 117, essentially all driven by the 30-year.

Oil seems to be stabilizing, but at a price that will slaughter some smaller producers. WTI crude finished the week at its high of $19.69 a barrel on the June contract. Predictions are for a sloppy termination of the current contract, though nothing quite like the end of the May contract when oil prices turned negative.

Precious metals continue to be massaged and depressed. Gold futures closed out on Friday at $1700.40 per troy ounce. Silver futures finished at $14.97. The gold/silver ratio stands at 113.6, near a 5000-year high. The sensible move, for investors would be to be buying silver for the foreseeable future, as premiums on both metals are high, though, on a percentage basis, the silver premiums are drastic. It's nearly impossible to purchase silver for under $20 an ounce in quantity. Smaller amounts, such as one ounce coins and bars carry premiums of 70 to 100% or higher, whereas gold premiums are about $130-160, less than 10%.

It's actually far easier to purchase silver than gold, especially on ebay, where delivery delays such as those being experienced by dealers, are cut down to a few days rather than weeks. Delivery delays are slowly abating, but minimum order sizes remain in place at many online dealers.

It appears as though stocks are going to tumble on Monday, as word leaked out that Berkshire Hathaway, the holding company of Warren Buffett, is going to be selling hard into the recent rally. A retest of the March lows could be underway as stocks finished dramatically lower Friday - which happened to be May 1 - wiping out the week's gains.

The Dow Jones Industrial Average has failed repeatedly to break through the 50% retrace line off the lows, and that could portend a significant shift in risk assessment.

At the Close, Friday, May 1, 2020:
Dow: 23,723.69, -622.03 (-2.55%)
NASDAQ: 8,604.95, -284.60 (-3.20%)
S&P 500: 2,830.71, -81.72 (-2.81%)
NYSE: 11,058.57, -313.77 (-2.76%)

For the Week:
Dow: -51.58 (-0.22%)
NASDAQ: -29.57 (-0.34%)
S&P 500: -6.03 (-0.21%)
NYSE: +40.68 (-0.37%)

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