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 28, 2019.
Key US market indices were down slightly last week, but remain close to all-time highs. The S&P closed the week down 0.27% to close at 2,942 and the Dow Jones fell 0.45% to close at 26,600 as the markets were on hold awaiting news out of the G20 Summit meeting regarding US-China trade tariff discussions. Investors have been concerned that ongoing trade tariffs between the US and China has the potential to slow global economic growth. Overseas markets were slightly positive last week on hopes of progress between the two countries regarding trade concerns. Emerging markets (MSCI EM) were up 0.43% while international developed markets rose 0.67%. For the month of June the materials and energy sectors were the strongest performers; utilities and REITs were the weakest. (1)
The Federal Reserve maintained their dovish posturing and yields on US Treasuries remained low. Interest rates declined slightly last week and the benchmark 10-Year US treasuries finished the week with a 2.00% yield, down 7 basis points. Fixed income investors will be keenly awaiting the July Fed meeting to see if they do indeed lower the Fed Funds rate in reaction to slower economic growth in the US. The US 2-year Treasury yield finished at 1.74% as markets continue to avoid an inverted yield curve. (1)
Oil prices rose 9.3% for the month of June to $58.47 per barrel for West Texas crude reflecting continued sanctions on Iran, Persian Gulf tensions and a decline in US crude stockpiles. Over the weekend both Saudi Arabia and Russia agreed to continue production supply cuts, further bolstering oil prices. (1)
Gold futures remained above $1,400 an ounce as investors continued to bet on easier monetary policy from the Federal Reserve and other central banks. Gold (ETF: IAU), an Endowment Series and Precious Metals strategy holding, ended the week at $1,409. Gold finished up 8.7% for the month as the US dollar weakened and geopolitical concerns continued. (1)
Inflation continues to be modest in the US. Core PCE inflation increased 1.6% year-over-year in May, remaining below the Fed’s long term target of 2%. (2)
The Consumer Confidence Index for June dropped 10 points from May to 121.5. After two consecutive months of the index rising, general consumer sentiment declined, most likely over concerns on escalating trade and tariffs tensions. (3)
Proprietary portfolio happenings:
AbbVie (ABBV), a Core Select and G50 holding, announced they were acquiring Allergan for roughly $60 billion dollars in a transformative acquisition for both companies. Investors reacted negatively to the news driving AbbVie’s stock price down roughly 15% for the day. They are concerned that both companies rely on a single product for a good portion of current revenues. (4)
Citigroup (C), a Core Select and G50 holding, raised its dividend 19% after the annual CCAR (Comprehensive Capital and Analysis Review) was reported. In addition they announced a $17 billion share repurchase program. Yield on the new rate is 2.90%. (5)
Teladoc Health (TDOC), a G33 holding, announced a new CFO last week. Investors reacted positively to the news and the stock was up 4.7% last week. (6)
Did You Know?
Grapes light on fire in the microwave? Back in 2011, a physicist at the University of Sydney went viral after he placed a grape in the microwave and filmed the fiery aftermath. Oddly enough, scientists couldn’t explain the phenomenon until quite recently. A March 2019 study reported that the fruity fireball occurs as a result of the loose electrons and ions that cluster to form plasma when grapes get hot.
Sources: (1) JP Morgan Weekly Market Recap 6/28/19, (2) BEA.gov, (3) Conference Board.org, (4) AbbVie Investor Relations, (5) Citi Investor Relations, (6) Teladoc Investor Relations