Updated: Jun 12
SUMMARY. This week marked TWO significant developments. The first was the intent to begin reopening the economy with federal guidelines laid out by the administration. The second was the leaked trial of Gilead's therapeutic drug to treat Covid-19. STAT news reported that a Chicago hospital treating coronavirus patients with remdesivir in a trial were recovering rapidly from severe symptoms. The publication cited a video it obtained where the trial results were discussed. Although encouraging we remain more optimistic on Hydroxy choloroquine & ZPak than this option after review another clinical trial conducted. Further, we remain perplexed as to why Gilead's anecdotal evidence was granted so much credence in the media vs Hydroxy which has been widely criticized of its positive evidence. Nonetheless, as we have been saying for months (that most were not discounting the drug therapy pipeline), this was expected to cause and has caused increased optimism on reopening the economy. Some caution is warranted, as we believe many states under control of Democratic Governors will be slower to re-open tied to political reasons while others slower tied to cases still increasing.
INVESTMENT IMPACT. During the week, we significantly reduced our over-weight positions in technology which has almost recovered all losses year to date. Instead, we shifted our model allocations to those companies that may benefit to the reopening of the economy. Further, we eliminated our more conservative telecommunications exposure in China tied to the growing political backlash coming over the Covid-19 cover-up of how China handled the outbreak. We remind clients, it was always our belief that the virus would defer growth not end it and was transitory not permanent. Our conviction of this was partly tied to our extensive research on drug therapies which we thought would work to thwart the spread and reduce deaths (which is continued to be ignored by the mainstream media which is opting to attribute it to mitigation efforts alone).
For more insights see our website and disclosures found there at BCA. As always contact us for further explanation of how these events can affect your finances.