Pence Wealth Management’s Financial Market Report

US FINANCIAL MARKET

• Starbucks said that it bought its first coffee farm, where it will research the leaf rust that is devastating Central American crops. Central America and Mexico account for more than one-fifth of global output of arabica beans.
• Visa Europe’s owners may decide to sell the credit card company to U.S.-based Visa. Visa Europe is owned and operated by more than 3,700 European member banks. It is the European licensee of Visa Inc and is the largest card network in the 27-country European Union.
• Lennar, the third-largest U.S. homebuilder by revenue, said earnings rose in the fiscal first quarter as prices and sales increased amid a broadening national housing recovery.
• General Mills reported third-quarter profit better than the analyst estimate.
• FedEx third-quarter profit fell 31% as customers shifted to slower and less-expensive international air-shipping options. It also cut its full-year forecast.
• GM is recalling nearly 27,000 Buicks and Cadillacs in the U.S. to fix a problem with the automatic transmissions.
• Volkswagen is recalling 384,181 vehicles in China to fix a long-standing gearbox problem.
• The Office of the Comptroller of the Currency (OCC) downgraded JPMorgan’s management rating to level 3, meaning the board’s abilities “may be insufficient” and “need improvement”, the WSJ said.
• Lockheed Martin said that 243 of 4,000 mid-level managers in its information systems and global solutions division have accepted voluntary layoffs.
• REIT American Realty Capital Properties said it offered to buy unlisted Cole Credit Property Trust III Inc for $5.7 billion in cash and stock to create the largest publicly traded REIT in the net lease sector. The offer is valued at more than $9 billion including debt. American Realty Capital is offering $12 in cash or 0.80 shares of its own stock for each Cole Credit share.
• Cole Credit said earlier this month that it would buy Cole Holdings Corp, a real estate investment manager with over $12 billion assets under management, and pursue a listing on the New York Stock Exchange. Cole Credit Property Trust III owns 926 properties in 47 states and counts Walgreen and CVS among its tenants.
• State-owned China Telecom profit fell 9.5% last year because it spent more to market the iPhone as it battled rivals for higher-paying customers. China Telecom is also the world’s biggest fixed-line phone operator by subscribers, rolled out service for the Apple iPhone in the first half of last year, becoming the second Chinese carrier to offer the popular smartphone. Mobile subscribers rose 27% to 161 million as the company added 34.1 million new customers, with 33 million of those for faster third-generation service.
• PIMCO’s Saumil Parikh said the proposed terms for Cyprus banking bailout “suggest a more bumpy road for Europe.” Investors think Cyprus is a test for policymakers.
• Restaurants are reeling from their worst three months since 2010, as American diners spooked by higher payroll taxes cut back on eating out. Sales at casual-dining establishments fell 5.4% last month.

US ECONOMY & POLITICS

• Congress is pressing to avoid a government shutdown with a Senate vote this week on a stopgap funding bill for the rest of the fiscal year.
• The Federal Reserve on Wednesday is expected to maintain its resolve to keep borrowing costs at record lows despite growing signs that the economy is strengthening.
• Fannie Mae and Freddie Mac will repay the Treasury sooner.

EUROPE & WORLD

• Lawmakers in Cyprus decisively rejected a plan on Tuesday to seize up to 10% of people’s bank deposits in order to secure an international bailout and prevent a collapse of the country’s banks. The vote leaves the tiny Mediterranean economy in financial limbo.
• After the island’s parliament rejected the terms of a bailout from the EU, Cyprus pleaded for a new loan from Russia on Wednesday to avert a financial meltdown. Cyprus has asked Russia for a five-year extension of a loan of 2.5 billion euros ($3.22 billion) that matures in 2016, as well as a reduction in the 4.5% rate of interest. Cyprus has also asked Russia to loan it a further 5 billion euros.

TODAY in HISTORY

• The Dutch East India Company was established. During its 196-year history, it became one of the world’s most powerful companies (1602)
• English physicist/astronomer Sir Isaac Newton died in London at age 84 (1727)
• The first five-man basketball team intercollegiate basketball game to use five players per team was held. Yale beat Pennsylvania by a score of 32-10 (1897)
• John Lennon married Yoko Ono in Gibraltar (1969)

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.