Pence Wealth Management’s Financial Market Report

US FINANCIAL MARKET

• JPMorgan fourth-quarter net income jumped 53%, and earnings for 2012 set a record. Fourth-quarter net income rose to $5.69 billion from $3.73 billion a year earlier. Revenue from mortgage production increased 51% to $1.6 billion. Also, Jamie Dimon had his pay cut in half after a review of losses at the bank’s CIO found he bears responsibility for the blunders.
• Goldman Sachs fourth-quarter earnings nearly tripled.
• Japan’s two leading airlines grounded their fleets of all 25 Boeing 787s on Wednesday after one of the Dreamliner passenger jets made an emergency landing. Japan officials said that a battery in the forward cargo hold triggered emergency warnings to the pilots.
• Facebook’s new search tool has strong potential to generate revenue for the social networking company but it is unlikely to challenge Google’s supremacy in web search at least in the near term, analysts said on Wednesday. Facebook currently has a partnership with Microsoft, whose Bing search engine provides search results for external websites. Analysts estimated that Facebook could add $500 million in annual revenue if it can generate just one paid click per user per year, and raised its price target on the stock by $4 to $35.
• Wal-Mart will buy an additional $50 billion in U.S.-made products over the next decade in areas like sporting goods and high-end appliances in what the world’s largest retailer called a bid to help boost the U.S. economy. The company claims about two-thirds of the goods it buys for its stores are made, sourced from or grown in the United States.
• Online retailer Amazon is fighting the IRS over a $234 million international tax bill. The IRS informed Amazon in November 2012 of what the agency said were unpaid taxes for 2005 and 2006. Amazon first publicly disclosed in April 2011 that it faces $1.5 billion in additional federal taxes over a seven-year period, beginning in 2005, according to a SEC filing.

US ECONOMY & POLITICS

• Industrial increased 0.3% last month after a 1.0% increase in November. Manufacturing production increased 0.8% after advancing 1.3% the prior month. For the fourth quarter, industrial production rose at a 1.0% annual pace. Manufacturing output increased at a tepid 0.2% pace.
• Last month, the amount of industrial capacity in use edged up to 78.8% from 78.7% in November. Industrial capacity utilization – a measure of how fully firms are using their resources – was 1.5 percentage points below its long-run average.
• US homebuilder confidence steady near 7-year high. The NAHB homebuilder index remained unchanged at 47 in January (vs. consensus 48). Readings below 50 suggest negative sentiment. The last time the index was at that level or higher was in April 2006, at 51.
• Consumer prices (CPI) were flat in December. In the 12 months to December the CPI increased 1.7%. In the 12 months to December, core CPI increased 1.9%.
• Gasoline prices fell 2.3%, marking the third straight monthly decline. The cost of apparel fell 0.1%. New motor vehicle prices were flat. Prices for used cars and trucks fell 0.4%, declining for a sixth straight month. Housing costs edged up, with owners’ equivalent rent of primary residences rising 0.1%.
• Shoppers spent only 3% more during the 2012 holiday season than they did a year earlier, the National Retail Federation said. Total spending during the holiday season rose to $579.8 billion.
• Non-store sales during the holiday season, which are mostly online, rose 11.1%. Non-store sales were not included in the 3% figure above.
• The U.S. Commerce Department reported yesterday that its broader measure of U.S. retail sales rose 0.5% in December.
• The House has approved a $50.7 billion measure for Superstorm Sandy victims.

EUROPE & WORLD

• Companies in the euro area are poised to cut dividends to the lowest level in four years as chief executive officers stockpile cash to weather the region’s sovereign-debt crisis.
• Japan’s economy contracted in the second half of 2012 and is on track for lackluster growth of 0.8% this year, hurt in part by a territorial row with China, the World Bank said. The value of Japanese exports to China fell by 17% between June and November of last year.
• The World Bank expects China’s economy to expand 8.4% in 2013 and round 8% in 2014.
• The World Bank expects India to grow 6.6% in 2014, and 6.9% by 2016.
• The German government on Wednesday more than halved its economic growth forecast for this year to just 0.4%. The government said growth will pick up in 2014, when it is forecast at 1.6%.
• Ahmadinejad said Wednesday Iran must move away from dependence on oil revenue to overcome Western sanctions that have slowed the economy and disrupted foreign trade.

TODAY in HISTORY

• Ivan the Terrible was crowned the first czar of Russia (1547)

• The U.S. Civil Service Commission established (1883)

• A year after it was ratified, the 18th Amendment to the Constitution, prohibiting the sale of alcoholic beverages, went into effect (1920)
• Mickey Mantle signed a contract which made him the highest paid baseball player in the American League. He had a contract for $85,000 (1961)

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.