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 January 10, 2020.
The Iranian/China situations de-escalation has led to an escalation in market sentiment. US markets notched intraday record highs and the Dow Jones Industrial Average climbed above 29,000 for the first time on Friday. Risk assets have come back in favor as the latest escalation in the rift between Washington and Tehran has eased and the signing of a “phase one” trade deal scheduled for next Wednesday has also helped lift sentiment. The S&P 500 rose 0.98%, the Russell 2000 gained 0.67% as the NASDAQ increased 1.76%. Overseas, the developed markets (MSCI EAFE) declined 0.08% and the emerging markets (MSCI EM) gained 0.88%.
Interest rates rose slightly and values fell slightly, with the benchmark 10-year Treasury yield closing at 1.83%, up 3 basis points. The 30-year fixed mortgage remained at 3.91% (1), below the key 4% mark, which has been a driver of home purchase.
US oil rigs declined another 11 last week to 659, with the total rig count down 25% year-over-year. Lower prices per barrel combined with increased productivity per rig has driven down the number of drilling rigs from their peak of 1,609 over five years ago. ()2) West Texas crude oil closed at $58.99 per barrel, down 3.5% year-to-date. (1)
Last month’s payrolls were below forecast as average hourly earnings rose 2.9% year-over-year, the weakest reading in 18 months. (3)
After some seasonal quirks, initial jobless claims are back to where they were, falling to 214,000 for the week-ending January 4, the fourth straight weekly decline and the lowest since the end of November. The four week moving average showed a positive trend, falling by 9,500 to 224,000, the lowest in a month. (3) The broader story is that since the spring of 2018, initial jobless claims have been moving sideways – a sign that overall firings remain low—while average wages are growing.
Proprietary portfolio happenings:
AeroViroment, Inc. (AVAV), a G33 holding, which is a military drone maker, along with Lockheed Martin (LMT), a G50 and Core Select holding, rose in unison with defense stocks after the drone strike against an Iranian general in Iraq and Iran fired ballistic missiles at bases housing US and coalition military forces in retaliation.
Salesforce.com (CRM), a G33 and Core Select holding, rose 8.4% following numerous Wall St. upgrades on several software companies to start the year.
Did You Know? If Facebook was a country, it would have 1 billion more people than China. At 2.45 billion monthly users, Facebook overshadows the population of China (1.4 billion) and India (1.3 billion). Even Instagram has three times as many people as the U.S. currently.
Sources: (1) JP Morgan Weekly Market Recap 1-13-19, (2) Baker Hughes Rig Count 1-10-20, (3) US Department of Labor 1-9-20