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 29, 2021. Economic/Market happenings:
In the worst weekly selloff since October, the markets were down across the largest global indices. The S&P 500 declined 3.29%, the Russell 200 lost 4.38%, and the NASDAQ was down 3.48%. The international developed markets index (MSCI EAFE) dropped 3.45% and the emerging markets index (MSCI EM) lost 4.44%. By sector, real estate and utilities were the best performers while energy and materials were the laggards. The week was marked by the funneling of abundant money into speculative – highly shorted – shares of a handful of stocks promoted by individual traders on an online website and then bought way out of proportion with normal trading in those names (and subsequently restricted from some trading services). These stocks have displayed extraordinary volatility and have reminded some of the early days of the internet era.
The Federal Reserve Board met last week and agreed to leave interest rates unchanged near zero and will continue to buy bonds at a rate of $120 million per month. The board noted that the pace of economic activity will depend significantly on the course of the coronavirus, including progress on vaccinations. Interest rate changes were minor across the 2-year, 10-year and 30-year treasuries, but the yield curve steepened last week. (2,1)
Silver (SIVR), a Precious Metals strategy holding, is outperforming the markets as global stimulus is projected to stir economic growth. Fifty percent of normal silver is demand is derived from industrial applications (including solar panels and electronic devices) which are economically and environmentally sensitive. Shares of SIVR were up 5.5% last week. (3)
New orders for durable goods edged up 0.2% in December, below expectations for a 0.8% gain held back by aircraft orders that were well below expectations. Business investments (non-defense ex-aircraft) rose by 0.6%. (4)
Home prices rose 9% in November on a year-over-year basis, according to the Case Shiller index. This marks an acceleration from the 8% annual rate in the prior month for the key 20 city price index. Phoenix, Seattle and San Diego led the pack with gains in the low-teens. (5)
Proprietary portfolio happenings:
Company News (6)
Abbott Labs (ABT), a Core Select holding, reported revenues and earnings that were well ahead of expectations and guided 2021 earnings higher than consensus expectations. Shares rose 9.5% last week. (7)
Eli Lilly (LLY), a G50 and Core Select holding, reported two of their new antibody treatments combined reduced the risk of COVID-19 hospitalizations and death by 70%. Shares rose 0.89% last week. (8)
Wyndham Destinations (WYND), a Contrarian Choice and Core Select holding, will change its name to Travel + Leisure Co. and its ticker to TNL on February 17 following the purchase of the Travel + Leisure brand from Meredith Corp. in early January. (9) Did You Know? The familiar “valentine” logo at the beginning and ending of I Love Lucy wasn’t added until the show went into syndicated reruns. When the show first aired on CBS in the 1950s, it was sponsored by Philip Morris, and began with Lucy and Ricky dancing around a huge pack of cigarettes. The show’s ending had Lucy lighting Ricky’s cigarette, cheerily declaring, “You see how easy it is to keep a man happy! Why not give your husband a carton of Philip Morris cigarettes?”