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 November 6, 2020.
Stocks rallied last week as election results, while still not complete, appeared to result in a divided government indicating little change in economic policy in Washington, D.C. Meanwhile we continued to see positive economic data (see below). The S&P 500 climbed 7.36% as the Russell 2000 gained 6.89% and the NASDAQ soared 9.05%. Overseas, the international developed markets (MSCI EAFE) advanced 8.11% while the emerging markets index (MSCI EM) gained 6.62%. By sector, tech and health care were the best performers in the U.S. while energy and utilities were the laggards. Growth stocks outperformed value. (1)
Interest rates rose and values fell for the benchmark 10-year U.S. treasury which ended the week with an 0.83% yield, down 5 basis points for the week. Similarly, rates on the 30-year treasuries declined by 5 basis points to 1.60%. (1)
Gold futures rose to a seven-week high on Friday as the U.S. dollar marked its sharpest weekly fall since March as election results continued to be tallied. For the week, the gold ETF (GLD) rose 3.97% (2) while the dollar (U.S. dollar index ETF DXY) fell 2.02%3. Weakness in the U.S. dollar can cause gold to become more attractive to overseas buyers since the precious metal is priced in our currency (and vice-verse).
The unemployment rate dropped a full point to 6.9% for October as the U.S. regained 630,000 non-farm jobs. The rate was better than consensus expectations and compares to the peak of 14.7% in April. Payrolls for the prior two months were also adjusted higher. (4)
The U.S. manufacturing index rose to a two-year high of 59.3 from 55.4 in September and ahead of expectations for 56.5. (Any reading above 50 indicates expansion.) The acceleration in new orders is notable since the run rate is at a 6-year high. Also, the customer inventory index is at a very low rate suggesting manufacturing activity is likely to remain elevated. (5)
The services index disappointed with a read of 56.6 last month, down 1.2 from the prior month and below expectations with 16 out of 18 industries reporting growth. Surveyed executives expressed cautious optimism about business conditions and the economy. (6)
Proprietary portfolio happenings:
Mercadolibre Inc. (MELI), a G33 holding, reported sales and earnings that exceeded analysts’ estimates for this online retailers in Latin America. (8) Shares rose 22.4% for the week.
Square Inc. (SQ), a G33 holding, reported revenues and earning ahead of expectations. As usual, management did not give guidance. (9) Shares rose 27.9% for the week.
Waste Management Inc. (WM), a G50 and Core Select holding, announced revenues and earnings that beat analysts’ expectations and raised guidance for profitability based on economic recovery that management is seeing in North America. (10) Shares rose 10.5% for the week.
Did You Know? Tibetan monks can control the temperature of their skin through meditation. Specifically, they have been shown to be able to raise their skin temperature (measured from their toes and fingers) as much as 17 degrees Fahrenheit while keeping their core temperature normal. Scientists from Harvard University were permitted to visit remote monasteries in the Himalayan Mountains throughout the 1980s to study this phenomenon.
Sources: (1) JP Morgan Weekly Market Recap 11-9-20,, (2) Morningstar, 3 Marketwatch.com, (4) US Bureau of Labor Statistics 11-6-20, (5) Institute for Supply Management Manufacturing PMI 11-2-20, (6) Institute for Supply, Management Non-Manufacturing PMI 11-4-20, 7 All weekly changes in company stock prices: Yahoo Finance 8 Mercadolibre Inc. press release 11-4-20, (9) Square Inc. press release 11-5-20, (10) Waste Management Inc. press release 11-2-20