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 15, 2019.
US markets made new highs following statements by both the White House economic advisor and the Commerce Secretary that China and the US were getting close to a trade agreement. The S&P made a new all-time high, up 0.94% for the week, while the Russell 2000 was down 0.10% and the NASDAQ gained 0.77%. Overseas, the developed markets (MSCI EAFE) added 0.08% while the emerging markets index (MSCI EM) dropped 1.51%-- reversing its gain from the prior week. In the US the health care and utilities sectors were the best performers as financials and energy lagged. (1)
Interest rates declined as values rose, with the benchmark 10-year Treasuries ending the week with a 1.84% yield, down 10 basis points. (2) Thursday’s inflation report of a modest 1.8% rate year over year (or 2.3% when excluding volatile food and energy) is keeping a lid on interest rates as bond investors focus on this rate when determining yield expectations over the next year. (3)
Natural gas rose 2.6% last week to $2.68 per mcf, continuing their gains from the 3.7% increase in October. However, Americans are still paying 38.5% less to heat their homes than a year ago. Historically, natural gas reached an all-time high of $15.78 back in late 2005.
Initial jobless claims were 225,000, an increase of 14,000 from the previous week and a five month high, about 10,000 higher than expectations. The important 4-week average (considered a better measure of labor market trends) crept up slightly. (5)
Proprietary portfolio happenings:
Boeing (BA), a Core Select and G50 holding, rose 5.9% following management’s report that it expects to resume shipments of the 737 MAX in mid-December. (6)
BlackLine, Inc. (BL), a G33 holding, rose 6.0% following the prior week’s quarterly report which was ahead of expectations. Shares of this cloud-based financial software firm also gained from a recently announced alliance with Google Cloud to add machine learning and artificial intelligence to enhance its platform. (7)
CenterPoint Energy (CNP), a G50 holding, received an unfavorable ruling from the Texas utility commission regarding the rates they can charge and ROE they are permitted to earn. With that ruling it becomes more likely that equity will be raised, diluting earnings to existing shareholders. (8) Shares dropped 11.5% for the week.
Walmart (WMT), a Core Select holding, reported quarterly sales and earnings that exceeded expectations with an accelerating contribution from online sales. The retailer also raised guidance for the full year. (10) Shares reached an all-time high on Thursday but were flat for the week
Did You Know? There is a species of jellyfish that can age both forwards and backwards, making them theoretically immortal. Most jellyfish have a lifespan of between a few hours and a few months. However, the Turritopsis Nutricula can grow old like every other living thing, but when stressed they have the unique ability to reverse this process and grow young again. Their path to immortality is hindered by the fact that they only grow to a maximum of 1/5 of an inch in diameter, so they are easy prey for many predators.
Sources: (1) Morningstar 11-15-19, (2) U.S. Treasury, (3) Bureau of Labor Statistics 11-13-19, (4) Trading Economics 11-18-19, (5) Department of Labor 11-14-19, (6) CNBC 11-11-19, (7) BlackLine press release 11-6-19, (8) Seeking Alpha 11-15-19, (9) Washington Post 11-15-19, (10) Walmart press release 11-14-19