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 August 14, 2020.
Equities markets rose around the world, with the S&P 500 up 0.69%, the Russell 2000 rising 0.59% and the NASDAQ up a mere 0.09%. Overseas the international developed markets (MSCI EAFE) gained 2.47% as the emerging markets (MSCI EM) added 0.40%. In the U.S., industrials and energy were the best performing sectors while real estate and utilities lagged. Also, value stocks out performed growth stocks. (1)
Bond prices fell as yields rose (to an eight week high), with the benchmark 10-year U.S. treasuries yield adding 14 basis points to end the week at 0.71% and the 30-year treasuries gaining 22 basis points to finish at 1.45%. The yield curve moved up and remains positive. Overseas the 10-year German government yield also rose, from negative 0.53% to negative 0.42%. (1)
Gold (GLDM) a Precious Metals and ETF Endowment Series holding fell 4.25% last week after the cash price for this precious metal hit an all-time high of $2,064 on August 6. Last week’s drop coincided with the rise in interest rates and snapped a nine week stretch of gains. (2)
Jobless claims were ahead of expectations as weekly new applications for unemployment declined to 963,000 from 1.19 million at the end of July, the second consecutive large decline. Continuing claims (which are reported with a 1 week lag) dropped by 604,000 to a new post-pandemic low. (3) Both the consumer price index and the wholesale price index rose 0.6% for the second month in a row, ahead of consensus expectations. They increased on a year-over-year basis but remain below the Federal Reserve’s 2% target. (4)
Consumer confidence in August edged up to 78.8 from 72.5 in July, having gained just 1 point from the pandemic low in April due to the gridlock in Washington, D.C. (5)
Higher consumer confidence led to higher retail spending which rose 1.2% in July, sending sales above pre-pandemic levels which indicates that the U.S. continues to heal from the recession despite a recent rise in virus infections. (6)
Proprietary portfolio happenings:
Komatsu (KMTUY), a G40i holding, rose 7.8% last week. This maker of construction equipment gained along side of other such companies on improving macroeconomic trends. (7)
Las Vegas Sands (LVS), a Contrarian Choice holding, shares rose following the announcement that Macau would resume tourist visas from the Chinese province which supplies the most gamers to this gambling mecca. Many believe it paves the way for increasing tourism from the entire Chinese mainland. Shares rose 9.3% for the week.
Did You Know? In 1923, Otto Schnering, the founder of the Curtiss Candy Company that created the outstanding “Baby Ruth” candy bar, hired a pilot to fly his plane over Pittsburgh and drop several thousand Baby Ruth candy bars over the city. Each candy bar was equipped with a parachute to avoid injuring people.
Sources: (1)JP Morgan Weekly Market Recap 8-17-20, (2) Apmex.com, (3) US Department of Labor 8-13-20, (4) Bureau of Labor Statistics 8-12-20 and Bureau of Labor Statistics 8-11-20, (5) University of Michigan Survey of Consumers 8-14-20, (6) Commerce Department July Retail Sales Report 8-14-20, (7) Finance.yahoo.com, (8) Reuters, “Macau Announces Partial Restart of Tourist Visas” 8-10-20