Economic Market/Portfolio Happenings
Hello and welcome to this week’s Jones Financial Blog! Our goal at Jones & Associates is to help keep you up to date with interesting current economic/market happenings as well as some proprietary portfolio happenings. Knowledge is power and thought we would share some of ours with you. Enjoy!
All data is for the week ended March 29, 2019:
Stocks rose across the major US indices buoyed by optimism on trade tariff talks with the Chinese, while overseas markets were virtually flat. The S&P rose 1.23% while the Dow Jones rose 1.67%, the Russell 2000 gained 2.32% and the NASDAQ increased 1.15%. In overseas markets the developed countries index (MSCI EAFE) edged down 0.04% as the emerging markets (MSCI EM) weakened by 0.06%. Within the S&P industrials and materials were the best performing sectors while utilities and communication services were the poorest performers. For the first quarter US stocks logged their best quarterly return in nearly 10 years led by small capitalization and large capitalization securities. (1)
Yields fell on rising demand for bonds, with the benchmark 10-Year US treasuries ending the week at 2.41%, down 3 basis points from the prior week and down 28 basis points since year end. Overseas, yields on the German government 10-Year bond dropped from 0.24% at the start of the year to negative 0.07%. (1)
West Texas crude oil rose 1.9% last week to close at $60.17 per barrel. (2) Our government has instructed global oil trading houses and refiners to further cut dealings with Venezuela or face sanctions themselves, even if the trades are not strictly prohibited by existing US sanctions. Year to date the “black gold” has advanced 32.7%. (2)
Economic growth (GDP) in the US was revised down to 2.2% from the 2.6% original estimate. Most categories of spending were revised lower. However, the increase in real GDP in the fourth quarter reflected positive contributions from personal consumption expenditures, commercial fixed investment, exports and federal government spending, especially defense spending. (3)
Consumer sentiment as measured by the University of Michigan improved to 98.4 from 93.8 in the prior month. This was a major rebound from the read of 91.2 in January. Households with incomes in the bottom 2/3 of the income distribution were the most optimistic with more widespread income gains and lower expectations of inflation. All income groups reported more optimism for the overall economy. (4)
Proprietary portfolio happenings:
Carnival Corporation (CCL), a G50 holding, reported strong revenue and earnings beats versus expectations. However, guidance was below expectations as the cruise line holding company said fuel costs and foreign currency translations would drag down the earnings growth rate in the current quarter. Management is still guiding to 5.5% organic revenue growth in this quarter. Shares were down 10.1% for the week. (5)
WellCare Health Plans (WCG), a G33 and Core Select holding, agreed to an offer to be acquired by Centene (CNC) for a combination of cash and Centene stock at an implied premium of 32% based on the closing price in the prior day’s stock trades. Shares of this managed health care company rose 11.5% for the week. (6)
Did you know…
April Fools’ Day in Scotland involves calling someone an April “gowk” meaning a cuckoo, a sign of a simpleton. In England, a fool is called a gob, gawby or gobby. In France, the victim of a hoax is called an April fish or “poisson d’Avril”, referring to a young fish— thus one easily caught. There, you must watch your back to avoid someone pinning a fish to it. Often there are pranks which trick the victim into placing calls to fish shops or the local aquarium.
Sources: (1) JP Morgan Weekly Market Recap 4/1/19, (2) OilPrice.com, (3) US Bureau of Economic Analysis 3/28/19, (4) University of Michigan Survey of Consumers, (5) Carnival Corp. press release 3/26/19, (6) WellCare Health Plans sarapress release 3/27/19