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 September 20, 2019.
The major stock indices were down last week, with the S&P down 0.49%, the Russell 2000 pulling back 1.04% and the NASDAQ declining 0.71%. Overseas, international developed markets were down 0.35% and emerging markets declined 0.45%. Utilities and real estate were the best performing sectors in the US while the consumer discretionary and industrials sectors were the poorest performers. (1)
The Federal Reserve cut interest rates by 25 basis points to the 1.75-2.00% range last Wednesday as widely anticipated. This decision was part of its ongoing mandate to foster maximum employment and price stability in the light global developments. The Fed chair signaled that it could stop there, a more hawkish position than markets had anticipated. Also, the rate the Fed pays on excess bank reserves will drop by 5 basis points to 1.80% in an effort to encourage banks to increase lending activities. (2) The US dollar gained strength against other major currencies on the news.
West Texas crude oil rose 5.9% last week following major attack on Saudi oil fields by the Iranians. (3) Given the major US production in recent years, the impact was far less than any other time in recent decades.
US industrial output rose 0.6% in August, well ahead of expectations for a 0.3% gain. This gain was the best rate in twelve months and relieves concerns that the manufacturing sector could be a drag on our economy. (4)
Housing starts jumped 12.3% month over month, well ahead of a 1.5% expected gain. On a year over year basis, starts advanced 6.6%. Lower mortgage rates (down 1.3% points in recent weeks) appear to be capturing some pent-up demand. Additionally, new single family home building permits rose 4.5% indicating a period of good building growth for the next several months. (5)
Proprietary portfolio happenings:
Cracker Barrel Old Country Store, a G50 holding, reported sales and earnings that were ahead of expectations and guided fiscal 2020 core results higher than consensus expectations.6 Shares rose 1.1% for the week on the news.
Gold Miners ETF (GDX), a Precious Metals holding, saw its price rise 7.7% last week following presentations from mining executives at the Denver Gold Forum. The unified message was that gold producers need to maintain discipline in both capital and production (thus leveraging the benefits from rising gold prices). (7)
JP Morgan Chase (JPM), a Core Select and G50 holding, announced a 12.5% increase to its dividend. (8) At the new rate, shares yield 3.03%.
Microsoft (MSFT), a Core Select holding, declared an 11% dividend hike payable in December. The board also approved a plan to buy back $40 billion or 4% of its shares. (9) At the new rate the share yield 1.47%.
Did You Know? The latest method for constructing super-high skyscrapers is to leave a floor open – a so-called blow-through floor – near the top. An example of this is the Vista Tower currently under construction in Chicago. The 101-story building will have such a blow-through floor on the 83rd level, covered with a screenlike perimeter wall that will allow Chicago’s famous winds to whip right through the space while cutting wind-induced sway through the building.
Sources: (1) JP Morgan Weekly Market Recap 9-23-19, (2) Federal Reserve FOMC Statement 9-18-19, (3) Oilprice.com (4) Federal Reserve Industrial Production 9-17-19, (5) US Census Bureau 9-18-19, (6) Cracker Barrel Old Country Store Inc. press release 9-17-19, (7) Bloomberg, “Pricey Gold Doesn’t Mean Fancy Food for Miners” 9-17-19, (8) JP Morgan Chase & Co. press release 9-17-19, (9) Microsoft press release 9-18-19