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 July 5, 2019.
Equities rose in major markets around the world, but especially in the US following the president’s lift of proposed tariffs on Chinese imports during the meeting of major countries in Osaka, Japan. The S&P rose 1.69%, the NASDAQ was up 1.96% and the Russell 2000 rose 0.59%. Overseas stocks in the international developed markets (MSCI EAFE) rose 0.52% while the emerging markets (MSCI EM) advanced 0.69%. The best performing sectors in the US were communications services and real estate while industrials and energy were the worst performers. (1)
Interest rates rose slightly and bond prices fell slightly, with the benchmark 10-year US treasuries closing the week with a 2.04% yield, up 4 basis points. (1) Based on a strong jobs report on Friday, investors are focused on the Fed chair’s testimony to Congress on Wednesday to see whether the Federal Reserve is likely to cut interest rates later this month as many had been expecting.
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)
Higher interest rate expectations are lifting the US dollar which pressures commodity prices since commodities quoted in dollars are worth less when the dollar becomes more expensive. Thus, despite tightening supplies out of OPEC countries, West Texas crude dropped 3.4% to close at $57.42 per barrel. (1)
Copper prices rose sharply on July 1 due to constructive tariff talks between the US and China as this industrial metal would benefit from increasing industrial output globally. However, it closed down 0.54% for the week and stands 6.12% below the close at year end as stockpiles reached a one year high while demand has not picked up. (2)
The June US jobs report was stronger than expected, with payrolls growing by 224,000 last month following a weak report in May. The unemployment rate now stands at a very low rate of 3.7%. Manufacturing added jobs at the fastest rate since January. Wage growth (average hourly earnings) rose 3.1% on a year-over-year basis, unchanged from the rate of the past few months. June marked the 10th anniversary of the official end of the great recession.
Proprietary portfolio happenings:
Copa Holdings (CPA), a G40i holding, rose following news that air traffic in Brazil was ahead of expectations for an airline that flies similar routes as Copa. (4) Shares in Copa were up 5.9% for the week.
Las Vegas Sands (LVS), a G50 holding, stock rose 4.7% on strong June casino reports for Macau which represents the vast majority of earnings for this gaming company. Gross revenues from Games of Fortune were up 5.9% versus expectations of just 1-2%. (5)
Six Flags Entertainment (SIX), a G50 holding, rose 7% last week as attendance trends look to be better than expected and the stock got an upgrade from a Wall Street firm which also cited signs of progress with upcoming parks in China. (6)
Did You Know?
A group of flamingos is known as a flamboyance.
Flamingos fly up to 37 mph.
Flamingos are born white—they get their color from shrimp and other food sources.
The first plastic lawn flamingos were created in 1957
Sources: (1) JP Morgan Weekly Market Recap 7-8-19, (2) Reuters “Metals- Copper Falls on weak demand outlook, inventory pile up” 7-4-19, (3) Bureau of Labor Statistics 7-5-19, (4) Wall Street Journal 7-4-19, (5) Macau Government 7-1-19, (6) Yahoo Finance “KeyBank Upgrades Six Flags” 7-1-19