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 May 8, 2020.
U.S. stocks rallied last week, particularly for small and mid-caps and for growth stocks, as some states or counties re-opened for business, China’s imports picked up, and trade tensions eased. The benchmark S&P 500 rose 3.57% as the Russell 2000 grew 5.52% and the NASDAQ advanced 6.05%. Overseas markets were mixed with international developed countries (MSCI EAFE) up 0.90% and emerging markets (MSCI EM) declined 0.52%. Energy and technology were the best performing sectors while consumer staples and utilities lagged. (1)
Interest rates rose and values fell with the benchmark 10-year Treasuries rate up 5 basis points to 0.69%. The 30-year mortgage rate was unchanged from the prior week at 3.40%, a 55 basis point drop since the start of the year. (1)
Copper futures contracts rose 4.2% last week to $2.41 per pound and have gained 14% since their multi-year low in late March on a report of increased Chinese imports of this key industrial metal. The report showed a 14% year-over-year increase in China’s imports as factory and construction continue to turn up. (2) Silver (SIVR), a Precious Metals and ETF Endowments, is another key industrial metal. It rose 3.5% for the week on the improved outlook for global economic growth.
The unemployment rate for April was 14.7%, less than consensus expectations for at least 16%. This is an extraordinary change from February’s rate of 3.5% and reflects the government’s stay at home orders to fight Covid-19. Hardest hit, as expected, has been the leisure and hospitality workers. Average hourly earnings rose 4.7% due to the substantial job loss among lower-paid workers.3 Weekly new jobless claims were 3.2 million, still a very large number but a deceleration from the prior two week’s claims. (4)
Proprietary portfolio happenings:
Business Development Companies ETF (BIZD), an Absolute Yield strategy holding, rose 5.9% last week as several companies reported quarterly results including earnings which were ahead of expectations and reduced debt concerns. (5)
MercadoLibre Inc. (MELI), a G33 holding, reported sales and earnings that beat expectations and guided that the secular shift to online transactions increased with the covid-19 pandemic. (6) Shares rose 29.6% for the week.
PayPal Holdings (PYPL), a Core Select & G33 holding, reported revenues and earnings that were ahead of expectations. April active users the highest in its years as a public company, and very strong daily transactions that reached a record on May 1. Shares rose 20.2% for the week.
Did You Know? The man who invented one of the first artificial hearts was also the man who hosted the 1960’s children’s show featuring ventriloquist dummies Jerry Mahoney and Knucklehead Smiff—Paul Winchell. He was an inventor who held over 30 patents for various items.
Sources: (1) JP Morgan Weekly Market Recap 5-11-20, (2) Seeking Alpha “Copper Scores Fifth Straight Day of Gains” 5-8-20, (3) Bureau of Labor Statistics 5-8-20, (4) US Department of Labor 5-7-20, (5) Ares Management Earnings Call Transcript 5-6-206 MercadoLibre press release 5-5-20, (7) PayPal Holdings press release 5-6-20