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 June 11, 2021.
Equity indices were generally higher last week with the benchmark S&P 500 advancing 0.43%, the NASDAQ gaining 1.85% and the Russell 2000 rising 2.18%. Overseas markets were also positive with the developed markets index (MSCI EAFE) up 0.34% and the emerging markets index edging up 0.09%. In the US, growth stocks outperformed value stocks and smaller caps outperformed larger caps. By sector, real estate and health care were the leaders while financials and materials were the laggards. (1)
Interest rates fell and bond values rose, with the benchmark 10-year treasuries declining 9 basis points to end the week with a 1.47% yield (after touching 1.74% at the end of March). (2) This occurred despite a report that inflation that rose to 2008 levels. (See Economic Data below.)
After rising dramatically earlier in the year, to a level not seen in more than 10 years, the price of copper has regressed from the recent peak. Currently $4.50 per unit, copper is down from its May 11 high of $4.76. This may be an indicator that general inflation has peaked post-pandemic along with the price of stocks in the materials sector. (3)
Headline inflation (all items) accelerated to 5.0% on an annualized basis in May, a 13-year high and in line with consensus expectations. Price gains for used cars and trucks stood out with a 7.3% month over month gain which accounted for one-third of the all-items increase. This is evidence that supply chain issues are taking a toll on some sectors. (4) The personal consumption expenditures inflation – which is of greatest interest to the Federal Reserve –rose just 2.6%, annualized, in the most recent data. (5)
The number of open job vacancies reached an all-time high of 9.3 million in April or roughly one job opening for every unemployed individual in the US. Vacancies were 1 million ahead of expectations. Also, the number of people who quit their jobs reached a series high of 2.7% of total employment—a 20 year high. (6)
Proprietary portfolio happenings:
Company News (7)
CyrusOne Inc. (CONE), a G50 holding, shares rose following merger news of other companies in the datacenter real estate investment trust subsector. (8) CyrusOne had received takeover interest two years ago from several infrastructure funds, and an activist investor revealed a new stake last month. (9) CONE shares rose 6.80% for the week.
Eli Lilly & Co. (LLY), a Core Select holding, rose strongly following FDA approval of another drug company’s treatment for Alzheimer’s disease, the first such approval in a category for which Eli Lilly has a promising drug in development. Shares of LLY gained 10.92% for the week. (10)
Varonis Systems (VRNS), a Core Select and G33 holding, rose 10.69% last week as stocks of cyber security firms climbed on rising expectations for revenues and earnings following a sharp increase in cyber-attacks following the hack of Colonial Pipeline. (11)
Did You Know? The most powerful commercial radio station ever was WLW (700KHz AM) in Cincinnati. During certain times in the 1930s, it broadcasted 500kW radiated power which covered half the globe at night. Neighbors within the vicinity of the transmitter heard the audio in their pots, pans, and mattresses.
(2) US Treasury
(7) All weekly changes in company stock prices: Yahoo Finance