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 12, 2019.
US stock markets were mixed last week. Large cap stocks continued their strong run to the year as the S&P 500 was up 0.82% and the Dow Jones Index was up 1.54%. Small cap stocks were slightly down with the Russell 2000 Index down 0.34%. International markets were also down slightly for the week, as International Developed stocks (MSCI EAFE) were down 0.54% and Emerging Markets (MSCI EM) were down 0.75%. From a sector perspective, Consumer Discretionary stocks were the strongest for the week while Health Care stocks lagged. (1)
Speaking before Congress, Federal Reserve chair Powell set the stage for the first U.S. interest rate cut in a decade later this month, pledging to "act as appropriate" to defend an economic growth in the US that is threatened by trade disputes and a global slowdown. With exceedingly low unemployment, low inflation and indications of solid economic growth in the first half, this possibility of a rate cut is seen by many economists as “insurance” against a slowdown rather than a response to deteriorated conditions. Treasury yields fell, and the US dollar weakened on expectations that our central bank will cut rates in July. (2)
Oil prices, as measured by WTI Crude, were up slightly on the week to finish at $60.21. Over the last four weeks, US inventories have been falling. This, combined with persisting tensions in the Middle East, has been a tailwind for oil prices. (3) Gold prices continued their strong recent rally, finishing slightly higher on the week. IAU, a widely used Gold ETF, is now up 10.17% year-to-date. (4)
Underlying consumer prices, measured by Core CPI, rose by the highest level in nearly 18 months in June. Strong increases in apparel, used cars and trucks, and household furnishings were the catalysts for the 0.3% month-over-month increase. Despite rising data, the Core PCE price index, which the Fed uses to gauge overall inflation, remained below the 2% target as of the last reading in May. (5)
Proprietary portfolio happenings:
Delta Air Line (DAL), a G50 holding, reported revenues & earnings that exceeded expectations based on healthy growth in leisure and corporate travel. Management also raised guidance for the full year as they are seeing particular strength in the domestic reservations. The board declared a 15% dividend increase. (6) Shares rose 3.84% for the week.
Square Inc (SQ), a G33 holding, was up over 12% last week on a Wall Street analyst report that the debit card business is beginning to gain traction and could become a material source of future revenue for the fintech company. (7)
Did You Know?
A woodpecker’s brain is protected by a spongy elastic material between their bill and their skull that holds their brain snugly and provides a cushion. This keeps their brains from getting injured while they bang away at a tree at a remarkable rate and force. For instance, the pileated woodpecker can strike a tree trunk at around 20 times per second, with around the same force as if you would hit your face against a wall at around 16 miles per hour. They do this around 12,000 times a day on average.
Sources: (1) JP Morgan Weekly Market Recap 7-15-19, (2) Federal Reserve Semiannual Monetary Policy Report to the Congress 7-10-19, (3) Marketwatch.com, (4) Morningstar.com, (5) CNBC.com, (6) Delta Air Lines press release 7-11-19, (7) Marketwatch.com