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 November 1, 2019.
The S&P 500 closed at a record high on Friday after Chinese tariff talk spooked the markets on Halloween when Chinese government officials cast doubts that a longer-term comprehensive trade deal with the U.S. could occur as they approach a “phase one” pact. Later in the week, markets strengthened on news that jobs continued to rise, faster than expected. Over two-thirds of the S&P companies have reported quarterly results and 75% of those have beaten earnings estimates.
The S&P rose 1.49%, the Russell 2000 added 1.99% and the NASDAQ gained 1.74%. Overseas the developed markets (MSCI: EAFE) rose 1.19% and the emerging markets (MSCI: EM) increased 1.75%. In the US health care and industrials were the best performing sectors while real estate and energy were the only sectors that declined. (1)
Interest rates declined slightly as values rose, with the benchmark 10-year Treasuries ending the week with a 1.73% yield, down 7 basis points. (1) The yield curve maintained its positive slope, indicating a positive outlook for economic growth.
West Texas Crude oil was virtually flat for the week after lower than expected demand was reported by the Energy Information Administration. (2) Offsetting reduced demand, the U.S. oil rig count was reported down 21% year over year after recording ten weeks of decreases. (3)
The US economy increased 2.0% in the third quarter on a year over year basis, decelerating slightly from the 2.3% rate of the prior quarter but beating consensus expectations of a 1.6% gain.3 Consumers continued to spend, with personal consumption expenditures rising 0.2% in September, unchanged from the prior month. (4)
The 128,000 job gain for October topped estimates for 89,000, and unemployment held fairly steady at 3.6%. Additionally, there were strong upward revisions to August's and September's reports while wages continued to gain at a 3% year over year pace. (5) A further sign of consumer confidence, pending home sales rose 6.3% for September on a year over year basis. (6)
Proprietary portfolio happenings:
Amgen (AMGN), a G50 holding, rose 7.3% based on a) their strong quarterly report of revenues and earnings and b) their new partnership with a Chinese oncology-focused biotech firm. (7)
AbbVie (ABBV), a G50 holding, shares rose 6.8% following announcements of revenues and earnings that beat expectations based on new product successes and raised the dividend by 10.3%. (8) Yield on the new dividend is 5.77%.
AT&T (T), a G50 holding, announced earnings that beat expectations and that it will actively review its portfolio of operations to realize $5-10 million from non-core assets. Additionally, it will continue to refresh its board of directors. (9) Shares rose 5.5% for the week.
eHealth (EHTH), a G33 holding, shares rose 21.6% following a period of decline as the market digested the prior week’s earnings report that was very solid and ahead of expectations. (10)
Teledoc (TDOC), a G33 holding, shares gained 12.4% following their report that revenue and earnings were ahead of expectations and issued upside guidance for the coming quarter. (11)
Did You Know? Popeye the sailor made his comic strip debut 90 years ago. Originally one of many characters drawn in a comic strip by Elzie Segar, Popeye was a one-eyed, 34-year-old, odd-looking sailor with a severe speech issue who was born in a typhoon in Santa Monica, California. This character quickly became so popular that they changed the name of the strip to “Popeye”.
Sources: (1) JP Morgan Weekly Market Recap 11-4-19, (2) Oilprice. com, (3) Baker Hughes Rig Count 11-1-19, (4) US Department of Labor 11-1-19, (5) Commerce Department 10-31-19, (6) National Association of Realtors 10-29-19, (7) Amgen press release 10-29-19 and 11-1-19, (8) AbbVie press release 11-1-19, (9) AT&T press release 11-28-19, (10) eHealth Inc. press release 10-24-19, (11) Teledoc Health Inc. press release 10-30-19