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 15, 2020.
Equities were down across the globe last week as investors were cautious about the re-opening of the U.S. economy beginning this week. The S&P 500 lost 2.20%, the Russell 2000 declined 5.42%, and the NASDAQ dropped 1.15%. Overseas, the international developed markets (MSCI EAFE) dropped 3.16% while the emerging markets index (MSCI EM) declined 1.11%. Health care was the only sector to show gains while real estate and energy were the worst performing sectors. (1) As of today (05/18/2020), at 1:00 p.m. CT, news on progress for a vaccine is lifting markets.
Interest rates declined and values rose again, with the benchmark 10-year U.S. treasuries down 5 basis points to 0.64% and 30-year bonds down 7 basis points to 1.32%. The rate on a 6-month bank CD remained at 0.43%. (1)
Silver (SIVR), a Precious Metals and Endowment Series ETF holding, rose 7.5% last week, with the metal rising above the $17 mark for the first time in months. (2)
Core inflation, which strips out volatile food and energy, fell 0.4% in April from the previous month, the largest monthly decline on record going back to 1957. That compared with economists' expectations for a narrower 0.2% slide and left core price inflation of 1.4% from a year ago. (3)
New weekly jobless claims rose by 2.98 million to equal 36 million claims over the last eight weeks. On a week over week basis, the data has been in decline since the end of March. (4)
Core retail sales, excluding the volatile auto and gas components, tumbled 16.2% in April from the prior month following a 2.8% decline in the prior month. Economists were predicting a 7.6% drop. On a year-over-year basis, core retail sales dropped 21.6%. The data likely marks the bottom for retail sales since 42 states are allowing stores to reopen, starting this weekend. (5) Additionally, an index of consumer sentiment rose about two points to 73.7 in May versus expectations of a decline. (6)
Proprietary portfolio happenings:
AbbVie (ABBV), a G50 holding, announced that it has acquired Allergan (AGN) for cash and stock about a year after the announcement of a deal. The transaction expands and diversified AbbVie’s biopharmaceutical capabilities in cancer and immunology with Allergan’s expertise in neuroscience and aesthetics. Shares of AbbVie rose 8% for the week. (7)
Bristol-Myers (BMY) and Merck & Co. (MRK), both G50 and Core select holdings, rose 5% and 4.4%, respectively, last week as major pharmaceuticals led the markets as investors were drawn to more defensive companies. (1)
LHC Group (LHCG), a G33 holding, rose 11% following the company’s quarterly revenues and earnings which were ahead of expectations. Management of this provider of in-home health care and hospice services also provided a positive outlook. (8)
Did You Know? An elf lives at the base of an ash tree on the shore of Lake Harriet in Minneapolis, MN. Although unseen, the elf allows the public to post notes by opening the 6” tall door to his house until he has time to answer each one. Every reply ends with, “I believe in you.” Gifts and candy are commonly left for the elf. During the winter, a note is left for visitors which reads, “moved to his castle in the east”.
Sources: (1) JP Morgan Weekly Market Recap 5-18-20, (2) Apmex 5-18-20, (3) US Bureau of Labor Statistics 5-12-20, (4) US Department of Labor 5-14-20, (5) US Census Bureau 5-15-20, (6) University of Michigan 5-15-20, (7) AbbVie press release 5-8-20, (8) LHC Group press release 5-7-20