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 17, 2020. Note the U.S. stock, bond and commodities markets were closed on Monday in observance of Martin Luther King, Jr. Day.
Equities showed strong performance across most of the globe following the signing of the phase one US-China trade deal last Monday. Investors appeared gratified with terms, including holding off further tariffs. The S&P 500 rose 1.99%, the Russel 2000 gained 1.84% and the NASDAQ added 2.29% while emerging markets (MSCI EM) rose 1.17% and overseas developed markets (MSCI EAFE) gained 0.86%. Utilities and technology were the strongest performing sectors while energy and consumer discretionary were the weakest. (1)
Interest rates were little changed in US securities last week with the 10-year US government notes yielding 1.84%. Mexico’s bonds have been surprisingly strong since they agreed a new North American trade arrangement in early December, with 10-year rates dropping from the 7.15% area to 6.85% since that time. (2)
Natural gas dropped 11% last week to $1.91 per unit (BTU), near a five-year low as milder-than normal weather over much of the US since year end limited demand for heating fuel. Prices are down 42% year-over year as record levels of production in the Texas Permian Basin have been met with slower demand growth in Asia, leading to this surplus. (3)
Average wages rose just 3% for December, slowing from the 3.7% rate for November. However, a variety of factors may have contributed to the weaker-than-expected rise in wages, likely to be one-off occurrences. (1)
Proprietary portfolio happenings:
BlackLine (BL), a G33 holding, received an upgrade by a Wall Street firm; shares were up 12.7% for the week.
Teledoc (TDOC), a G33 holding, pre-announced positive surprises to their last quarter at a conference and raised their guidance for the current quarter. Shares rose 12.3%. (4)
Visa (V), a Core Select and G33 holding, shares rose 5.6% last week following their announced acquisition of Plaid for $5.3 billion. Plaid’s products will enable Visa to expand its core business particularly with financial technology firms. (5)
Did You Know? Ostriches don’t hide their heads in the sand. When an Ostrich feels genuinely threatened, it will take off running. It can pretty much out run most other animals, having been clocked at 45 miles per hour when being chased by a close predator. The myth that ostriches stick their heads in the sand comes from their first line of defense: actually lying down to see if the predator will pass by so they won’t have to expend the energy in trying to outrun it.
Sources: (1) JP Morgan Weekly Market Recap 1-20-20, (2) Trading Economics, (3) Trading Economics, (4) Teledoc Investor Relations 1-13-20, (5) Visa.com Investor Relations 1-13-20