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 June 14, 2019.
Most stock markets were up slightly despite China’s reported industrial output that was well below expectations, indicating trade tariffs with the US were impacting Chinese – and perhaps other international – economic growth. The S&P rose 0.53%, the Russell was up 0.58% and the NASDAQ rose 0.73%. Overseas, international developed markets declined 0.26% while emerging markets were up 0.90%. In the US the consumer discretionary and communications services were the best performing sectors while industrials and energy were the poorest performers. (1)
The Federal Reserve is set to meet next week; consensus expectations are for no change to their interest rates, but commentary may be key to market rates going forward. Bond prices were flat for the week, with the benchmark 10-Year treasuries ending with a 2.09% yield. (2)
Oil prices were forced higher by Thursday’s attacks on two oil tankers in the Persian Gulf. However, prices ended the week with a mere 0.4% gain to $52.51 per barrel on worries that sluggish global economic growth would hurt demand. (3)
Corn futures settled at their highest in five years, up 9% for the week, lifted by expectations for a decline in U.S. corn production. This week a survey by the U.S. Department of Agriculture indicated U.S. corn production for the coming year could decline by 1.4 million bushels to 13.7 billion due to the ongoing impact of spring flooding in the Midwest. (4)
Homeowners rushed to refinance their old mortgages to take advantage of a drop in interest rates. As the 30-year rate dropped to 4.12% from 4.42% at the start of May, applications to refinance home loans rose 47% during the week of June 7 from the prior week while applications to purchase homes rose by 10%. (5)
Retail sales for May were ahead of expectations, easing worries of a weakening US economy as retail sales advanced for the third month in a row. Sales rose 3.2% year over year last month when excluding more volatile vehicle & gas sales. Online sales rose 11.4% while brick & mortar store sales declined on a year over year basis. The prior month’s report was also revised upward. (6)
Proprietary portfolio happenings:
Facebook Inc. (FB), a G33 holding, revealed its plans to introduce a cryptocurrency, having enlisted more than a dozen companies which will each invest around $10 million into a consortium that will govern the newly created coin. The new currency is planned to be pegged to a basket of government-issued currencies. (7)
Raytheon Co. (RTN), a G50 holding, announced an all-stock merger of equals with United Technologies (UTX). The combination will create a behemoth producer of aerospace and defense systems with annualized revenues of $74 billion. The deal is expected to close in mid-2020. Shares were down 4.6% for the week. (8)
TeleDoc Health (TDOC), a G33 holding, rose 5.3% for the week following initiation of coverage from a major Wall Street brokerage firm with a positive rating. (9)
Did You Know?
The month of June is named after the Roman goddess Juno, the wife of Jupiter and queen of the gods. The month was held sacred to her and thought by the Romans to be the luckiest month for marriage, since Juno was the Goddess of Marriage. This is also the month of the Summer Solstice, the day with the longest daylight of the year on June 21st when the sun sets at 8:48 pm in Rome.
Sources: (1) JP Morgan Weekly Market Recap 6/17/19, (2) U S Department of the Treasury, (3) Oilprices.com, (4) U S Department of Agriculture 6/10/19, (5) Mortgage Bankers Association 6/12/19, (6) U S Commerce Department 6/14/19, (7) Reuters.com 6/13/19, (8) Raytheon Co. press release 6/9/19, (9) TheFly.com