Pence Wealth Management’s Financial Market Report

US FINANCIAL MARKET

• Facebook slumps as mobile advertising revenue failed to live up to Wall Street’s high expectations. Three brokerages downgraded the stock this morning. Fourth-quarter revenue was $1.585 billion, better than expected. However, its operating margin declined to 33% from 48% due to investing heavily. Costs rose to $1.06 billion from $583 million. Facebook said the total number of monthly active users reached 1.06 billion, while daily active users rose to 618 million.
• UPS forecast profit for this year that trailed analysts’ estimates as a weak global economy weighs on shipping. UPS is focusing on its own operations after terminating an agreement to buy TNT for $6.9 billion.
• Marlboro maker Altria Group’s fourth-quarter profit rose about 32% as it commanded higher prices for cigarettes and smokeless tobacco and expanded its industry-leading share of the U.S. market.
• Annaly Capital raised its offer to buy the rest of CreXus Investment and has sealed the deal for about $872.3 million in cash.
• Qualcomm gave a fiscal second-quarter sales and profit forecast that exceeded analysts’ estimates, helped by strong sales of smartphones that run on its technology. The largest seller of semiconductors for mobile phones net income in the fiscal first quarter rose 36% to $1.91 billion and sales increased 29% to $6.02 billion. The majority of Qualcomm’s revenue comes from baseband chips, which connect phones to cellular networks, sold to wireless-device makers such as Apple, HTC, and Samsung.
• MasterCard fourth-quarter results topped Wall Street estimates and revenue growth accelerated as more people chose card payments over cash. Purchase volumes in Asia-Pacific, the Middle East and Africa grew at 19.5%, far outpacing the 7.1% rise in the United States.
• Dow Chemical posted lower-than-expected adjusted profit, as demand withered for polyurethane and chlorine around the world, especially in China and Europe.
• Boeing stood by the troubled lithium-ion battery technology and said that the grounding had no significant impact on its 2013 financial forecast.
• Whirlpool reported a higher-than-expected quarterly profit and gave a strong outlook for 2013. The maker of Maytag and KitchenAid has benefited from cutting costs, raising prices and adopting a string of measures to boost productivity.
• Energizer first-quarter net income fell 10% due to restructuring costs, yet adjusted results beat expectations.
• Dunkin’ Brands fourth-quarter net income nearly tripled as more customers headed to its shops and spent more there.
• Colgate-Palmolive fourth-quarter net income rose 1% on higher prices and cost cuts. Colgate is cutting 6% of its staff by 2016 as part of a broader cost-cutting program. North America accounts for 18% of Colgate’s sales, while Latin America is its largest region with 29% of its sales.
• Diageo reported steady sales growth in the second half of 2012, driven by the growth in the U.S. of brands like Ketel One vodka and Bulleit Bourbon. The maker of Johnnie Walker whisky and Guinness beer saw sales grow 5%, overall.
• Apollo and Metropoulos submit $410 million offer for Hostess Twinkies.

US ECONOMY & POLITICS

• Initial claims for state unemployment benefits increased 38,000 (due to post-Christmas seasonal adjustment) to 368,000, the Labor Department said on Thursday. The four-week moving average for new claims is at 352,000, suggesting a steady improvement in labor market conditions.
• The number of planned layoffs at U.S. firms rose in the first month of the year, but that was more than offset by an increase in plans to hire. Employers announced 40,430 job cuts this month, up 24.2% from 32,556 in December, according to Challenger. Overall hiring announcements climbed to 60,585 from 16,266 in December.
• Business activity in the U.S. expanded more than forecast in January, a sign manufacturing picked up at the start of the year. The MNI Chicago Report’s business barometer rose to 55.6 this month, the highest since April.
• President Barack Obama will let his jobs council expire this week without renewing its charter.
• Household purchases, which account for about 70% of the economy, rose 0.2% after a 0.4% gain the prior month, a Commerce Department report showed.
• Personal income posted a 2.6% gain in December, well ahead of expectations. Disposable income, or the money left over after taxes, climbed 2.8% after adjusting for inflation, the biggest gains since May 2008. After-tax income rose at a 6.8% annual rate from October through December, the biggest increase since the second quarter of 2008, a report showed yesterday.
• The saving rate increased to 6.5%, the highest since May 2009, from 4.1%. Wages and salaries increased 0.6%.
• The fourth-quarter drop in GDP was largely due to a decline in government outlays and a smaller gain in inventories that subtracted a combined 2.6 percentage points from growth, Commerce Department data showed yesterday.

EUROPE & WORLD

• Latvia takes big step to becoming 18th euro country in spite of domestic concerns.
• Russian GDP growth slowest since 2009 as investment wanes. Its economy expanded 3.4% in 2012, down from 4.3% a year earlier.
• Singapore’s jobless rate fell to a five-year low last quarter as companies hired more local workers after the government tightened the inflow of foreign labor.
• Philippine economy expands 6.8% in fourth quarter and 6.6% in 2012.
• Japan’s industrial production picked up pace in December from the month before. Industrial output is up 2.5% in December.

TODAY in HISTORY

• The House of Representatives approved the Thirteenth Amendment to the Constitution, which abolished slavery in the United States (1865)
• The first social security check was issued to Ida Fuller for $22.54 (1940)
• The first U.S. earth satellite, Explorer I, was launched (1958)
• The first McDonald’s opened in Russia (1990)

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.