Author: Dorian Holden

Weeks after plunging to less than zero, oil prices are rocketing higher.

Last checked, crude now trades at $33.43.  And the worst may be behind us.  

Helping, Saudi Arabia and Russia ended its price war, and have stopped flooding the market with unwanted supply.  The two are now part of the deepest oil production cuts on record.  Better, U.S. shale companies have shut down unprofitable wells.

And,  according to Mohammad Barkindo, secretary-general of OPEC, “as much as 17 million barrels a day will have been taken off the market by next month,” as noted by Bloomberg.  

Better, “Concerns about the planet running out of places to store crude and product have evaporated,” said Judith Dwarkin, chief economist at RS Energy Group. “Near-month prices in the physical market are factoring this in as well as for the outlook ahead.”

Plus, the global economy is just beginning to reopen, which is seeing glut evaporate. With global production cuts and recovery expectations increasing, oil prices could run higher.  

And there’s news from Energy Intelligence, “The OPEC-plus alliance may extend May and June oil production cuts of almost 10 million barrels per day through the end of this year, an OPEC delegate tells Energy Intelligence. The delegate said a proposal to that effect would be discussed at the next OPEC -plus video-link meeting in June.”

If we see further progress, crude could easily recover back to $50, near-term.  

If that’s the case, some of the biggest oil stocks to keep an eye on include:

Exxon Mobil (XOM)

In recent months, XOM plummeted from $70 to less than $30.  However, it’s just now beginning to recover from those lows, and could potentially refill a bearish gap around $58.

Chevron (CVX)

After plunging from $110 to less than $55, CVX is also recovering quickly.  At the moment, it’s consolidating just under $93.  What we’d like  to see is a potential break out with a bearish gap refill around $110 again near-term.

Marathon Oil (MRO)

There’s a good deal of fear priced into MRO as well after gapping lower in recent months.  Near-term, we believe the stock could refill its bearish gap at $7, and potentially turn higher to at least $12 a share.  However, that all depends on if the economy can successfully reopen, and there’s no signs of more glut on the market.

Thanks to the coronavirus, teleconferencing stocks have been explosive.

In fact, on May 4, 2020, we brought four of them to your attention:

·    Zoom Video Communications (ZM)

·    Slack Technologies (WORK)

·    RingCentral Inc. (RNG)

·    LogMeIn Inc. (LOGM)

Since the start of May, ZM ran from a low of $140.45 to $172.  WORK ran from $26.16 TO $30.50.  RNG ran from $216.109 to $267.50.  LOGM has remained flat.

With the exception of LOGM, we could see higher highs in related stocks.  All as more people begin to work from home with the coronavirus making its rounds.  Twitter for example will allow its employees to work from home forever.  

According to Twitter, it was “one of the first companies to go to a work from home model in the face of COVID-19, but we don’t anticipate being one of the first to return to offices. We were uniquely positioned to respond quickly and allow folks to work from home given our emphasis on decentralization and supporting a distributed workforce capable of working from anywhere. The past few months have proven we can make that work. So, if our employees are in a role and situation that enables them to work from home and they want to continue to do so forever, we will make that happen.”

Amazon just extended its remote work policy through Oct. 2020.  Facebook and Google extended it through the end of the year.  

In addition, according to a CNBC survey,”83% of tech workers say they’ve been able to work from home in recent weeks, and many want their new routines to stick. More than a quarter (27%) say they’ll want to work from home all the time from now on, and 36% say they’ll want to work from home more often than they used to. Just 5% say they’ll want to work from home less often than they had previously, and a mere 2% never want to work from home again.”

The race is on for a coronavirus vaccine.

At the moment, over 4.58 million people have been infected and more than 309,184 have already died around the world.  In the U.S. alone, there are 1.45 million cases. In Russia, the count is up to 272,043.  In the UK, it’s up to 241,455.  In Spain, 230,698.  In Italy, 223,885.

However, there is good news – one of the top vaccine companies is exploding.

Moderna (MRNA) is racing to higher highs on news its vaccine produced COVID-19 antibodies in all 45 of its participants.  

“These interim Phase 1 data, while early, demonstrate that vaccination with mRNA-1273 elicits an immune response of the magnitude caused by natural infection starting with a dose as low as 25 [micrograms],” Tal Zaks, the chief medical officer at Moderna said, as quoted by CNBC.

“When combined with the success in preventing viral replication in the lungs of a pre-clinical challenge model at a dose that elicited similar levels of neutralizing antibodies, these data substantiate our belief that mRNA-1273 has the potential to prevent COVID-19 disease and advance our ability to select a dose for pivotal trials,” he added.

If the company sees further success, Phase II trials will begin shortly.  

Phase III could begin shortly after that with thousands of healthy volunteers.  According to Bloomberg, “the mRNA technology being used by Moderna and several others relies on the body’s own cells to produce viral proteins. Once injected into the body, the RNA slips into human cells and tells them to make virus-like proteins, in this case the “spike” protein on the surface of the coronavirus. If the vaccine works, those proteins then trigger the body to generate protective antibodies.”

Hurricane season doesn’t officially begin until June.

But Mother Nature may be throwing one our way a bit early this year.  In fact, according to the National Hurricane Center, as noted by CNBC, the Atlantic’s first tropical storm may develop near Florida and the Bahamas this weekend.  Plus, the 2020 hurricane season is expected to be very active, with at least 16 forecast tropical storms, eight of which could become hurricanes as also noted by CNBC.  That’s thanks in part to a developing La Nina.  

At the same time, we can actually profit from hurricanes, as some companies predictably see a jump in costs as they repair businesses. Other companies generate more business as they supply the products and services needed in the rebuilding effort.  

Here are some of the top ones to keep in mind.

Generac Holdings (GNCR)

GNRC is a $6.13 billion leader in power generation equipment and other light-motor equipment for residential and industrial customers. The company is the market leader in home standby generators and the leading global manufacturer of mobile generators for industrial use.  Beyond the physical damage to homes and businesses, one of the biggest inconveniences of a powerful storm is electrical outages. 

GNRC has a history of running higher around the beginning of the hurricane season. 

Home Improvement Stocks

Typically, investors bid up Home Depot (HD) and Lowe’s (LOW) since they historically stand to benefit from increased sales of plywood and other home improvement goods.  This segment is “naturally positively exposed to preparation and recovery efforts,” says Morgan Stanley.  These “typically see a boost in sales post-storm as damaged property is repaired.”

Xylem Inc. (XYL)XYL is another one to watch.  It’s a global leader in water services, including testing, treating and transportation. When a massive storm hits, floodwaters can overwhelm public drinking water and mean large government contracts for making the water safe again.

There’s still a good amount of fear in this crazed market.

All after Federal Reserve Chairman Jerome Powell said the pace of the U.S. downturn is “without precedent” and cautioned a recovery could take longer than expected.  He also said the U.S. may need additional support to pull the U.S. from the brink.  

“The scope and speed of this downturn are without modern precedent, significantly worse than any recession since World War II,” Powell said, as quoted by The Wall Street Journal. “Additional fiscal support could be costly but worth it if it helps avoid long-term economic damage and leaves us with a stronger recovery.”

All thanks to the COVID-19 pandemic that has stalled the global economy.

Unfortunately, the longer this health risk sticks around, the more likely businesses will fail, and households will be strapped for income Powell added.  The U.S. just lost 20.5 million jobs in April 2020.  More than 33 million have now claimed jobless benefits since March 2020.  

Worse, some analysts believe the U.S. economy could shrink 40% on an annualized basis in the second quarter of the year.  

At the same time, Powell noted the Fed is not considering negative interest rates.  “I know there are fans of the policy, but for now it’s not something that we’re considering,” he said, as quoted by CNBC. “We think we have a good toolkit and that’s the one that we will be using.”

House Proposes $3 Trillion Stimulus Package

While the Fed races to help keep the economy afloat, the House just proposed a $3 trillion aid package called the Health and Economic Recovery Omnibus Emergency Solutions (HEROES) Act—to help strengthen state and local government funding and extend relief to Americans. 

According to The Wall Street Journal, the HEROES Act would include:

·      A second round of direct stimulus payments to individuals, at $1,200 per family member (up to $6,000 per household)

·      An extension of the additional $600-per-week unemployment benefits through January 2021

·      $200 billion in hazard pay for first responders and frontline workers 

·      $75 billion for increased coronavirus testing·      $175 billion in rent and mortgage assistance

We’re still in desperate need of COVID-19 vaccine.

Without it, life can’t resume any sort of normalcy.  However, there are signs of good news from three of the top companies racing towards a solution.  

Moderna Inc. (MRNA)

Shares of Moderna Inc. (MRNA) were up another $7 this morning.

This comes just days after the U.S. FDA approved its vaccine candidate for Phase 2 trials.  From here, the company will begin the next round of trials with 600 participants, and is also finalizing plans for a Phase 3 trial as early as this summer, says CNBC.

“We are accelerating manufacturing scale-up and our partnership with Lonza puts us in a position to make and distribute as many vaccine doses of mRNA-1273 as possible, should it prove to be safe and effective,” CEO Stephane Bancel said.

Even better, as noted by CNBC, “In an interview this week with National Geographic, Anthony Fauci, who runs the NIAID, praised the Moderna vaccine. ‘These vaccines are inducing, at least in animal models, really rather substantial immune responses, particularly the mRNA vaccine.’”

The company has hopes it can start Phase 3 trials by summer 2020.

Inovio Pharmaceuticals (INO) 

Weeks after saying it developed a potential vaccine in three hours, Inovio launched a phase one trial to see if it’s safe for humans. Over the course of the trial, 40 people will be given two doses of the vaccine, and monitored for reaction.

If all goes well, the company will start another study to assess its efficacy against the virus. “We’ve set the internal goal of having 1 million vaccines for testing by end of 2020,” says Kate Broderick, Senior VP of R&D at Inovio.

To date, preclinical data has shown promising immune responses across animal models.  “Preclinical results for INOVIO’s COVID vaccine have been consistent with completed Phase 1 vaccine study for Middle East Respiratory Syndrome (MERS), also caused by a coronavirus, in which INOVIO’s DNA vaccine was well tolerated and induced high levels of antibody responses in 95% of subjects, while also generating broad-based T cell responses in nearly 90% of study participants,” notes Inovio.

In recent days, Cantor Fitzgerald reiterated an Overweight rating on the stock with a $17 price target.  HC Wainwright also reiterated a Buy rating with a price target of $17.

Gilead Sciences (GILD)

Just days ago, the company said preliminary results of a COVID-19 vaccine trial “showed at least 50% of patients treated with a 5-day dosage of antiviral drug remdesivir improved and more than half were discharged from the hospital within two weeks,” as noted by CNBC.  “The company also said another trial by the National Institute of Allergy and Infectious Diseases met its main goal.”

“These data are encouraging as they indicate that patients who received a shorter, 5-day course of remdesivir experienced similar clinical improvement as patients who received a 10-day treatment course,” said Aruna Subramanian, a lead investigator of the study.

Yikes.

The coronavirus walloped Americans in April 2020, with 20.5 million job losses.  That sent the unemployment rate to 14.7%, matching a World War 2 high of 14.7%.  

Worse, “If millions of Americans who’ve been furloughed and expect to return to their jobs are counted, the Bureau of Labor Statistics said the jobless rate would have almost 5 percentage points higher at nearly 20%,” says MarketWatch.

“This is the biggest and most acute shock that we’ve seen in post-war history. It’s a dramatic loss of output in a very short period of time,” added Michelle Meyer, head of U.S. economics at Bank of America, as quoted by CNBC.

·      Hotels and restaurants saw 7.6 million job cuts.  

·      Retail unemployment fell by 2.1 million.  

·      The health industry saw nearly 1.5 million jobs cut.  

·      Manufacturers lost 1.3 million jobs.  

·      Construction lost 975,000 jobs.

·      Financial Activities saw a loss of 262,000 jobs.

·      Transportation and warehousing lost 584,100 jobs.

However, some analysts believe job losses will soon peak.

“Then we’ll get a bounce if we don’t get a second wave [of infections] in the summer months,” said Mark Zandi, chief economist at Moody’ Analytics. “The unemployment rate will be cut in half by Election Day. Then we go nowhere fast until there’s a therapy we all feel good about — not only a vaccine but one that’s widely distributed.”

Telehealth has become one of the biggest beneficiaries of the COVID-19 story.

All as health officials and governments strongly urge folks to limit face to face contact.  As a result, stocks like Teladoc Health (TDOC) have raced from a 2020 low of $81.95 to $177.

From here, it could run even higher as patients flock to virtual care.

“In the first quarter of 2020 alone Teladoc Health delivered two million medical visits to people around the world, while simultaneously expanding access to millions of new members,” said Jason Gorevic, chief executive officer. “As our clients and consumers have turned to us during these unprecedented times, our proven ability to meet their needs has elevated our global leadership role and accelerated our impact on the healthcare system overall.”

Better, telehealth may be here to stay for quite some time.

Telehealth Could Become a $175 Billion Industry by 2026

In fact, it’s becoming so popular Global Market Insights estimates the market could be worth $175 billion by 2026.  

“Maintaining social distancing and self-quarantine are of key importance in containing the spread of coronavirus. This has led to few countries taking stringent measures such as partial or complete lockdown. Which supports increasing adoption of telemedicine services to avail healthcare services.”

In addition, analysts at Forrester say virtual care visits could soar to one billion this year.  

This comes just weeks after President Trump’s telehealth announcement.

“My emergency declaration allowed us to waive regulations to give nurses and doctors maximum flexibility to respond to the virus and to protect our frontline professionals that we’ve authorized through telehealth nationwide, which is really becoming big stuff — telehealth.  It makes it a lot easier for patients, and it really has been working out amazingly well,” said President Trump, as quoted by the White House.

Some of the top stocks to watch as telehealth picks up momentum include Teladoc Health (TDOC), Walgreens (WBA), and CVS Health (CVS).

Coronavirus is still wreaking havoc.

While some states, and countries may soon open for business, the virus is still causing issues.  To date, nearly 3.7 million people have now been infected.  We’ve seen 2568,085 deaths.  There are 1.2 million cases in the U.S.  In Spain, they’re nearing 220,000.  In Italy, they’re just above 213,000.  The UK is now nearing 200,000.  

But there appears to be some good news out there.

We may be nearing a vaccine.  For example, just days ago, Gilead’s (GILD) said preliminary results of a COVID-19 vaccine trial “showed at least 50% of patients treated with a 5-day dosage of antiviral drug remdesivir improved and more than half were discharged from the hospital within two weeks,” as noted by CNBC.

Even the World Health Organization (WHO) said it will speak with the U.S. and Gilead on how the remdesivir drug can be made widely available to the world.  “There’s signals of hope there for the potential use of the drug,” said Dr. Mike Ryan, executive director of the WHO’s health emergencies program, as quoted by CNBC.

In addition, Gilead has said it expects to produce more than 140,000 rounds of its 10-day treatment by the end of this month.  It also says it can make a million rounds by the end of the year, and perhaps several million by 2021.

Hopefully, we see some good progress with this, so life can get back to some sort of normalcy.

Another hopeful vaccine is being created by Pfizer and BioNTech.

The two just announced they’ve begun delivering doses of their experimental coronavirus vaccines for initial human testing in the United States, says CNBC.  “If the vaccine proves to be safe and effective in trials, it could potentially be ready for wide U.S. distribution by the end of the year, shaving several years off the typical vaccine development timeline.”

“We are optimistic that advancing multiple vaccine candidates into human trials will allow us to identify the safest, most effective vaccination options against COVID-19,” said BioNTech Chief Executive Ugur Sahin, as quoted by MarketWatch.

Uranium is back in bull market territory.

While most other commodity prices have taken a hit, uranium prices are picking up momentum.  All as mine shutdowns wiped out more than a third of annual global output, as demand has remained stable, says Bloomberg.  In fact, thanks to COVID-19, production was pulled back at Kazatomprom, for example, which said it would reduce operations for about three months. 

Cameco halted production at Cigar Lake in Canada, as well.  

“Prior to Kazatomprom’s announcement, we were forecasting a 30m pound deficit in [the] uranium supply/demand balance, which now looks as though it could be as much as 40m pounds,” said Alexander Pearce, analyst at BMO Capital Market, adding that the additional shortfall will “only accelerate” the depletion of inventories, as noted by Financial Times.

In addition, the Trump Administration outlined plans to revitalize the U.S. nuclear energy market.  A report from the Nuclear Fuel Working Group (NFWG) argues that “measures to buoy the struggling companies will allow for a rebirth of nuclear power in the U.S. while disrupting China’s and Russia’s hold on the overseas market for reactors,” as quoted by The Hill. 

Trump Administration officials also want to grant U.S. energy regulators the ability to block imports of nuclear fuel from Russia and China, adds Reuters.  All while creating a U.S. stockpile of uranium from domestic producers.

With the NFWG report, there are several key support points for the industry.

• End DOE’s bartering of uranium and reevaluate DOE’s Excess Uranium Inventory Management Policy 
• Create a level playing field for all energy sources in power markets and encourage FERC action to improve competition in the wholesale energy markets 
• Streamline regulatory reform and land access for uranium extraction 
• Support Department of Commerce efforts to extend the Russian Suspension Agreement to protect against future uranium dumping in the U.S. market 

 Enable NRC to deny imports of nuclear fuel fabricated in Russia or China for national security purposes