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 December 10, 2021
Equities were up across the major global indices last week due in large part to preliminary data which suggested the Omicron variant may be less severe than expected, and positive news regarding the efficacy of mRNA vaccine, both of which have eased concerns of another economic lockdown. Gains were led by US stock indices, with the S&P 500 rising 3.85%, the Russell 2000 adding 2.45% and the NASDAQ up 3.62%. International developed markets (MSCI EAFE) gained 2.44% while the emerging markets (MSCI EM) increased 1.15%. In the US the best performing sectors were technology and energy while consumer discretionary and utilities were the laggards. (1)
Interest rates rose across all maturities and fixed income values declined. The 2-year, 10-year and 30-year treasury rates rose by 7, 13 and 19 basis points, respectively.1 Bond investors are focused on comments from the Federal Reserve’s December 15th meeting in which they are expected to disclose a timetable for the process of tapering its stimulus.
Oil prices rose on a relief that the demand impact of Omicron may not be as significant as originally thought. The price of West Texas crude rose 8.16% last week to $71.67 per barrel. (2)
US consumer prices rose 6.8% in November from the same a year ago, the highest rate in nearly 40 years. This was an acceleration from 6.2% in the prior month. (3)
Unit labor costs increased at a 9.6% annualized rate in the third quarter, well ahead of consensus expectations for an 8.2% increase. Labor costs were driven by a 3.9% increase in hourly compensation and a 5.2% decline in productivity. (4)
New applications for unemployment benefits sank to a 52-year low of 184,000 in the last week of November. (4) The 43,000 decline from the prior week is likely due to holiday-related hiring together with a reluctance of employers to lay off workers in a tight labor environment. (5)
Proprietary portfolio happenings:
Company News (6)
Broadcom Inc. (AVGO), a G50 holding, shares rose 13.18% last week after reporting revenues and earnings that beat consensus estimates and management raised guidance for the full year. Additionally, the board announced a new $10 billion share buyback program and increased the dividend by 14%. Yield on the new rate is 2.60%. (7)
CVS Health Corp. (CVS), a G50 holding, raised its revenue and earnings guidance prior to its annual investor day. The board also announced a 10% increase to its dividend and authorized a $10 billion share buyback program. Shares rose 8.79% for the week. (8)
Costco Wholesale Corp. (COST), a Contrarian Choice and Core Select holding, reported quarterly revenues and earnings that beat expectations as comparable store sales rose 10% year over year. Shares rose 5.65% for the week. (9)
Did You Know? When Santa Claus makes his trip around the world on Christmas Eve, you can rest assured that he's legally allowed to drive his sleigh—at least in the United States. In 1927, the jolly man in the red suit was given a pilot's license from the Assistant Secretary of Commerce for Aeronautics William P. MacCracken.
(6) All weekly changes in company stock prices: Yahoo Finance