Trading Fear and Hope Around the Virus Outbreak (GLD, ZM, NVAX)

SPDR Gold Trust (NYSEARCA:GLD) continues to display a positive posture as coronavirus fears temper economic growth expectations and ramp stimulus threats. Gold often performs well when there is reason to speculate on a potential economic downturn because governments are prompted to stimulate through extra deficit growth and monetary responses such as interest rate cuts and quantitative easing.

All of these measures make the value of so-called “fiat money” questionable on a longer-term basis, especially for large family offices working to protect and grow massive stores of accumulated wealth over very large time horizons.

The recent breakout of COVID-19 is a good example. China is the fastest-growing large economy in the world and the second-largest overall. Chinese economic risk is extremely high right now on a cyclical basis as the company nests and quarantines large segments and regions to combat the spread of the virus. It has spread, though, penetrating possibly dozens of other countries with an aggressive infection rate.

Gold is pricing in risk of global recession right now. One doesn’t have to assume that risk is extremely high to see a value to hedging a piece of large stores of wealth as protection. And gold is a very small market. If the world’s biggest portfolios increase their gold allocation by just a percent or two, the impact on the price of gold could be dramatic.

See Detailed GLD Chart Here.

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Zoom Video Communications Inc (NASDAQ:ZM) is clearly a COVID-19 play. The technicals are undeniable. But the story is a little less obvious, until you think about it. The company provides remote conferencing services using cloud computing. Zoom offers communications software that combines video conferencing, online meetings, chat, and mobile collaboration.

It has a large footprint in China, where you can’t take public transportation to go into the office, or where many people have been quarantined at home, but still have to attend meetings. One can assume usage is going through the roof for the company’s tech right now.

Zoom Video Communications Inc (NASDAQ:ZM) provides a video-first communications platform that delivers changes how people interact primarily in the Americas, the Asia Pacific, Europe, the Middle East, and Africa. It connects people through frictionless video, voice, chat, and content sharing.

The company’s cloud-native platform enables face-to-face video experiences and connects users across various devices and locations in a single meeting. It serves education, entertainment/media, enterprise infrastructure, finance, healthcare, manufacturing, non-profit/not for profit and social impact, retail/consumer products, and software/Internet industries, as well as individuals.

ZM shares have been acting well over the past five days, up about 3% in that timeframe, but up more than 30% in the past month following initial widespread reports of the viral outbreak.

Zoom Video Communications Inc (NASDAQ:ZM) pulled in sales of $166.6M in its last reported quarterly financials, representing top line growth of 84.9%. In addition, the company has a strong balance sheet, with cash levels far exceeding current liabilities ($859.9M against $317.8M).

See Detailed NVAX Chart Here.

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Novavax, Inc. (NASDAQ:NVAX) is interesting around the next corner. Of all the COVID-2019 movers, we think this one is most likely to end up being a great bearish setup in the making.

The long-term trajectory speaks of numerous failures to execute in clinical development, and the company is not part of the inside clique with funding to solve the virus vaccine puzzle.

Novavax, Inc. (NASDAQ:NVAX) bills itself as a clinical-stage biotechnology company that focuses on the discovery, development, and commercialization of recombinant nanoparticle vaccines and adjuvants.

Its lead adjuvant is Matrix-M that is used to enable a vaccine to enhance the amplitude of the immune response and qualitatively change it, enhance its specificity to provide protection against related microorganisms, as well as allows immunization with much lower doses of antigen.

The company develops respiratory syncytial (RSV) virus fusion protein nanoparticle vaccine candidate for infants via maternal immunization in Phase III clinical trial; older adults in Phase II clinical trial; and children six months to five years of age in Phase I clinical trial.

Novavax, Inc. also develops NanoFlu vaccine, which is in Phase I/II clinical trial for treating seasonal influenza in older adults; and Ebola virus glycoprotein vaccine that is in Phase I clinical trial. Its preclinical programs include Zika virus; combination respiratory vaccine candidate to protect against RSV and seasonal influenza, as well as other infectious disease vaccine candidates.

Shares of NVAX are up about 22% in the past week, and have powered higher over the past month, rallying roughly 61% in that time on strong overall action.

NVAX pulled in sales of $2.5M in its last reported quarterly financials, representing top line growth of -67.6%. In addition, the company has a strong balance sheet, with cash levels far exceeding current liabilities ($75.5M against $21.6M).

See Detailed NVAX Chart Here.

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