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 27, 2020. Note the U.S. markets were closed all day Thursday and Friday afternoon in observance of the Thanksgiving holiday.
Major equity indices around the globe rose last week with the S&P 500 gaining 2.30%, the Russell 2000 rising 3.94% and the NASDAQ up 2.97%. International developed markets (MSCI: EAFE) added 2.24% and the emerging markets (MSCI EM) rose 1.79%. In the U.S. small cap stocks outperformed large caps, and energy names far surpassed the other sectors. (1)
Interest rates rose 1 basis point for the benchmark 10-year U.S. treasuries, but the yield curve steepened as short term rates declined slightly and long term rates moved up, with the 30-year ending at 1.57%, a 4 basis point gain. (2) Ongoing purchases of bonds by the Federal Reserve are keeping yields low in the face of an improving economic outlook—due to the COVID vaccines—over the intermediate term.
Oil prices rose significantly last week, with the price of West Texas crude (WTI) rising 7.3% to $45.53 per barrel. Since the start of November, the price of WTI is up 27.2% (3) on an improving outlook for global economic growth as a result of COVID vaccines..
New claims for jobless benefits rose to a five-week high of 778,000 which was well ahead of consensus expectations for 730,000. (4) Rising numbers of COVID cases have led some states and cities to shutter schools and limit businesses again. Lower economic activity, especially in the services sector, have forced companies to lay off employees.
Orders for durable goods in October rose 1.3% from the prior month, with strength across the board, and some portions of the September report were also revised upward. Durable goods run the gamut from toasters to aircraft, items that are meant to last three years or more. (5)
Proprietary portfolio happenings:
Becton, Dickinson & Co. (BDX) a Core Select holding, increased its quarterly cash dividend by 5.1%. (7) Yield on the new rate is 1.45%.
Dollar Tree, Inc. (DLTR), a Contrarian Choice and Core Select holding, rose 15.7% after the company reported same store sales for its Family Dollar and Dollar Tree stores rose 5.1%, exceeding expectations, with earnings that also were ahead of consensus estimates. Further, management raised guidance for the holiday quarter. (8)
Parsley Energy (PE), a holding in the Energy Sector Focus, G33, Contrarian Choice and Core Select strategies, rose 14.0% last week on rising prices for crude oil (see Commodities above). Several other Energy Sector Focus holdings also rose faster than the oil sector ETF (XLE) which advanced 8.57% for the week.
Did You Know? Volkswagen currywurst is a brand of sausage manufactured by the Volkswagen car maker for its employee cafeterias since 1973. The product has been described as the most produced of any of Volkswagen's parts, some 6.8 million sausages or 18,000 per day being manufactured in 2019. That was more than all the cars Volkswagen produced last year.
Sources: (1) JP Morgan Weekly Market Recap 11-30-20, (2) US Treasury, (3) Oilprice.com, (4) US Department of Labor 11-25-20, (5) US Census Bureau 11-25-20, (6) All weekly changes in company stock prices: Yahoo Finance (7) Beckton, Dickinson & Co press release 11-24-20, (8) Dollar Tree Inc. press release 11-24-20