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 January 15, 2021. Note the markets and our offices were closed on January 18 in observance of Martin Luther King, Jr. Day. Economic/Market happenings:
The unemployment data (see Economic Data below) showed that the pace of the economic recovery is slowing in the face of rising coronavirus cases, bolstering the argument for more stimulus when the new administration takes office next week and causing stock prices to take a breather. Rising interest rates in recent weeks and a steepening yield curve also caused growth stocks to underperformed value stocks. The S&P 500 fell 1.46%, the NASDAQ declined 1.54% and the Russell 2000 gained 1.51%. Overseas, the developed markets index (MSCI EAFE) fell 1.36% while the emerging markets (MSCI EM) edged up 0.34%. Within the U.S., energy and real estate were the best performing sectors while communication services and technology were the laggards. (1)
Interests rates were on the rise during the week until the new administration’s stimulus package was announced and the unemployment situation was weaker than expected. The benchmark 10-year treasury note closed with a 1.11% yield, down 2 basis points for the week and 30-year treasuries also closed 2 basis points lower, with a 1.85% yield. (2)
Agricultural prices continued to rise last week, benefitting Rogers Elements ETN (RJA), an Endowment Series holding. Bad weather in South America is delaying grain plantings and the USDA lowered its forecasts for upcoming harvests in the region as well as the past season’s harvest in the U.S. Meanwhile, demand has been stronger than expected. Corn futures ended the week at $5.19 per bushel, up 9.5% year-to-date. (1)
New jobless claims of 965,000 were worse than expectations of 795,000 and continuing claims are now 5.9 million as the resurgent virus is causing this deterioration as states and businesses scale back or close. Continuing claims have fallen from 10.6 million at the end of September but remain above pre-pandemic levels of about 1.7 million. (3)
Consumer inflation rose 1.4% in December from the prior month, with the majority of the increase tied to higher gasoline prices. The cost of gasoline jumped a seasonally adjusted 8.4% in December, but gas prices are still 15% below year-ago levels on reduced demand during the pandemic. Ex-fuel and food, consumer inflation was up 1.6% on a year-over-year basis. (4)
Proprietary portfolio happenings:
Company News (5)
Bristol Myers Squibb (BMY), a Core Select and G50 holding, rose +6.5% after management guided revenues higher than consensus expectations through 2025 and announced an addition $2 billion planned share buyback program for this year. (6)
Eli Lilly & Co. (LLY), a Core Select and G50 holding, rose 14.6% on the success in phase 2 trials for their Alzheimer treatment in slowing the effects on the disease on cognition and function. It appears to have superiority among other existing drugs for Alzheimer’s disease. (7)
Las Vegas Sands (LVS), a Contrarian Choice holding, fell 8.1% last week following the passing of their founder, chairman and chief executive officer Sheldon Adelson, a leader in the casino/resort industry. Mr. Adelson was 87 years old. (8) Did You Know? Disneyland has an underground tunnel system? There are lots of quirky things that some think are underneath Disney parks, but these literally are! The tunnels were built in response to characters having to run through other lands to get to their posts, which spoiled the magic. Thanks to the tunnels, you won’t see a Tomorrowland spaceman in the Old West–inspired Frontierland.
Sources: (1) JP Morgan Weekly Market Recap 1-18-21, (2) US Treasury, (3) US Department of Labor 1-14-21 4 Bureau of Labor Statistics press release 1-13-21, (5) All weekly changes in company stock prices: Yahoo Finance 6 Bristol Myers Squibb presentation 1-11-21, (7) Eli Lilly press release 1-11-21, (8) Las Vegas Sands press release 1-12-21