WSJ : Cash Isn’t Trash Compared to Stocks and Bonds

Cash Isn’t Trash Compared to Stocks and Bonds
The risks of a sharp selloff in both stocks and bonds is high at the same time, making cash an attractive haven

Stock valuations are incredibly high, but the long-term Treasurys that investors typically use to safeguard their portfolios are shockingly expensive. Under these circumstances, the better hedge might be old-fashioned cash.

Almost any way you look at them, stocks seem quite expensive. The S&P 500 trades at about 22 times its expected earnings over the next year, its richest forward price/earnings ratio since the dot-com bubble. Against its inflation-adjusted earnings over the past decade—the valuation method popularized by economist Robert Shiller—it is similarly expensive. Other yardsticks, such as the overall value of U.S. stocks in comparison to gross domestic product, tell a similar story.

No valuation method is perfect of course, but when so many of them point in the same direction it is a reason for caution. Indeed, about the only way to argue that stocks aren’t significantly overvalued is to compare them to long-term Treasurys. The 10-year Treasury note yields just 0.72%, putting it near its lowest levels in history. Against that, the low earnings yield on stocks (the inverse of the price/earnings yield, 4.5% on a forward basis) doesn’t seem so bad.

Whether stocks really are inexpensive in comparison with long-term Treasurys is an open question, especially because the low-inflation, low-growth environment that Treasury yields are predicated on calls into question the strength of future earnings growth. One thing that seems clear, however, is that as an investment, Treasurys don’t have much room left for upside. If worries about the economy became severe enough to send the 10-year’s yield down to zero, for example, its market value would rise by only about 7%.

In contrast, there could be plenty of downside. Consider a situation where next year a massive stimulus plan is enacted and a vaccine against the new coronavirus becomes widely available, the combination of which makes the economy really hum, while the Federal Reserve steadfastly keeps short-term rates near zero. If that pushed the yield on the 10-year to 2.5%, the 10-year note would lose about 16% of its value. Short-term Treasurys don’t carry anything like those downside risks, and their yields aren’t substantially lower than their long-term counterparts—the three-month bill’s is 0.1%. A number of high-yield savings accounts have interest rates that approach or exceed the yield on the 10-year note.

When investors turn to cash, it is usually because market losses have made them deeply worried, leading them to miss out on gains made in the subsequent recovery. But now, when both stocks and long-term Treasurys seem awfully expensive, a bit of cash might provide them with a margin of safety, and an easier night’s sleep to boot.

>>> US Gapping down

Gapping down

In reaction to earnings/guidance:

  • FSLY -28.2% (lowers Q3 rev guidance below consensus), AA -6.2%, ACCD -5.7%, TFC -1.7%, TSM -1.6%, CMC -0.9%, UAL -0.8%, MS -0.6%

Select Index ETFs showing weakness:

  • QQQ -1.4%, SPY -1%, DIA -0.9%, IWM -0.8%

Other news:

  • VVPR -19.7% (prices offering of 2,941,176 of its ordinary shares at $8.50 per share)
  • LEAF -12.2% (files for $100 mln mixed shelf offering; also files for 8 mln share offering by selling shareholders)
  • VRTX -11.6% (to stop dosing in Phase 2 trial of VX-814 and will discontinue development)
  • NET -7.3% (in sympathy with weak FSLY guidance)
  • AMCX -7.3% (announces preliminary results of modified Dutch auction tender offer)
  • SIBN -5% (prices offering of 3,190,053 shares of its common stock at $22.00 per share)
  • AKAM -3.7% (in sympathy with weak FSLY guidance)

Analyst comments:

  • ROKU -3.7% (says it's pleased with patent non-infringement verdict)
  • AMZN -1.7% (reaches NFL playoff game streaming deal, according to Variety)
  • CPSS -1.1% (acknowledges receipt of interest from third party)
  • TTD -4.3% (downgraded to Sector Weight from Overweight at KeyBanc Capital Markets)
  • ROKU -3.7% (downgraded to Sector Weight from Overweight at KeyBanc Capital Markets)
  • OKE -3.4% (downgraded to Sell from Neutral at Goldman)
  • MDLZ -1.2% (downgraded to Neutral from Buy at Guggenheim)
  • DUK -1.1% (downgraded to Neutral from Outperform at Credit Suisse)
  • WMB -1.1% (downgraded to Neutral from Buy at Goldman)

>>> US Gapping up

Gapping up 

In reaction to earnings/guidance:

  • ORGO +28% (guides Q3 and FY20 revs above consensus), CARS +14.1% (guides Q3 revenue above consensus), SNBR +6.8% (also says it intends to resume share repurchases in Q4), RDFN +2.4% (guidance update), WBA +1.9%, VSH +0.9% (raises guidance for Q3 revenue)

Other news:

  • AVXL +32% (announces "positive" results from proof of concept controlled Phase 2 clinical trial evaluating ANAVEX2-73 (blarcamesine) in Parkinson's disease dementia)
  • ARWR +10.2% (VRTX news seen as positive for ARWR)
  • PGEN +3.6% (announced FDA clearance and successful technology transfer for its UltraPorator system)
  • LIVX +3.1% (stock offering)
  • DTIL +2.5% (announces U.S. Patent Trial and Appeal Board upholds Allogeneic CAR T patents)
  • RDFN +2.4% (convertible notes offering)
  • SAGE +1.7% (announces positive interim, topline zuranolone safety and tolerability data from open-label shoreline study in patients with MDD)
  • VCYT +1.6% (announces two presentations)
  • ACI +1.5% (declares first dividend)
  • AMAG +1.5% (requests hearing to maintain Makena as treatment option; higher after Covis Group confirmed it commenced tender offer for all outstanding shares of AMAG Pharmaceuticals)

Analyst comments:

  • ALKS +3.5% (upgraded to Buy from Neutral at Mizuho)
  • SONO +1.4% (upgraded to Buy from Neutral at BofA Securities)
  • VIAC +1.2% (upgraded to Overweight from Equal Weight at Barclays)
  • USX +0.7% (upgraded to Buy from Hold at Stifel)
  • EAT +0.5% (upgraded to Outperform from Market Perform at BMO Capital Markets)

>>> US Early premarket gappers

Early premarket gappers

  • Gapping up:
    • ORGO +24.3%, ARWR +8%, SNBR +7%, GNCA +6.7%, LIVX +6.2%, CARS +5.5%, VSH +3.8%, GORO +2.7%, PRPL +1.7%, VCYT +1.6%
  • Gapping down:
    • FSLY -28.4%, VVPR -17.3%, LEAF -12.2%, VRTX -9.4%, NET -7.3%, SIBN -5.9%, ACCD -5.7%, AA -5.4%, ROKU -4.6%, AKAM -4.1%, AMZN -2.1%, FTI -2%, REGN -1.6%, AZRE -1.5%, QQQ -1.5%, TSM -1.4%, UAL -1.2%, SPY -1%, IWM -1%, DIA -0.9%

WSJ : Covid-19 Outbreaks Led to Dangerous Delay in Cancer Diagnoses

Covid-19 Outbreaks Led to Dangerous Delay in Cancer Diagnoses
‘Cancer doesn’t take a pause’ but amid the pandemic, many Americans avoided oncology screenings and other potentially lifesaving procedures

A decline in mammograms and other screening procedures after the coronavirus pandemic struck is leading to missed and delayed cancer diagnoses, according to data from insurance claims, lab orders, Medicare billings and oncology-practice records, an emerging pattern that is alarming oncologists.

Hundreds of thousands of cancer screenings were deferred after worries about Covid-19 shut down much of the U.S. health-care system starting this spring. Because many cancers can advance rapidly, months without detection could mean fewer treatment options and worse outcomes, including more deaths.

“There’s really almost no way that doesn’t turn into increased mortality,” with the full effects likely to play out over a decade, said Norman E. “Ned” Sharpless, director of the National Cancer Institute. Missed screenings and other pandemic-related impacts on care could result in about 10,000 additional deaths from breast and colon cancer alone over the next 10 years, the NCI projected earlier this year. Dr. Sharpless said the estimate now appears low.


Cancer-care provider 21st Century Oncology, which has 300 locations around the U.S., said about 18% of its newly-diagnosed breast cancer patients this year through August had an advanced stage of the disease, compared with 12% in all of 2019. From 2015 to 2019, the share of its breast cancer cases detected at an advanced stage was between 11% and 12.5%. The provider has also seen a higher proportion of its lung-cancer patients arriving with a more advanced stage of the disease this year.

“It’s distressing as a physician,” said Constantine Mantz, chief policy officer for 21st Century Oncology, which is a unit of Australian company GenesisCare.

The early data on cancer underscore concerns that the negative health impact of the coronavirus extends well beyond the direct effects of Covid-19. This year, deaths tied to a range of medical conditions—from Alzheimer’s disease to heart attacks—have exceeded those of previous years in what physicians and researchers say reflects stress from the pandemic and deferred medical care.

Richard Wehmeyer died of lung cancer this September, just a month after a stage-four diagnosis was confirmed. A computerized tomography scan a year earlier had first detected a tiny, potentially cancerous nodule in his right lung and he was urged at the time to get another scan in three to six months.

Mr. Wehmeyer, a 70-year-old respiratory therapist who lived in Nolensville, Tenn., never made the follow-up appointment. His son, Nic, and the oncologist who treated him, Todd Bauer of Tennessee Oncology, said he didn’t want to risk exposure to the coronavirus after it emerged this spring, partly because his sons have compromised immune systems. After coughing up blood, he went to a hospital in August and learned the tiny nodule had grown into metastatic disease.

“I wish he would have prioritized it,” said Nic Wehmeyer, who lives in New York but stayed with his father in Tennessee this spring. The cancer “wasn’t caught until it was past the tipping point.”

Data from lab giant Quest Diagnostics Inc. shows that freshly-detected cases of several types of cancer dropped sharply this spring. The mean weekly number of newly diagnosed breast cancer patients fell by nearly 52% for March and early April, compared with figures before the pandemic. This missing cohort means there are likely many patients with undiagnosed cases, said Harvey Kaufman, a senior medical director at Quest.

“Cancer doesn’t take a pause,” he said.


In March, as much of the U.S. health-care system stopped performing routine procedures, the number of cancer screenings plummeted, according to data from insurers, electronic medical records and a patient survey. Many clinics paused in-person visits. Some people, nervous about the virus, decided to hold off on checkups. Other patients, seeking to avoid doctors’ offices and hospitals, chose to ignore nagging, unexplained symptoms, oncologists say.

“We undoubtedly will have delays in diagnoses, and more advanced cancers,” said William Cance, chief medical and scientific officer of the American Cancer Society.

Claims tallied by researchers at UnitedHealth Group Inc., parent of the largest U.S. health insurer, show mammograms dropped by as much as 95% in the second week of April compared with that same week in previous years. Screenings began to resume later in the summer, though they returned only to typical levels.


Researchers didn’t see the above-normal totals that would be expected if all of those who missed procedures this spring returned for them later in the year and no one else skipped their screenings, said Deneen Vojta, executive vice president for global research and development at UnitedHealth.

“There’s clearly no makeup,” she said.

In the first eight months of 2020, the UnitedHealth count found nearly a million fewer mammograms, colorectal and cervical cancer screenings compared with the same period last year. The analysis includes UnitedHealth’s roughly 32 million Medicare Advantage and commercial members.

An analysis of a sample of Medicare billings by the Community Oncology Alliance and Avalere Health, a consulting firm owned by Inovalon Inc., highlights other signs of undetected cancer patients. New-patient oncology visits were down between 29% and 70% in the months between March and July, compared with the same months a year earlier. Biopsies for breast, lung and colon cancer fell between 11% and 79% over the same span, according to Debra Patt, an executive vice president at Texas Oncology, who was a lead researcher on the study.

One of Dr. Patt’s patients, Brenda Hudson of Buda, Texas, says her primary care physician told her to get a mammogram in June, but she waited until August to get it done. At 66, with no family history of breast cancer, she felt her risk was low and she was nervous about the coronavirus.

“I’m like, ‘I’m just not ready to be in a lot of medical facilities,’” she said.

The mammogram detected a small lump in Ms. Hudson’s right breast and a biopsy confirmed the cancer diagnosis. She will be treated with chemotherapy and a lumpectomy, followed by radiation. Dr. Patt said Ms. Hudson’s cancer is fast-growing and while she has a good prognosis, she might not have needed to get chemotherapy if it had been detected in June.

WSJ : U.S. Moves to Protect Technologies Considered Critical to National Securit

U.S. Moves to Protect Technologies Considered Critical to National Security
Guidelines outline how to prevent advanced technologies such as artificial intelligence from falling into the hands of foreign adversaries

WASHINGTON—Artificial intelligence, quantum information science and semiconductors are on a new list of advanced technologies that the U.S. is aiming to protect under guidelines being released Thursday.

The technologies on the list, which is being released by the White House’s National Security Council, are considered critical to the country’s national security position, including military, intelligence and economic interests.

The list will be accompanied by a report that gives government agencies specific guidelines on how to prevent the technologies from falling into the hands of foreign adversaries, such as China, according to a senior administration official.

The report, a copy of which was reviewed by The Wall Street Journal, noted that China is spending heavily to overtake the U.S.’s lead in several top innovation areas.

That includes by “employing means that include stealing technology, coercing companies to disclose intellectual property, undercutting free and fair markets, failing to provide reciprocal access in research and development projects and promoting authoritarian practices that run counter to democratic values,” the report said.

The new initiative is meant to signal U.S. government departments and agencies to rally around the country’s existing network of researchers, academics and the private sector players that turn ideas into innovations that strengthen U.S. national security, the senior official said.

It is the first governmentwide directive for federal agencies to give priority to protecting a centrally designated set of technologies, the official said. Previously, guarding those technologies was up to divisions within State, Defense, Commerce and other departments.

“What’s new here is a whole-of-government approach,” the senior official said.

The list of 20 technologies also includes advanced computing, biotech and aero-engine technology. It builds upon an earlier list of technologies, including neurotech and quantum encryption, that Commerce Department officials have guarded as they regulate which high-tech U.S. items can be shipped overseas under existing federal export control laws.

The report included ways for federal agencies and other groups to protect U.S. technology, including by encouraging the private sector to consider national security implications of pursuits that involve critical technology. It also called for a strong export control system that regulates which U.S. technologies can be sent overseas.

Commerce officials have expanded their watch over critical technologies since Congress passed new rules in 2018 calling for strengthened U.S. export controls.

The release of protected technologies comes as China and Russia are racing to advance their own military capabilities.

Meanwhile, the federal government’s spending on research and development projects has fallen below the level that private-sector enterprises have spent annually since 1980, the report said.

“As a result, America’s lead in certain [critical and emerging technology] sectors is declining. The United States will take meaningful action to reverse this trend,” according to the 18-page report.

The report also outlined steps that federal agencies should take to promote innovation within the U.S. industrial base, including fostering ideas from inventors and cutting back on regulations, policies and bureaucratic processes that currently stifle industry growth.

National Security Council staff plan to update the list annually, the report said.