US FINANCIAL MARKET
- U.S. stocks opened flat in what is expected to be holiday-thinned trading on Monday, on the heels of the best two-week advance for the S&P 500 in five months and ahead of data on the housing market.
Special Report (2013 Market Summary):
- Equity returns will slow next year, Wall Street strategists forecast. The S&P 500 will end 2014 at 1,950, according to the average of 20 estimates compiled by Bloomberg. That represents a 5.9 % gain over the next 12 months.
- The S&P 500’s gain this year created more stock market value in the U.S. than any year on record.
- Companies in the S&P 500 are worth $3.7 trillion more today than they were 12 months ago. The credit crisis in 2009 wiped out $11 trillion in total U.S. market value.
- The S&P 500 has returned 26 % on an annual basis since March 2009.
- U.S. bonds fell 3.4 % this year, poised for the first drop since 2009.
- Earnings growth is slowing. Profits rose about 3.8 % per quarter this year on average.
- The Q4 2013 estimated earnings growth rate for the S&P 500 is 6.3%.
- The Financials sector is projected to have the highest earnings growth rate for the quarter, while the Energy sector is projected to have the lowest earnings growth rate for the quarter.
- On September 30, the earnings growth rate for Q4 2013 was 9.6%.
- All ten sectors have recorded decreases in earnings growth rates over this time frame, led by the Energy sector. For Q4 2013, 94 companies have issued negative EPS guidance and 13 companies have issued positive EPS guidance.
- Cash & short-term investment balances (“cash”) in the S&P 500 (ex-Financials) rose by 18.0% year-over-year and settled at a balance of $1.36 trillion at the end of Q3 2013. Major factor for cash growth was large cash inflows from operations. S&P 500 companies generated $351.3 billion in free cash flow in Q3, the second largest amount in at least ten years. Excluding Verizon’s $49 billion debt offering intended to help finance its $130 billion acquisition of Vodafone Group’s stake in Verizon Wireless, cash grew 14.0% year-over-year, which was lower than the final Q2 growth rate (+14.8%).
- GDP will expand 2.6 % next year, up from 1.7 % in 2013, according to the median of 78 economists surveyed by Bloomberg. The unemployment rate fell to 7 % in November, a five-year low, as weekly jobless claims held below 400,000 all year.
- Disney: Marvel, Pixar, Star Wars, what’s not to like? Walt Disney jumped 2.7 % to a record $76.54 in the morning after it was raised to buy from neutral by Guggenheim Securities LLC analyst Michael Morris. Morris’ 12-month target price is $87.
- Wells Fargo agreed to pay Fannie Mae $591 million to resolve repurchase demands on loans originated before 2009 and sold to the government-backed firm. Wells Fargo reached an $869 million accord with Freddie Mac in September to resolve disputes on a similar subset of loans.
- Google and Audi plan to announce that they are working together to develop in-car entertainment and information systems that are based on Google’s Android software, people familiar with the matter said. The coming announcements signal Google’s response to an initiative launched last June by Apple to integrate iPhones and other devices running its iOS operating system with car makers’ dashboard control panels. Apple so far has the support of BMW, Daimler’s Mercedes-Benz division, General Motors and Honda Motor.
- Ford said U.S. sales for its main brand will surpass 2.4 million vehicles this year, as record demand for its Fusion sedan and hybrid models helps extend a lead over Toyota’s namesake line.
- SEC pushes US insurers for details on ‘captives’. The U.S. securities regulator has asked life insurers to disclose the potential cost of forcibly winding down in-house insurance units known as ‘captives,’ whose business model has come under regulatory radar, the Wall Street Journal reported. State insurance regulators, which approve these captive units, have previously raised concerns that some companies may be covering up their financial health by moving business to such related entities.
- Cooper Tire & Rubber said on Monday it was terminating a proposed $2.5 billion sale to India’s Apollo Tyres, marking the end of an agreement plagued by obstacles from the start.
- Target said PIN data of some customers’ bank ATM cards were stolen in a massive cyber attack at the third-largest U.S. retailer, but it was confident that the information was “safe and secure.” The stolen PIN data was “strongly encrypted” when it was removed from Target’s systems, spokeswoman said in a statement on Friday.
US ECONOMY & POLITICS
- Pending home sales increased 0.2 %, the first gain in six months, after a 1.2 % drop in October that was larger than initially reported. The median projection in a Bloomberg survey of economists called for a 1 % advance.
- More than 975,000 Americans signed up this month for health insurance under Obamacare, pushing total enrollment above 1.1 million in 36 states covered by the U.S. healthcare.gov website.
EUROPE & WORLD
- World stocks were putting the finishing touches to a bumper year on Monday, steady at a six-year peak as rising benchmark bond yields and commodity prices underscored expectations of firmer global growth in 2014.
- Wall Street was set for a quiet start to its final full session of 2013 – its best year since 1997, with a near 30 % gain.
- In Europe, Britain’s FTSE 100, Germany’s DAX and France’s CAC 40 all made minor downward adjustments with annual gains running at 14, 26 and 17 %.
- Japanese shares ended 2013 with a flourish, up 0.7 % – 56.7 % for the year – as the yen skidded to a fresh five-year low for a third straight session.
- German Finance Minister Wolfgang Schaeuble told a newspaper on Monday that low interest rate policies adopted by central banks around the world could not continue forever.
- BMW and Toyota have agreed to develop a joint platform for sportscars.
- Spain retail sales rose 1.9 % year-on-year on a calendar-adjusted basis in November. Retail sales had been falling every month for three years until September.
- French President Francois Hollande received approval from the country’s constitutional court to proceed with his plan to tax salaries above 1 million euros at 75 % for this year and next.
TODAY in HISTORY
- The United States bought some 45,000 sq mi of land from Mexico in the Gadsden Purchase (1853)
- Sun Yat-sen was elected the first president of the Republic of China (1911)
- The Union of the Soviet Socialist Republics (USSR) was established through the confederation of Russia, Byelorussia, Ukraine, and Transcaucasian Federation (1922)
- California’s first freeway opened (1940)
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.