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 February 14, 2020. Note, US equity and fixed income markets are closed today to commemorate the birthdays of Presidents Washington (Feb. 22) and Lincoln (Feb. 12).
Equities rose across most of the world last week on better economic news in the US (see below) and declining growth in the number of new coronavirus cases (although off a higher base), particularly outside of China. The S&P 500 rose 1.65%, the Russell 2000 added 1.90% and the NASDAQ increased 2.23%. Emerging markets (MSCI EM) rose 1.37% and international developed markets (MSCI EAFE) were off a slight 0.02%. Within the US, growth stocks once again outperformed value stocks; real estate and utilities were the best performing sectors while financials and consumer staples lagged. (1)
Fixed income securities were flat to slightly down as interest rates were modestly down in the short and long maturities but unchanged for the benchmark 10-year Treasuries. (1)
Oil prices advanced 3.4% last week to $52.05 per barrel of West Texas crude, the first weekly rise in six weeks. Reports of stronger demand out of China eased concerns about a slowdown in demand and economic growth as a result of the coronavirus. (2)
The mortgage application index rose last week as purchases stood 16% above the year ago level with refinancing rising 207% on a year-over-year basis. Warmer than normal weather across most of the country likely pushed the growth rate higher. The average 30-year mortgage rate was 3.72%. (3)
New unemployment claims rose by just 2,000 versus expectations for a 7,000 increase. On a four-week moving average, jobless claims are unchanged from last week’s 212,000 which has been the lowest level since July. (4)
Inflation (excluding volatile food and energy) rose 2.3% over last year, a tick ahead of expectations. This represented the largest gain in more than a year and can be attributed to higher costs for shelter and medical care. (5)
Consumer sentiment as reported by the University of Michigan was very strong across all political parties, with both Democrats and Republicans more optimistic about prospects for the next six months on a year-over-year basis. In total, the consumer sentiment index came in at 100.9 for February, ahead of the prior month and consensus expectations. (6)
Proprietary portfolio happenings:
Crown Castle International (CCI), a G50 holding, is a communications tower real estate investment trust (REIT) which rose in unison with others in the sector in reaction to the court’s decision to approve the merger of Sprint and T-Mobile. Shares were up 10.3% for the week.
CNA Financial (CNA), a G50 holding, reported earnings that exceeded expectations for this insurance company. Management also announced a 5.7% boost to its dividend; shares now yield 2.8%. (7) Shares rose 7.5% for the week.
Chart Industries (GTLS), a G33 and Core Select holding, reported bookings at the end of the fourth quarter were ahead of expectations and raised guidance versus estimates. (8) Shares rose 16% last week on the news.
Nestle S.A. (NSRGY), a G40i holding, reported stronger than expected core growth in revenue and earnings driven by robust momentum in their key U.S. market and pet care globally. Earnings and free cash flow grew by 11%. (9) Shares rose 2% on the news.
Did You Know? The Himalayas Mount Everest is generally considered the tallest mountain because it reaches the highest elevation at 29,029 feet. However, some argue that this should not be the measure used, but rather the tallest from the base to peak. In that case, Hawaii’s Mauna Kea would be the tallest at about 10,200 meters from its base on the ocean floor to peak at 4,205 meters above sea level.
Sources: (1) JP Morgan Weekly Market Recap 2-17-20, (2) Bloomberg News, “Chinese Refiners Go on a Buying Spree” 2-14-20, (3) Mortgage Bankers Association 2-12-20, (4) Bureau of Labor Statistics 2-13-20, (5) Bureau of Labor Statistics CPI Summary 2-13-20, (6) University of Michigan Consumer Sentiment by Political Party 2-14-20, (7) CNA Financial press release 2-10-20, (8) Chart Industries 2-13-20, (9) Nestle press release 2-13-20