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 8, 2019.
Markets around the world advanced on Friday after both Chinese and US leaders said their negotiators agreed to remove some of the additional tariffs in phases, signaling a potential trade truce could go beyond a freeze on new duties and increase global trade. Now we await confirmation from our president and the Chinese premier. For the week the S&P rose 0.93% to a new record, the Russell 2000 gained 1.37% and the NASDAQ advanced 1.11%. Overseas the developed markets (MSCI EAFE) increased 0.54% and the emerging markets (MSCI EM) added 1.50%. By sector, financials and energy were the best performers last week and utilities and real estate were the laggards. (1)
Yields are rising across the board on the strong economic data, expectations of increased global trade and stock market gains. Rates on long-dated maturities have increased significantly in the past three months. Last week the 10-year Treasury yield rose 19 basis points to 1.94%, the highest since late July. One month ago, the 10-year yield was at 1.54%. (2) The futures market indicates that bets are off for more rate cuts, with just a 50% chance of a rate increase at some point over the next year. (3)
The price of Gold (GLDM), a Precious Metals and ETF Endowment Series holding, declined 3.63% last week on expectations of increased global economic activity due with the anticipated US-China trade agreement. Typically a safe haven asset, gold is up 13.31% year to date. (4)
Weekly initial jobless claims of 211,000 were below estimates and reflect an 8,000 drop from the prior week. Those already collecting unemployment benefits (continuing claims) fell by 3,000 to the lowest level since the early 1970’s. (5) The pace of layoffs and the unemployment rate remain near a 50-year low which has been encouraging to consumer confidence and spending.
The services sector indicator rose to 54.7 in October from a near three year low of 52.6 in the previous month and ahead of expectations of 53.5. The sub-sectors of employment, activity and new orders all rose at faster rates. (6)
Proprietary portfolio happenings:
The Walt Disney Co. (DIS), a Core Select holding, reported revenues and earnings that exceeded expectations. Management’s detailed plans for its streaming service launch was well received by investors, also. (7) Shares rose 3.9% for the week.
EOG Resources (EOG), an Energy Select holding, reported higher oil production and meaningfully lower operating expenses than expected with lower capital spending plans. (8) Shares rose 5% for the week.
Expedia Group (EXPE), a G33 holding, disappointed with its quarterly results and its growth outlook. (9) The shares dropped 26.5% for the week. This holding is currently under review.
Malibu Boats Inc. (MBUU), a G33 holding, reported revenues and earnings that exceeded low Wall Street expectations. (10) Shares rose 17.1% last week.
Virtusa Corp. (VRTU), a G33 holding, reported a slight beat to expectations and indicated a return to growth for its largest client along with strong growth at other clients, particularly for its digital engineering consulting services. (11) Shares were up 10.5% for the week.
Did You Know? The entire world's population could fit inside Los Angeles. The world's total population is more than 7.5 billion, which sounds huge. However, it might feel a little more manageable knowing that if every single one of those people stood shoulder-to-shoulder, they could all fit within the 500 square miles of Los Angeles, according to National Geographic.
Sources: (1) JP Morgan Weekly Market Recap 11-11-19, (2) US Treasury, (3) CME Group 30 Day Federal Funds Futures 11-8-19, (4) Morningstar, (5) US Department of Labor 11-7-19, (6) Trading Economics, (7) Walt Disney Co. press release 11-7-19, (8) EOG Resources press release 11-6-19, (9) Expedia Group press release 11-6-19, (10) Malibu Boats press release 11-7-19, (11) Virtusa press release 11-7-19