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 29, 2020.
Major equity indices across the globe increased last week, with the S&P 500 up 3.04%, the Russell 2000 gaining 2.87% and the NASDAQ adding 1.79%. Overseas, the international developed markets index (MSCI EAFE) rose 5.11% while the emerging markets (MSCI EM) added 2.87%. Value stocks advanced at a stronger pace than growth stocks. By sector, financials and industrials were the best performers as communications and energy were the laggards.1 Global stocks rallied on Friday after President Trump did not escalate trade tensions with the Chinese as many had feared. (2)
U.S. bond rates were slightly changed last week with the benchmark 10-year treasuries at 0.16%. Overseas rates, however, continue to rise, although from negative rates to less negative rates, with the 10-year German bond rate rising to -0.45%, up 4 basis points, as economic growth prospects are improving with the re-opening of the European region post-Covid. (1)
Silver (SIVR), a Precious Metals and ETF Endowment Series holding, gained 4% last week and nearly 17% for the month of May. Re-opening economies around the world post-Covid are the key to its gains since silver is primarily used in manufacturing. (3)
Mortgage purchase applications rose 9% last week, the sixth consecutive weekly gain and a jump of 54% since early April. With mortgage interest rates near all-time lows, refinance activity was nearly flat month over month but still 176% higher than a year ago.
New homes sales rose 0.6% from March to April, well ahead of expectations for a 22% decline. On a year-over-year basis, sales of new single-family homes were down 6.2%.
Consumer spending in the U.S. fell 13.6% in April following a revised 6.9% decline in March. Personal income rose 10.5% in April, boosted by government payments, and the savings rate climbed to 33% as individuals conserved cash due to uncertainties. With reduced consumer spending, the core inflation index, which excludes food and energy, rose just 1% on a year-over-year basis. (6)
Proprietary portfolio happenings:
Discover Financial Services (DFS) a Core Select, Contrarian Choice and G50 holding, gained 17.4% based on expectations that credit card losses will be less than previously feared. (7)
Paylocity Holdings (PCTY), a G33 holding, rose 10.3% last week as the cloud-based human resources management firm benefited from an improved outlook for small and mid-size businesses return to more normal operations. (8)
Did You Know? Four babies are born every second. Every second, we welcome four new babies into our overall population. Do a little math and you'll find out that means there are approximately 250 births each minute, 15,000 each hour, and 360,000 each day. In a full year, there are around 131.4 million babies born on Earth, according to the Ecology Global Network.
Sources: (1) JP Morgan Weekly Market Recap 6-1-20, (2) Barron’s “Global Stocks Rally” 6-1-20, (3) SeekingAlpha.com4 Mortgage Bankers Association press release 5-27-20, (5) US Census Bureau 5-26-20, (6) US Commerce Department 5-29-207 https://finance.yahoo.com/8 https://finance.yahoo.com/