Pence Wealth Management’s Financial Market Report

US FINANCIAL MARKET

• Apple became the top mobile phone seller for the first time in the U.S. market during the fourth quarter of 2012, outshining arch rival Samsung Electronics. Apple’s share of the U.S. mobile phone market jumped to 34% from 26%, while Samsung’s share grew to 32.3% from 31.8%, Strategy Analytics. Samsung had been the top mobile phone vendor in the US since 2008. Apple sold 17.7 million iPhones in the U.S. in the fourth quarter, up 38% from the previous year. Samsung shipped 16.8 million phones during the same period.
• Taiwanese smartphone maker HTC will shift its focus more towards emerging markets and offer lower priced phones in China this year as it grapples with slumping revenue in the shadow of Apple’s iPhone and Samsung’s Galaxy series.
• Oracle agreed to buy Acme Packet, which makes network equipment to speed up voice, video and data delivery across networks, for about $2 billion.
• McDonald’s says it is offering its first new Happy Meal entree in a decade: Fish McBites. The Happy Meals will come with seven pieces of Fish McBites, French fries, apple slices and a drink. Depending on which drink is selected, McDonald’s says the Happy Meals with Fish McBites have between 385 calories and 415 calories.
• Twitter acknowledged that it has become the latest victim in a number of cyber-attacks against media companies, saying hackers may have gained access to information on 250,000 of its more than 200 million active users.
• Japan’s ANA is in talks with Boeing to speed up the delivery of three 777 jetliners as its fleet of 787 Dreamliner airplanes remains grounded with undiagnosed battery problems. ANA, Asia’s top airline by revenue, lost more than $15 million in revenue from having to cancel Dreamliner flights last month.

US ECONOMY & POLITICS

• President Barack Obama says 2013 can be a year of solid economic growth, but only if Washington gets out of the way.
• The ISM manufacturing index rose to 53.1 in January (vs. consensus 50.7). The new orders component rose 3.6 pt to 53.3, production rose 1 pt to 53.6, and employment rose 2.1 pt to 54.0. More than half of the increase was due to an 8-point surge in the inventories component to 51.0.
• Consumer sentiment from the University of Michigan was a stronger than expected 73.8 (vs. consensus 71.5) from December reading of 72.9. The payroll tax has depressed spending by lower-income households and has likely contributed to consumers’ continued weak assessment of their current financial situation. The largest increase came from families with incomes over $75,000, likely due to recent strength in the stock market.
• Growth in construction spending was stronger-than-expected at +0.9% month-on-month in December (vs consensus +0.7%). Private residential construction spending rose by 2.2%, consistent with the broadly-solid housing construction data seen in recent quarters, while private non-residential spending rose by 1.8%. Public construction spending–which has been weak for the past three years–continued to trend down, falling 1.4%.
• Motor vehicle sales dropped only slightly in January. Total vehicle sales dropped only slight to 15.2m (annualized), in line with consensus expectations. The figure represented a small drop from December’s total of 15.3m. Domestic vehicle sales were stronger than expected at 12.1m, an increase from 12.0m in December.
• The Thomson Reuters/PayNet Small Business Lending Index, which measures the overall volume of financing to small U.S. companies, rose to 112 from an upwardly revised 111.1 in November.
• Separate PayNet data showed financial stress at near-record-low levels. Accounts overdue by 30 days fell to 1.20% of the total from 1.21% the previous month. A “normal” rate of delinquency is 1.5% to 1.6%.
• Longer-term delinquency rates also eased. Accounts behind 180 days or more, which are considered in default and unlikely to be paid, dipped to 0.24% from 0.27%.

EUROPE & WORLD

• President Francois Hollande said France was keen to agree the EU 2014-2020 budget, but there was still much work to be done.
• French Finance Minister Pierre Moscovici said the government believed it could reach its 2013 economic growth target of 0.8%.
• Japan’s Hitachi cut its full-year profit outlook by about 13%.
• The U.S. government and Mexican tomato growers reached a tentative agreement that reduces the threat of a costly trade war stemming from a U.S. decision last year to pull out of a 1996 bilateral tomato trade pact.
• Iran considers an offer to negotiate directly with the U.S. over its nuclear program a “step forward” and expects to resume meetings with world powers later this month, the Persian Gulf nation’s Foreign Minister Ali Akbar Salehi said.

TODAY in HISTORY

• George Washington and John Adams are elected the president and vice president of the United States (1789)
• The first Winter Olympics in the US were held at Lake Placid, NY (1932)
• Roosevelt, Churchill, and Stalin met at the Yalta Conference (1945)

Special Report: Summary of the benchmark revisions

With the release of data for January 2013 on February 1, 2013, the Bureau of Labor Statistics (BLS) introduced its annual revision of National estimates of employment, hours, and earnings from the Current Employment Statistics (CES) monthly survey of nonfarm establishments. Each year, the CES survey realigns its sample-based estimates to incorporate universe counts of employment — a process known as benchmarking. Comprehensive counts of employment, or benchmarks, are derived primarily from unemployment insurance (UI) tax reports that nearly all employers are required to file with State Workforce Agencies.

The March 2012 benchmark level for Total nonfarm employment is 132,505,000; this figure is 424,000 above (bold number) the sample-based estimate for March 2012, an adjustment of 0.3%. The table shows the Total nonfarm percentage benchmark revisions for the past ten years.

The Labor Department published benchmark revisions to payrolls data going back to 2008. After the revision, it said the employment level in March 2012 was 424,000 higher on a seasonally adjusted basis than previously reported. Current unemployment rate is at 7.9%, down from 8.4% in 2011 and 9.4% in 2010.

The US economy created average of 165,000 jobs per month (private sector’s share was 172,000) in 2012, up from the previous year’s 153,000 (private sector’s share was then 175,000). The economy has recovered nearly 4 million jobs in the last two years.

Sources: Reuters, Yahoo Finance, Google Finance, Bloomberg, CNN Money, Bureau of Labor Statistics.

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.