Economic Market/Portfolio Happenings
Congratulations to the Virginia Tech Hokies on their first national basketball title!
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 year ended April 5, 2019:
U.S. stocks climbed in the first week of the new quarter, after better-than-exp
ected China manufacturing data calmed lingering concerns about momentum for the world’s second-biggest economy and its impact on the global markets despite uncertainty over Britain's departure from the European Union. Other positive US data during the week (see below) also drove markets higher. The S&P rose 2.09%, the NASDAQ gained 2.73% and the Russell 2000 was up 2.80%. Overseas the international developed markets (MSCI EAFE) rose 2.01% while the emerging markets (MSCI EM) increased 2.58%. In the US materials and financials were the best performing sectors while consumer staples and utilities were the worst performers. (1)
Bond prices fell as interest rates rose, with the 10-Year government bonds ending the week with a 2.50% yield, up 9 basis points. On a year over year basis, rates are down by 27 basis points for the 10-Year while they are higher for than year ago for those maturing in 2 years or less as the yield curve has flattened. (2)
The Chinese manufacturing purchasing managers index rose to 50.8 in March from 49.9 in February, rebounding to a growth trajectory for the first time in four months. Gains for the private gauge came on the heels of China’s official manufacturing PMI released on Sunday, which rose to a six-month high. (3)
Meanwhile, a reading of the eurozone’s manufacturing sector showed its struggles continuing, as the eurozone purchasing manager’s index fell to a below-consensus 47.5, indicating contraction. (4)
In the US durable-goods orders declined 1.6%, better than consensus estimates for a decline of 2.1%, largely because of fewer bookings for commercial aircraft and defense-related hardware, the Commerce Department said. (5)
Weekly initial jobless claims were ahead of expectations. At 202,000, it was the lowest number in 49 years and about 15,000 below consensus estimates. (6) Together with the monthly jobs report, which was also better than expectations, this points to strength in our labor market –with a very low 3.8% unemployment rate – despite concerns about a US economic slowdown. (7) The value of the US dollar vs. other currencies crept up on the news.
Mortgage applications rose a robust 18% for the last week of March, primarily due to falling mortgage interest rates. The index of applications for mortgages on newly purchased homes rose 3% week over week while the index for refinancing rose 39% from the previous week. Mortgage rates fell for the fourth week in a row, with rates for some loan types reaching their lowest levels in 15 months. (8)
Proprietary portfolio happenings:
Delta Air Lines Inc. (DAL), a G50 and Core Select holding, boosted first quarter guidance for revenues and earnings in a pre-release last Monday. Shares rose 11.8% for the week.
Keane Group, Inc. (FRAC), an Energy Sector Focus holding, benefitted from multiple stock upgrades last week in the services subsector of the energy market. Shares rose 9.8% for the week.
Wal-Mart de Mexico (WMMVY), a G40i holding, shares rose 8.8% for the week in response to management’s report that same store sales grew 4.4% year over year, better than the consensus estimated growth of 2.7%.
Did You Know...You won’t find much more than a general store and part of a gas station in Nothing, Arizona – a desert stop 120 miles from Phoenix. Nothing was incorporated in 1977 as a way of injecting some humanity into a stretch of US 93, but its residents didn’t find it too hospitable: the last of them moved out after a pizza parlor failed to attract passing truckers. The name became prescient, and there are currently no known occupants. In June 2016, Nothing was subject to a publicity stunt in which free patches of land could be given out to dads on Father’s Day. Approximate value? Nothing.
Sources: (1) JP Morgan Weekly Market Recap 4/8/19, (2) US Treasury Daily Treasury Yield, (3) Marketwatch.com “China Manufacturing Activity Hits 6 month High” 3/31/19, (4) Markit Economics 4/5/19, (5) US Census Bureau 4/2/19, (6) US Department of Labor 4/1/19, (7) Bureau of Labor Statistics 4/5/19, (8) Mortgage Bankers Association 4/3/19