Pence Wealth Management’s Financial Market Report

US FINANCIAL MARKET

• Starbucks said it will set up its first outlet in Vietnam early next month. Vietnam is the second-biggest coffee producer in the world after Brazil. Starbucks operates more than 3,300 stores across 11 countries in the China and Asia-Pacific region. On a separate note, Starbucks is rolling out a $1 reusable plastic cup at its cafes starting Thursday.
• Among the chains reporting December sales at stores open at least a year on Thursday, Costco stood out with growth that topped expectations.  Limited Brands’ sales rose less than anticipated. Target’s same-store sales were essentially flat. Macy’s same-store sales were up 4.1%. Family Dollar Stores’ same-store sales rose about 2.5%.
• Microsoft bought start-up id8 Group R2 Studios as it looks to expand further in technology focused on the home and entertainment. id8 Group R2 Studios recently launched a Google Android application to allow users to control home heating and lighting systems from smartphones.
• Northrop Grumman said that it would not participate in the 2013 international air show in Paris to save money.
• GM’s U.S. sales rose 3.7% in 2012. GM sold just under 2.6 million new cars and trucks. Ford’s U.S. sales were up 5%. Chrysler sales jumped 21%. Chrysler sold 1.65 million vehicles. Volkswagen was up 35%.
• U.S. drug approvals in 2012 reached their highest level in 15 years, led by 11 new cancer therapies. The Food and Drug Administration cleared 39 novel medicines in 2012, nine more than a year earlier
• Moody’s says more steps needed to save U.S. credit rating. Moody’s placed the U.S. credit rating on a negative outlook August 3, 2011 when the Congress and the White House wrestled over a relatively routine measure of raising the debt ceiling.
• Standard & Poor’s said the deal does not affect its negative view of the U.S. credit outlook, and said more work remains ahead for policymakers, but the risk of another recession in the world’s biggest economy has eased.

US ECONOMY & POLITICS

• The ADP National Employment Report showed the private sector added 215,000 jobs last month. The ADP report is jointly developed with Moody’s Analytics.
• The Labor Department said initial claims for state unemployment benefits increased 10,000 to a seasonally adjusted 372,000 last week. However, claims data for nine states, including California and Virginia, was estimated because of the Christmas and New Year holidays.
• The government is expected to report on Friday that employers added 150,000 jobs to their payrolls in December, little changed from 146,000 in November. Job gains in the first 11 months of last year averaged about 151,000 per month, not enough to significantly lower unemployment.
• Consumers continued to pay down debt in the third quarter of 2012, the American Bankers Association said. Delinquencies on bank card payments fell to an 18-year low during the quarter, and a composite ratio covering late payments in eight loan categories also fell.
• The Bloomberg Consumer Comfort Index rose in the period ended Dec. 30. Americans earning $100,000 or more reported their most optimistic reading in more than two years.
• U.S. manufacturing ended 2012 on an upswing despite fears about the “fiscal cliff”. The Institute for Supply Management (ISM) index of national factory activity rose to 50.7 up from 49.5 in November. The ISM index had fallen to a 40-month low in November. ISM’s employment index rose to 52.7 from 48.4 in November.
• Planned layoffs at U.S. firms fell in December for the first time in four months, while the overall job-cut total in 2012 was the lowest since 1997. Employers announced 32,556 job cuts last month, the second lowest monthly total of 2012 and down 43% from 57,081 in November, according to Challenger. During 2012, employers announced 523,362 cuts, down 14% from the 606,082 job cuts announced in 2011. The leading job-cut sector of 2012 was the computer industry, which announced 46,164 layoffs. Government sector announced 19,128 layoffs in 2012.
• The Mortgage Bankers Association (MBA) said its seasonally adjusted index of mortgage application activity, which includes both refinancing and home purchase demand, fell 10.4% in the week ended December 28. The survey covers over 75% of U.S. retail residential mortgage applications.

EUROPE & WORLD

• Consumers and firms’ deposits in banks in troubled euro zone member states remained mainly stable in November, ECB data showed.
• Spain’s registered jobless number is down by 59,000 to 4.8 million in December. Spain’s unemployment rate was at 25% at the end of the third quarter.

FACTSET

• Industry analysts more optimistic than strategists on 2013 S&P 500 target prices. Industry analysts in aggregate predict the S&P 500 will see a 12.5% increase in price in 2013.

• For 2013, analysts are most optimistic on MSCI Europe’s Energy sector. Of the 9,863 ratings on MSCI Europe companies at the end of December, 45% were Buy ratings, 38% were Hold ratings, and 17% were Sell ratings.

TODAY in HISTORY

• Martin Luther excommunicated by Pope Leo X (1521)
• Construction of the Brooklyn Bridge began (1870)
• Congressional proceedings were televised for the first time (1947)
• Sir Edmund Hillary reached the South Pole overland (1958)
• Alaska became the 49th state in the United States (1959)
• Pope John XXIII excommunicated Fidel Castro (1962)

Sources: Reuters, Yahoo Finance, Google Finance, Bloomberg, CNN Money.

This information has been prepared from sources believed to be reliable, but no representation is being made as to its accuracy or completeness. The information provided should be used only as general information and is not intended to provide specific advice or recommendations for any individual. The economic forecasts set forth in the material may not develop as predicted. All indices, such as the S & P 500, are unmanaged and may not be invested into directly.