Pence Wealth Management’s Financial Market Report

US FINANCIAL MARKET

• Amazon.com reported better-than-expected quarterly profit, fueled by the growth of higher-margin businesses during the holiday quarter. The gross profit margins were 24 percent compared with expected 22%. Its Q4 revenue rose 22 percent to $21.27 billion.
• Boeing posted stronger-than-expected profit as its backlog of orders rose, and said its 2013 forecast assumed no significant impact from the grounding of its 787 Dreamliner jet by regulators. The company said it booked 394 net aircraft orders in the quarter, and that its total order backlog was nearly 4,400 planes valued at $319 billion, a record tally.
• Kinder Morgan Energy is buying natural gas company Copano Energy LLC for about $3.72 billion in cash (or $5 billion, including debt) so it can offer more services to its customers.
• EU antitrust regulators blocked a 5.2 billion euro ($7 billion) bid by UPS for TNT Express, denting the world No. 1 package delivery company’s hopes of expanding its presence in Asia and Latin America.
• RIM changes name to BlackBerry; unveils 2 new phones and BlackBerry 10 OS, signaling hope for new start.
• Chrysler profit jumps on higher sales. Chrysler posted a $1.7 billion profit in 2012 and said it expects to earn more than $2 billion this year.
• Southern fourth-quarter profit rose 47 percent as the electric utility operator overcame flat revenue by cutting spending on non-fuel operations and maintenance.
• Dunkin’ Donuts is about to face off with Starbucks in Vietnam. It signed deals to open an unspecified number of locations over the next several years. 
• L-3 Communications fourth-quarter net income dropped by 23 percent, still the results beat Wall Street predictions and the company boosted its full-year profit predictions.
• Lenovo quarterly profit rose 34 percent to a record high on strong sales of smartphones and tablet computers. The company said its smartphone business in China was profitable for the first time and handsets were launched in India, Indonesia, Russia and other markets. Shipments of media tablets rose 77 percent to 800,000 units. Lenovo shipped 9.4 million smartphones during the quarter, all but about 400,000 of them in China. Revenues in the bigger but slower-growing PC market rose 7 percent to $7.9 billion.
• LG Electronics sinks to loss after EU fine. The European Union fined it 492 million euros ($664 million) last month for rigging prices of cathode-ray tubes for years up until 2006. 

US ECONOMY & POLITICS

• US economy shrinks 0.1 percent, 1st time in 3½ years. Real US GDP growth in Q4 was much weaker-than-expected. Economists had expected output to increase at a 1.1 percent rate.
• GDP was accounted for by two especially weak categories–federal defense spending and inventory investment–which together subtracted 2.6 percentage points from the headline number. Weakness in these categories does not represent the overall trend in the economy. Particularly weak defense spending number was the largest negative contribution in four decade. Personal consumption spending rose at a sturdy 2.2% rate.
• The GDP price index rose at a modest 0.6% annual rate (vs. consensus 1.5%), and combined with the weaker-than-anticipated rate of real growth, resulted in nominal GDP growth of only 0.5% (annualized), the weakest since the 2007-2009. recession.
• Job growth likely modest but steady in January. The ADP National Employment Index shows an increase of 192,000 private sector jobs in January – 27,000 more than analysts’ expectation of 165,000. 
• Fed is expected to keep “bond-buying” monetary policy on a steady path, but behind the scenes intensive debate continues over when the controversial bond-buying program should be curtailed.

EUROPE & WORLD

• Euro-Area economic confidence rises more than forecast. The index rose to 89.2 from a revised 87.8 in December.
• Spain recession deepens more than forecast amid austerity. GDP fell 0.7 percent in the last quarter.
• Japan is set to increase its defense budget (0.8% to $51.7 billion) for the first time in 11 years and boost Coast Guard spending as it copes with mounting incursions by Chinese ships in waters near islands claimed by both countries.
• Chinese incomes rose faster in the countryside than in cities for a third straight year in 2012.
• South Korea’s industrial production unexpectedly rose in December as strength in domestic demand offset weakness in exports.

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.