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 October 16, 2020.
U.S. stocks were mixed last week in response to mixed economic data (below), with the S&P 500 rising 0.21%, the Russell declining 0.22% and the NASDAQ adding 0.79%. International developed markets (MSCI EAFE) were down 1.45% while emerging markets (MSCI EM) edged up 0.15%. In the U.S., industrials and communication services were the best performing sectors while real estate (REITs) and energy were the poorest performers. (1)
Interest rates declined and values rose across all maturities with the benchmark 10-year treasuries down 3 basis points to 0.76%. Their yields have been range bound in the .60-.80% area for the past nine weeks without a clear trend emerging. (2)
Oil prices moved higher for the second straight week as supplies fell more than expected and OPEC+ indicated that it is committed to production cuts. The price of West Texas crude oil rose 1.3% for the week to $41.12 per barrel. (3)
Grain prices have been rising due to strong demand from China, hot and dry weather in the Midwest, significant weather-related corn losses in the U.S. and China and lower Brazilian exports. Gradient’s Endowment Series A-E benefitted from these higher prices with its holding in Elements Rogers Agriculture ETN (RJA) which was up 1.98% last week. (4)
New claims for unemployment benefits rose faster than expected and ended what had been a 4-week string of improvements. The rate of nearly 900,000 was the highest level since late August as fresh layoffs were worse than expected. (5)
Retail sales for September, however, were stronger than expected. They rose 1.9% from August versus the 1.2% consensus estimate. Excluding strong vehicle sales, retail growth was still strong at 1.5%. (6)
Inflation measured by the consumer price index (CPI) rose 0.2% in September from the prior month, in line with expectations but slower than the prior month’s increase. Prices for most items were muted except for used vehicles which rose 6.7% as consumers sought out alternatives to public transportation. On a year-over-year basis, the core CPI (excluding volatile food & energy) rose 1.7% and used vehicle prices were up 10.3%. (7)
Proprietary portfolio happenings:
Apple, Inc. (AAPL), a Core Select holding, revealed its latest offerings of iPhones, with management noting increased market share globally. Shares rose 1.7% for the week.
Eli Lilly & Co. (LLY), a Core Select and G50 holding, was forced to pause its testing of a monoclonal antibody treatment for Covid-19 over safety concerns. Shares were down 6.7% for the week.
Vertex Pharmaceuticals (VRTX), a G33 holding, dropped development of a molecule in Phase 2 due to harmful— although temporary—effects on patients. The drug had been under study for people with inherited liver disease. Shares declined 19.2% for the week.
Did You Know? The first Wienermobile hit the pavement in 1936 and proved to be an ingenious and enduring marketing tool for Oscar Mayer. The company’s fleet now numbers six, and they’re constantly touring in their “coast-to-coast wiener roast.” Note however, hot dogs are not served during their appearances, just a sticker and a wiener whistle. Click here for a schedule of visits near you!
Sources: (1) JP Morgan Weekly Market Recap 10-19-20, (2) US Treasury, (3) Oilprice.com, (4) Yahoo Finance, (5) Department of Labor 10-15-20, (6) US Census Bureau 10-16-20, (7) Bureau of Labor Statistics CPI Summary 10-13-20 8 Apple press release 10-13-20, (9) Eli Lilly press release 10-14-20, (10) Vertex Pharmaceutical press release 10-14-20