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Pence Wealth Management Financial Markets Reports

US FINANCIAL MARKET

  • U.S. stocks rose at the open on Monday, advancing to all-time highs as Apple surged on a distribution deal with China Mobile. The S&P has soared about 28% this year, thanks largely to the Fed’s stimulus, and is on track for its best year since 1997.
  • Apple has signed a long-awaited agreement with China Mobile to sell iPhones through the world’s biggest network of mobile phone users. Apple said its smartphones will be available to China Mobile customers starting January 17. Pricing and availability details for the iPhone 5S and 5C lines will be disclosed at a later date.
    • China Mobile, which has about 763 million customers (or 62% of China’s 1.22 billion wireless subscribers), will begin registering orders for iPhone from December 25.

Pence Analysis (Special Report):

  • China Mobile may add from 12 million to 24 million new iPhone sales for Apple in 2014, based on Bloomberg estimates. This means:
    • $7 – $14 billion revenue (based on $580 average iPhone price for 5s and 5c)
    • $1.4 to 2.8 billion profit (based on 20% net profit margins)
    • $1.55 to $3.10 EPS (based on 899 million outstanding shares)
    • $22 to $44 stock price increase today, some of which already priced in this month (based on its PE of 14.25)
  • Men’s suit retailer Jos. A. Bank Clothiers said its board has unanimously rejected the $1.5 billion bid by Men’s Wearhouse.
  • The number of transactions at Target fell 3 to 4% compared with last year’s final weekend before Christmas.
  • Tiffany & Co said a Dutch arbitration court ruled that it must pay Swatch Group 402 million Swiss francs ($448.79 million) in damages over their failed joint venture to produce and market watches.
  • For hedge funds that made money this year there was only one strategy that really mattered – latching onto the stockmarket rally. So far this year the average hedge fund is up 8.2% – their best year in three but lower than a near 21% rise in the MSCI World Index for stocks.

US ECONOMY & POLITICS

  • November personal income rose 0.2% while spending rose 0.5%. Analysts expected both to have risen 0.5%. The market wasn’t impacted by the data.
  • Thomson Reuters/University of Michigan’s consumer sentiment index jumped to 82.5 for December, up from the 75.1 posted in November.
    • The survey’s barometer of current economic conditions jumped to 98.6 in December, up from both the preliminary read of 97.9 as well as the November reading of 88.
    • The survey’s gauge of consumer expectations rose from 66.8 in November to 72.1.
  • U.S. consumers shopped less on the final weekend before Christmas despite deeper discounts. The number of visits to stores fell 7% on Friday and Saturday, RetailNext said. Only two-thirds of Americans are all or almost finished with their Christmas shopping.
  • Durable goods orders are projected to advance 1.8% in November, boosted by more bookings for commercial aircraft and motor vehicles.
  • A final confirmation vote on Janet Yellen to head the Federal Reserve was delayed until early January after the U.S. Senate dropped plans to consider her nomination this weekend. Senate Majority Leader Harry Reid late yesterday announced an agreement under which senators will vote to advance Yellen’s nomination today, then take a holiday break and return Jan. 6 for the final vote. 
  • The Federal Reserve’s balance sheet reached a record $4 trillion, as the central bank pushed on with its unprecedented asset-purchase program. The Fed’s holdings rose $14.1 billion to $4.01 trillion in the past week.
    • Chairman Ben S. Bernanke has raised assets from $2.82 trillion before the third round of quantitative easing began in September 2012 and quadrupled them since 2008 to attack unemployment after the 2008-2009 recession.

EUROPE & WORLD

  • International Monetary Fund (IMF) managing director Christine Lagarde said on Sunday the international lender would raise its growth forecast for the world’s largest economy next year. The IMF forecast in October that the U.S. economy would expand 2.6% in 2014.
  • Japan unveiled a record budget (95.88 trillion yen or $921 billion) for the next fiscal year. The government forecast on Saturday that Japan’s real gross domestic product will grow by 1.4% for the fiscal year starting March 2014, slowing from an expected 2.6% growth for the current year as a planned sales tax increase is seen dampening consumption.
  • China aims to start building at least 6 million units of public housing next year. But next year’s target is lower than the 2013 objective. The country began building 6.7 million units of public homes this year and has completed 80% of them. Large-scale construction of public homes in China not only supports growth in the world’s second-largest economy, it also helps to quell discontent over soaring house prices.
  • Airbus said on Monday it had finalized a deal with Emirates Airline for 50 more A380s aircraft that had been announced at the Dubai airshow last month. The deal is worth $23 billion at list prices and brings total orders from Emirates alone for the world’s largest jetliner to 140 aircraft.

TODAY in HISTORY

  • George Washington resigned as commander-in-chief of the U.S. Army (1783)
  • Maryland voted to cede a 100-square-mile area for the District of Columbia (1788)
  • President Woodrow Wilson signed the act creating the Federal Reserve System (1913)

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.

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