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 April 18, 2019. Note the markets were closed on the 19th in observance of Good Friday.
The stock markets were mixed last week, with the S&P down 0.07%, the Russell 2000 down 1.20% and the NASDAQ up 0.17%. In the US the industrials and technology sectors made the greatest gains while losses in health care stocks from proposed healthcare legislation pressured the markets downward. Overseas, the emerging markets and the developed markets made similar gains, up 0.34% and 0.35%, respectively. Positive economic data out of China helped drive stocks overseas markets higher. (1) (See Economic Data below.)
As first quarter earnings season unfolds, we have seen 15% of the S&P companies report so far. Of those, 78% logging a positive earnings surprise—which is above the five-year average. (2)
Interest rates rose modestly last week as values declined modestly, with the benchmark 10-year treasuries closing at a 2.57% yield, up 1 basis point for the week but well of their 2.39% closing lows just three weeks ago. (3) Evidence of recent success from China’s central bank actions spurred a selloff in “safe haven” fixed income securities in favor of more risk-oriented securities.
Oil prices continued to climb with West Texas Crude finishing the week up 0.17%. (4) With this morning’s announcement by the US that sanctions on oil produced in Iran would be tightened, global oil prices are rising again today to new highs for the year.
China’s first quarter economic growth of 6.4% was one tenth above expectations. Additionally, March indicators surprised to the upside. Data confirms what investors were hoping to see and should bode well for economic growth data out of Europe in the coming weeks. (1)
Sales at U.S. retailers surged in March by the most in a year and a half, the latest in a string of reports suggesting the economy is firming up after a soft spell of growth earlier in the year. Retail sales gained 1.6% last month, well ahead of the MarketWatch consensus estimate for 1.1% growth. Sales at auto dealers jumped 3.5%, the second big increase in a row. Online sales jumped 11.6% while sales at brick and mortar stores were flat. (5)
Proprietary portfolio happenings:
ABB Ltd. (ABB), a G40i holding, reported a beat to revenue and earnings estimates. Additionally, their chief executive stepped down, giving encouragement to improving management capabilities. Shares rose 6% for the week for this Zurich based manufacturer of electrification products, robotics, industrial automation and power grid products.
Netflix (NFLX), a G33 and Core Select holding, reported revenues and earnings that were ahead of expectations. Importantly, subscription growth was ahead of expectations both in the US and abroad. (6) Although current quarter guidance was lowered, we believe it is part of a pattern of conservative guidance which has been exceeded in final reports. Shares rose 3% for the week.
United HealthCare Group (UNH), a Core Select strategy holding, reported strong sales and earnings growth that beat expectations and raised guidance for the full year. Shares declined due to concerns around politicians that are calling for free health care in the US. Shares are now down 13% in the last month.
Did You Know...The Christian Easter Sunday always occurs between March 22 and April 25, since the date is set according to the phases of the moon, as is the Jewish holiday of Passover. It is believed by some that Easter was named after the Anglo-Saxon goddess, Eastre, whose symbols were the egg and the hare (rabbit). However, the Easter egg itself was defined by early Christians as symbolic of the resurrection of Jesus: the egg was likened to the tomb from which Christ emerged.
Sources: (1) JP Morgan Weekly Market Recap 4/22/19, (2) FactSet Earnings Insight 4/18/19, (3) US Treasury, (4) Goldman Sachs Market Monitor 4/22/19, (5) US Census Bureau 4/18/19, (6) ABB Ltd. Press release 4/17/19, (7) Netflix press release 4/16/19, (8) United Health Group press release 4/16/19