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 27, 2019.
Stock prices fell across the major indices last week with the higher risk stocks hurt the most. The benchmark S&P was down 0.98%, the Russell 2000 dropped 2.45% and the NASDAQ declined 2.18%. Overseas the developed markets (MSCI EAFE) were down 0.62% while the emerging markets (MSCI EM) were down 1.86%. Trade tensions continued to weigh on the outlook for manufacturing around the world. In the US small cap growth stocks suffered the biggest declines. The best performing sectors were consumer staples and utilities while health care and energy were the poorest performers. (1)
Interest rates dropped and values rose across all US fixed income maturities, with the benchmark 10-year government bond yields declining 5 basis points to 1.69%. The yield curve remained positive, with longer maturities offering higher yields as overseas central bankers guided rates lower in the coming months. (1)
Oil prices dropped after easing tensions in the Middle East while Saudi production is to resume earlier than expected following drone attacks in Middle East. Additionally, China - U.S. trade tensions continued to put pressure on oil prices as U.S. exports are expected to be weak. West Texas crude declined 3.8% for the week to $55.90 per barrel. (2)
US economic growth for the last quarter was reiterated at 2.0%, in line with expectations. (3) US pending home sales (signed contracts but before closing) rose 1.6% in August on a month over month basis and rose 2.5% year over year. This marks a reversal in the recent slump for contract signings, with the West leading the other regions with a 3.1% month over month. (4)
Manufacturing activity in the eurozone contracted more sharply in September, according to a first indication, with its worst reading in nearly seven years. The flash eurozone manufacturing purchasing managers index (PMI) fell to 45.6 in September, down from 47 in August and compared to expectations of 47.3 Any report less than 50 indicates activity declined. Germany, the biggest economy in the eurozone, reported its worst figures in more than a decade. It has been vulnerable to the deterioration of global conditions, drawing concerns that the export powerhouse will record its second consecutive quarter of negative growth from the June to September period, which would qualify as a technical recession. (5)
US manufacturing for August was better than expected, with a flash (initial) index report of 51 versus expectations of 50.3. (6)
Proprietary portfolio happenings:
Carnival Cruise Lines (CCL), a G50 holding, reported revenues and earnings that beat consensus estimates but lowered guidance for the current quarter, sending the share price lower.6 CCL closed down 9.6% for the week.
Insulet Corp. (PODD), a G33 holding, shares rose 5.2% on news that the Federal Food & Drug Administration approved Insulet’s new Alternate Controller Enabled Infusion Pump (ACE Pump) allowing it to market its Omnipod DASH system as an integrated insulin pump system. ACE Pumps can deliver insulin at set or variable rates.
Did You Know? The practice of saying “o’clock” is a remnant of much simpler times when clocks weren’t prevalent and people told time by a variety of means, depending on where they were and what references were available. Until the 1300s the sun had been used as a reference point, with solar time being slightly different than clock time since sundials vary hour lengths based on the seasons. Thus, to distinguish the fact that one was referencing a clock’s time, people would say, “It is six of the clock,” which later got slurred down to “six o’clock”.
Sources: (1) JP Morgan Weekly Market Recap 9-30-19, (2) Oilprice.com, (3) US Bureau of Economic Analysis 9-26-19, (4)National Association of Realtors 9-26-19, (5) IHS Markit press release (Eurozone) 9-23-19, (6) IHS Markit press release (US) 9-23-19, (7) Carnival Cruise Lines press release 9-26-19, (8) Insulet Crop. press release 9-23-19