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Mystery Solved: Who is the Nasdaq Whale?

Nasdaq whale

There is good news and bad news regarding the coronavirus. Let me start with the good news . . .

The head of the World Health Organization (WHO) says he hopes the coronavirus pandemic will be over in under two years.

Speaking in Geneva, Tedros Adhanom Ghebreyesus said the Spanish flu of 1918 had taken two years to overcome. But he added that current advances in technology could enable the world to halt the virus “in a shorter time.”

“Of course, with more connectiveness, the virus has a better chance of spreading,” he added.

However, Professor Sir Mark Walport, a member of the UK’s Scientific Advisory Group for Emergencies (Sage) said that Covid-19 was “going to be with us forever in some form or another.”

“So, a bit like flu, people will need re-vaccination at regular intervals,” he said.

And now for the bad news . . .

As we complete the Labor Day weekend, our country is sadly still averaging about 40,000 new coronavirus infections a day.

Back on the Memorial Day weekend, the number of new coronavirus infections averaged only 22,000 a day.

So, in effect, the two holidays sandwiched a summer of disappointment and lost opportunity in combating the virus.

It’s easy to see why.

Consider the annual Sturgis Motorcycle Rally. The rally was held from Aug. 7 to Aug. 16. It drew about 500,000 motorcycle enthusiasts to Sturgis, South Dakota.

It also had an uninvited guest – the coronavirus.

That “guest” had a great time and turned it into a superspreader event.

The first preliminary scientific study has been conducted on the effects of Sturgis.

The researchers estimated the Sturgis rally led to over 250,000 new coronavirus infections. If true, it will be the worst superspreader event of the U.S. pandemic by far.

The fact is that the U.S. failed to tamp down the virus before the autumn sets in. That’s when we will see the start of the flu season and children going back to school.

All of this takes place at a time when the colder weather forces people indoors where the virus spreads quite easily.

That should keep healthcare stocks on the front foot for a long time. And new biotech stocks are key to finding a long-term solution to the virus.

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The Big News

Trump, Biden Accuse Each Other of Politicizing the Virus

President Trump and his Democratic rival Joe Biden have accused each other of politicizing a Covid-19 vaccine. This threatens to undermine the public confidence that is required to ensure enough people take the inoculation when it is available. For their part, the nine leading pharmaceutical companies working on COVID-19 vaccines were forced into an unprecedented action. All of them pledged to only seek approval for Covid-19 vaccines demonstrated to be safe and effective. In a statement, the companies pledged to “make the safety and well-being of vaccinated individuals our top priority.”

Jobs Gone Forever

Many companies that have been hit particularly hard by the pandemic are turning temporary furloughs into permanent layoffs. Well-known companies including SeaWorld, Royal Caribbean Cruises and American Airlines are making layoffs permanent. This is showing up in the economic statistics. Job growth slowed in August, as more people reported that they had lost their jobs permanently. If recent corporate filings are a guide, this trend seems locked in for the foreseeable future.  

College Towns Become Virus Hotspots

About 100 college communities across our country have experienced a sharp rise in coronavirus infections in recent weeks. This occurred as students returned for the fall semester. The spread of the virus off-campus is affecting workplaces,  other schools and other institutions in these communities. At least 51,000 coronavirus cases and 60 deaths from the virus can be traced to U.S. colleges and universities.    

Children May Carry Virus Longer Than Adults

Researchers at the Children’s National Hospital in Washington analyzed the medical records of more than 60 children who had been tested multiple times for Covid-19. They found the median time it took to test negative was 25 days. The median is 20 days for adults. Researchers also found the median time to develop antibodies from the coronavirus infections was 18 days for children versus adults, who usually had antibodies in 10 to 15 days.   

Doubts Cast On Convalescent Plasma

A panel of experts convened by the National Institutes of Health said there was insufficient evidence to support the use of convalescent plasma. “There are currently no data from well-controlled, adequately powered randomized clinical trials that demonstrate the efficacy and safety of convalescent plasma for the treatment of Covid-19,” the panel said in a statement. FDA head Dr. Stephen Hahn was forced to retract his claim that plasma treatment would have saved the lives of 35 out of 100 patients. Data suggest that figure is closer to five out of 100.

Inside the Confidential Airbnb IPO

WSJ reports that Airbnb plans a secret +$18 billion IPO. That means the Silicon Valley giant is keeping details 100% confidential. Get details here: Inside Airbnb’s Confidential IPO.

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The Coronavirus Numbers

Here are the numbers from Tuesday at 8 a.m. ET from Johns Hopkins University:

  • 27,356,706 Coronavirus Infections Worldwide
  • 893,005 Deaths
  • 6,301,451 Infected in the U.S.
  • 189,221 Deaths in the U.S.

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What’s Next

The major market news is that the “Nasdaq whale” has been identified.

Everyone had wondered what had sent technology stocks on a parabolic journey higher recently.

A major institutional buyer – the Nasdaq whale –  had done never-before-seen massive buying of call options on a large number of tech stocks.

This action by the Nasdaq whale sent stocks like Tesla and Apple soaring. Here’s why . . .

Dealers, which include big banks such as Goldman Sachs and market makers like Citadel Securities, would be exposed to losses on call options if share prices spike and they are not hedged.

So, to hedge that risk, dealers purchase the underlying stock, so they do get a piece of any share price spike. Their buying, in turn, pushes up the underlying stock, creating a self-fulfilling cycle of higher prices.

Who is the Nasdaq Whale?

The Nasdaq whale turned out to be the world’s No. 1 investor in technology start-ups – Japan’s Softbank, which is headed by Masayoshi Son. The Nasdaq whale is the guy that lost $70 billion when the dot-com bubble burst.

Softbank had snapped up calls on the well-known technology stocks in the last month in huge amounts. Its buying led to the largest-ever trading volumes on in option contracts linked to individual stocks.

But now that Son has been found out as the Nasdaq whale, he knows his position is at risk to attacks from other big players.

The Nasdaq whale may now be liquidating. That will lead to continued downside pressure on the tech darlings.

Add this giant speculative position to the coronavirus pandemic . . .  and Fed Chairman Jerome Powell’s job has just gotten a lot tougher.

That leaves us with the reality that interest rates are likely to stay low for many years.

That was backed up in remarks by Powell. In a Friday interview with NPR, Powell said, “We think the economy’s going to need low interest rates, which support economic activity, for an extended period of time.”

Powell added, “It will be measured in years.”

The statement aligns with the Fed’s recent change in policy.

In a break with the past, the Fed now will no longer hike rates in order to stop a rise in inflation.

More easy money is likely in the cards.

Powell said the Fed is likely not done with monetary accommodation: “We’ve done a lot of things we can do, but we can do more and we will do them as we see the need for that.”

That means, over the medium-term, the market will continue to do well . . . particularly for exciting new companies coming to market.

Go here to discover the Pre-IPO secret being used on Wall Street.  

Yours in Health & Wealth,

Tony Daltorio

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