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 February 19, 2021. Economic/Market happenings:

Stocks

  • The S&P 500 declined 0.68%, the Russell 2000 dropped 0.98% and the NASDAQ lost 1.54% last week on rising interest rates and higher than expected unemployment claims. Overseas markets rose slightly, with international developed markets (MSCI EAFE) up 0.28% and emerging markets (MSCI EM) edging up 0.09%. The best performing sectors in the US were energy and financials while health care and utilities were the laggards. (1)

Fixed Income

  • U.S. Treasury yields rose and bond values fell as the 10-year Treasury note headed for its sharpest yield rise in about six weeks. Debt prices came under pressure over worries of pent-up inflation when the government passes the proposed $1.9 trillion stimulus package, even as recent employment data have struggled to support fears of reflation. The 10-year Treasury note yield rose 14 basis points to 1.34%, its highest since last February, while the 30-year bond added 13 basis points yield 2.14%. (2)

Commodities

  • Natural-gas led an across-the-board surge in energy prices on Tuesday, as large sections of the U.S. struggled with subzero temperatures and mandated rolling blackouts hit several states, particularly Texas. Spot prices for wholesale electricity in Texas spiked more than 10,000% to more than $9,000 per megawatt hour vs. pre-storm prices of less than $50 per unit. Energy storage infrastructure literally froze, preventing physical delivery utility companies and their customers. (3)

​Economic Data

  • Retail sales rose 5.3% last month versus December, the first increase in four months and the largest increase in eight months. This is highly unusual for January to gain from December and compares to a 1% decline in December. When excluding vehicles and gas, retail sales increased 6.1%. Brick-and-mortar store sales rose 5.1% while online sales advanced 28.7%. The spending increase was fueled in part by federal stimulus checks for millions of Americans, more generous unemployment benefits, and fewer restrictions on business after a sharp decline in Covid-19 cases. (4)

  • Existing home sales in January rose 23.7% year over year, ahead of consensus expectations. With record low mortgage rates and people seeking less crowded living conditions, sales would have been even higher if not for the 25.7% decline in the inventory of homes available for sale. (5)

  • New claims for unemployment benefits unexpectedly surged last week, rising to 861,000 vs. 773,000 expected. The numbers for the prior week were also revised higher by 55,000, an additional disappointment. (6)

  • A leading indicator for national manufacturing conditions, the New York Fed’s Empire State business conditions index, rose 8.6 points to 12.1 in February, the highest level of activity since July and well ahead of estimates for a reading of 5.9. Any reading above zero indicates improving conditions. The new orders sub-index and unfilled orders rose dramatically. Also, prices paid for goods jumped 12.3 points to the highest level in 10 years. (7)

Proprietary portfolio happenings:

Company News

  • Baidu (BIDU), a G33 holding, rose 8.6% following its quarterly report in which artificial intelligence solutions (cloud services) revenues rose 67% and management indicated stronger growth for autonomous driving and intelligent car initiatives. Earnings were also ahead of expectations. (9)

  • With rising interest rates and credit metrics improving across the sector, financial stocks were among the best performers last week including:

  1. G50 holding Truist Financial Corp. (TFC) which rose 6.6%

  2. G50 holding CME Group (CME) which gained 5.8%

  3. G50, Contrarian Choice and Core Select holding JP Morgan (JPM) which rose 4.8%

  4. Louisiana Pacific (LPX), a Core Select and Contrarian Choice holding, and NextEra Energy Inc. (NEE), a Core Select holding, each raised their dividend by 10% last week. (9,10)

  • Louisiana Pacific (LPX), a Contrarian Choice and Core Select holding, reported a sales gain of 60% – ahead of expectations – led by OSB, an alternative to plywood due to strength in building and remodeling. Earnings also exceeded expectations, and management raised guidance for the coming year. Shares rose 8.7% for the week. (10)

Did You Know? Thanks to his long limbs, the Great Emancipator wasn’t quite WWE material, but Abraham Lincoln was an accomplished wrestler as a young man. He won all but one of about 300 matches. Honest Abe once challenged an entire crowd of onlookers with, “I’m the big buck of this lick. If any of you want to try it, come on and whet your horns.” There were no takers. Lincoln’s grappling exploits earned him an “Outstanding American” honor in the National Wrestling Hall of Fame in Stillwater, OK.




Sources: (1) JP Morgan Weekly Market Recap 2-22-21

(2) US Treasury

(3) Reuters “Texas Wholesale Electric Prices Spike…” 2-15-21

(4) US Census Bureau 2-17-21

(5) National Association of Realtors press release 2-19-21

(6) US Department of Labor 2-18-21

(7) Federal Reserve Bank of NY “Empire State Manufacturing Survey” 2-16-21

(8) All weekly changes in company stock prices: Yahoo Finance

(9) Baidu press release 2-17-21

(10) Louisiana Pacific press release 2-16-21

Herstle Jones, LUTCF, CLTC President & Founder

With over 20 years of experience in the financial services industry,

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