Economic Market/Portfolio Happenings
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 July 17, 2020.
Equities moved higher across most of the global indices with the S&P 500 rising 1.27%, the Russell 2000 gaining 3.57% although the NASDAQ was down 1.08%. Overseas, the international developed markets (MSCI EAFE) rose 2.20% while the emerging markets (MSCI EM) slipped 1.21%. Industrials and materials were the best performing sectors while tech and consumer discretionary were the poorest performers. In general, value stocks outperformed growth stocks. (1)
Interest rates and bond values were flattish, with the benchmark 10-year U.S. treasuries ending with a 0.64% yield as credit market investors expect additional fiscal stimulus and monetary support for the U.S. economy in the weeks ahead. (1)
Silver (SIVR), an Endowment Series and Precious Metals holding, rose 3.6% last week as mining for zinc and lead (the primary sources of silver supplies) continues to decline while industrial demand for silver continues to rise.2 Year-to-date the price of silver is up 8.8%. (3)
A key leading economic indicator, the New York Empire State Index, rose for the first time since the pandemic began in March. The index rose from negative 0.2 in June to 17.2 in July, far exceeding expectations of 8.9. Anything above zero indicates improving conditions. (4)
First time claims for unemployment dropped a slight 10,000 for the week ended July 11 to 1.3 million which was disappointing but understandable given the rising number of coronavirus hospitalizations and economic restrictions in the southwest states. (5)
Proprietary portfolio happenings:
Abbott Labs (ABT), a Core Select holding, reported revenues and earnings that were ahead of expectations led by their diagnostics division which is producing a rapid Covid-19 testing kit. Management also raised earnings guidance significantly for the full year. The stock rose 6.7% for the week. (6)
Infosys (INFY), a G40i holding, reported earnings that were better than expected last quarter. The Indian outsourcing firm beat on both revenue and earnings, with margins being a particular point of strength. Shares rose 18% for the week. (7)
Quest Diagnostics (DGX), a G50 holding, continued recent strong performance on high levels of covid testing. The company announced that second quarter revenue will be well ahead of both prior guidance and consensus expectations. Shares rose 7% for the week. (8)
Did You Know? While Proctor & Gamble initially argued that Pringles were in fact “chips” in the U.S., they took a different track in the U.K. In order to avoid a 17.5% Value Added Tax (VAT) in the U.K., P&G stated that Pringles should be considered a cake, rather than a “crisp.” Their argument was that since only 42% of the product was made from potato and the fact that it is fashioned from dough, that it should be considered a cake. P&G initially won in High Court, but the decision was reversed in the UK appellate court, and the company had to start paying the VAT.
Sources: (1)JPM Weekly Market Recap 7.13.20, (2) CNBC 7.9.20, (3) Bloomberg.com 7.7.20, (4) thestreet.com 7.9.20