Kodak Audio devices are displayed at the iWorld booth during CES 2020 in Las Vegas, Nevada.
David Becker/Getty ImagesThe company that invented the digital camera is staging a comeback that has nothing to do with photography.
That’s right, Kodak is still a thing. Its stock was up more than 300% in trading Tuesday after The Wall Street Journal reported the iconic photography company will receive a $765 million loan from the U.S. government to produce medical ingredients, including hydroxychloroquine. It’s the first loan of its kind under the Defense Production Act and is part of an American push to bring production back to the U.S., ending reliance on foreign sourcing.
But should the stock be up triple-digits? It’s hard to say. No one was paying attention to the company on Wall Street. There are no analysts covering the microcap stock.
Kodak filed for bankruptcy protection in 2012 and emerged as a new corporate entity around the end of 2013. These days, the company is focused on imaging and producing chemicals, consumable products, and software for the industry. As of Monday’s closing prices, Kodak’s market value, including debt and preferred stock, was less than $300 million. That’s why a $765 million loan from the government is a really big deal.
But the stock’s surprising leap is a very 2020 story about government loans, medical drugs, and Covid-19. For those reasons, people will pay attention today.
—Al Root
***
What’s in the Republican Coronavirus Relief Package
At long last, details of the GOP’s coronavirus relief package have been released. The roughly $1 trillion proposal, called the Heals Act, is the start of formal negotiations with Democrats, who passed a $3 trillion package through the House of Representatives in May.
- The proposal includes another round of direct payments for those who qualified in the spring. The payments will work mostly the same: $1,200 for individuals making under $75,000 a year and $2,400 for couples making under $150,000 a year. Families with children will receive an additional $500 per child, including adult dependents.
- The Republican plan cuts the flat $600 extra unemployment benefit to $200 until October. At that time, workers would receive 70% of their lost wages in federal and state benefits, with the federal government’s contribution being capped at $500.
- Hard-hit businesses that have seen revenue fall 50% or more from last year will be eligible for a second round of Paycheck Protection loans.
- The plan also includes liability protection against Covid-19-related lawsuits deemed unwarranted for businesses, schools, and health-care providers. Sen. Majority Leader Mitch McConnell said there won’t be a relief bill passed in the Senate that doesn’t include this measure.
- Also included in the bill: Continued student loan deferment and funding for reopening K-12 schools and universities, Covid-19 testing, and hospitals.
What’s Next: Democrats now want to wring as much additional spending out of Republicans as possible. Beyond the proposed cuts to federal unemployment payments, Democrats will seek funding for state and local governments and hard-hit communities, and hazard pay for front-line workers.
—Ben Walsh and Connor Smith
***
Moderna, Pfizer Begin Phase 3 Vaccine Trials
Biotech company Moderna and drugmaker Pfizer announced the first patients have received their respective Covid-19 vaccines as part of their final, Phase 3 trials.
- Moderna’s announcement came a day after the company said it received $472 million in additional federal funding, bringing total government support for Moderna’s vaccine to almost $1 billion. It’s being conducted with two governmental health agencies and will take several months to determine whether it prevents symptomatic Covid-19.
- Pfizer’s trial, which is being conducted with partner BioNTech, will be conducted in 120 cities in the U.S. and abroad. The U.S. has agreed to pay the companies $2 billion for 100 million doses of their experimental vaccine.
- Dr. Anthony Fauci said Monday that he is “not particularly concerned” about the safety of Moderna’s potential vaccine, which uses a novel approach by employing mRNA molecules that send messages to DNA to instigate an immune response to the virus.
- Bill Gates says SK Bioscience, a South Korean pharmaceutical company he has funded, can produce 200 million vaccine doses by next summer.
- The news of the trials beginning came as the White House confirmed that National Security Advisor Robert O’Brien had tested positive for Covid-19.
What’s Next: November is likely the earliest that we will know if Moderna’s possible vaccine has been proven effective, Dr. Fauci said. Even then, some degree of caution will likely be necessary, because it does not appear that any of the vaccines under development provide complete inoculation against Covid-19 infections.
—Ben Walsh
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Two MLB Games Called Off After Coronavirus Infections
Major League Baseball’s season was thrown into disarray after players and staff members of the Miami Marlins tested positive for Covid-19. The league postponed the Marlins’ home opener Monday and a Philadelphia Phillies game against the New York Yankees because Marlins players tested positive before Sunday’s series finale against the Phillies.
- “The health of our players and staff has been and will continue to be our primary focus as we navigate through these uncharted waters,” Marlins’ CEO Derek Jeter said in a statement. “Postponing tonight’s home opener was the correct decision to ensure we take a collective pause and try to properly grasp the totality of this situation.”
- The Marlins played the Phillies knowing their players had tested positive and, manager Don Mattingly told reporters, “never really considered not playing.”
What’s Next: The infections raise the question of whether MLB will be able to pull off its shortened season. While the National Basketball Association is keeping players in a bubble in Walt Disney World and the National Hockey League is sequestered in two Canadian cities, baseball teams are traveling to play at empty ballparks.
—Ben Walsh
***
Fed Meets Amid Economic Uncertainty
Federal Reserve officials will meet today and Wednesday as Covid-19 cases surge in states like Louisiana, Missouri, and Alabama. In the weeks leading up to today’s meeting, central bank leaders have repeatedly warned about the spread of the virus and the impact of rising cases on the U.S. economy.
- In June, Federal Reserve Bank of Dallas President Robert Kaplan said he anticipated “substantial job growth” in June and July, and through the summer, assuming there’s wide adoption of mask-wearing, contact tracing, and other recommended prevention practices in the U.S.
- The Wall Street Journal reports that many Fed officials believe existing plans should provide the U.S. economy with enough support. But how the pandemic continues to unfold could change that. Last Friday’s jobless claims showed an increase in weekly initial claims for the first time since March.
- This will be the first Fed meeting since the Senate Banking Committee advanced Judy Shelton’s nomination, President Donald Trump’s controversial pick to join the Fed’s board of governors. Sen. Susan Collins (R.-Maine) on Monday said she’d join fellow Republican Sen. Mitt Romney (R.-Utah) in opposing Shelton, who could be named by Trump to replace Jerome Powell when his term as Fed chairman expires in 2022 if Trump is re-elected.
What’s Next: Federal Reserve officials are unlikely to roll out new stimulus measures. But that doesn’t mean they won’t consider doing so in the weeks and months ahead.
—Connor Smith
***
Gold Futures Fall After Rally to Record
Gold futures did something on Tuesday they haven’t done in a while—fall. Up as high as $1,974.40 an ounce overnight, gold futures fell to $1,925.60 around 7:30 a.m. Eastern.
- The decline came as the China Gold Association reported demand fell 38% in the first half of the year.
- That setback shouldn’t obscure the rally that has come on concerns over rising government spending which has been offset by aggressive Federal Reserve bond purchase activity. Those fears are only fueled by discussions by U.S. lawmakers on a new round of stimulus, with the Federal Reserve expected to reiterate Wednesday that interest rates will be nearly zero for years to come.
What’s Next: The question that gold traders are asking is whether, or perhaps when, the yellow metal can reach $2,000. Former Fed Chairman Ben Bernanke once told Congress nobody understands gold prices, and that he doesn’t pretend to, either. But gold’s ascent has closely tracked the decline in inflation-adjusted government bond yields.
—Steve Goldstein
***
Congratulations to the winners of our July virtual stock exchange challenge!
1. Kenneth Symons ($151,832.48)
2. Andrew Annese ($149,118.88)
3. Sandeep Reddy ($148,419.25)
Players built a portfolio by investing $100,000 in virtual money over a month and competed against other members of The Barron’s Daily newsletter. Read an edited interview with each of our winners about their strategies below. You can also view their winning portfolios here.
Kenneth Symons, 1st place:
- “I researched over 1000 biotech and pharma companies that were in collaborations for treatments and vaccines, and I narrowed that down to a dozen or so companies which I bought in my own portfolio. So the five companies which I bought in the virtual stock challenge (Altimmune, Vaxart, Vir, BioNtech, Sorrento Therapeutics) were also holdings in my own portfolio.”
- “I read hundreds, if not thousands, of science and business articles since the pandemic began so they all contributed somewhat to my knowledge of biological science and vaccines and biotech and pharma companies. Certainly there were many articles in Barron’s that provided good insight and helped to guide some of my research.”
Andew Annese, 2nd place:
- “Investing in 2020 has ushered in a new paradigm. I attempted to focus my portfolio on Covid testing stocks with strong balance sheets, along with ‘stay at home’ companies. My biggest gamble was Meridian Bio-science (VIVO). They announced orders for ‘millions and millions’ of testing kits. It paid off big time, with a 47 percent gain. And, of course, relying on Barron’s for solid, reliable information every week. Congrats to Kenneth Symons! It was a good battle.”
Sandeep Reddy, 3rd place:
- “My selected portfolio was a subset of my real money portfolio. The ideas generated were taken from an investment blog, The Kirk Report. Tesla was my biggest holding and surprise.”
Are you ready to compete? Our next game starts on Aug. 1. Join the challenge and pick your stocks here.
—Bonnie Bennett Slater
***
—Newsletter edited by Stacy Ozol, Anita Hamilton, Mary Romano, Matt Bemer
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