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Pence Wealth Management Financial Markets Reports

US FINANCIAL MARKET

  • U.S. stocks opened flat on Wednesday but they turned positive after data showed sales of new single-family homes recorded their biggest increase in nearly 33-1/2 years in October.
  • Apparel retailer Express joined other U.S. retailers in forecasting a weaker-than-expected holiday quarter due to muted Thanksgiving sales and a highly promotional environment.
    • Retailers from Urban Outfitters to Wal-Mart are bracing for what is expected to be the toughest holiday shopping season since 2008 as customers are increasingly budget-conscious and value-focused.
    • U.S. retailers looking north in their quest for growth should consider the frosty reception Canada has so far given trendy discounter Target a cautionary tale: what looks like a simple border crossing can easily go wrong.
      • Target had big plans for Canada earlier this year when it started opening the first of an unprecedented 124 stores in one year, along with three distribution centers.
      • But it disappointed shoppers with prices above those it charges in the United States, and then with empty shelves as it miscalculated demand and struggled with managing inventory.
  • Wal-Mart is paying for lawyers to represent more than 30 of its executives involved in a foreign corruption investigation.
    • The U.S. Department of Justice is investigating whether Wal-Mart paid bribes in Mexico to obtain permits to open new stores there, and whether executives covered up an internal inquiry into the payments. The department is also looking into possible misconduct by the world’s largest retailer in Brazil, China and India.
    • On a separate note, Wal-Mart is sticking with Bank of America’s Merrill Lynch unit to run its 401(k) program with $18 billion in assets.
      • The average Wal-Mart employee has about $18,000 in their retirement account, according to BrightScope. That’s much smaller than the average worker’s account balance of about $84,000.
      • Wal-Mart, the world’s biggest retailer, has more than 1.2 million people participating in its retirement plan.
  • Rockwell Collins, which makes cockpit systems for airplanes, said it sees “pretty significant” opportunities to supply systems on Boeing’s newest commercial airliner, the 777X.

US ECONOMY & POLITICS

  • Purchases of new U.S. homes surged in October by the most in three decades, signaling buyers are starting to take higher mortgage rates in stride. Sales jumped 25.4 % to a 444,000 annualized pace, following a 354,000 rate in the prior month that was the weakest since April 2012.
  • The Institute for Supply Management’s (ISM) non-manufacturing index decreased to 53.9 in November from 55.4 in the prior month. The figure includes industries that range from utilities and retail to health care, housing and finance and make up almost 90 % of the economy.
  • Markit’s composite Purchasing Managers Index (PMI) – a weighted average of its manufacturing and services indexes – rose to 56.2 last month from 49.6 in October. The “flash” or preliminary reading came in slightly higher at 57.1 last week.
    • Services sector PMI, also reported by Markit, rose to 55.9 from 49.3 in October.
  • The Commerce Department said the nation’s trade deficit fell 5.4 % to $40.6 billion as exports hit a record high.
    • Exports increased 1.8 % to $192.7 billion. That was the highest on record and snapped three straight months of declines in exports. Sales of goods to China, Canada and Mexico were the highest ever.
    • Imports rose a modest 0.4 % to $233.3 billion in October, the highest in 1-1/2 years. Purchases of products from the EU climbed to a record.
  • U.S. private employers hired more workers than expected in November.
    • Private employers added 215,000 new jobs to their payrolls last month, the ADP National Employment Report showed, beating economists’ expectations for a gain of 173,000 jobs.
    • October’s gain was revised to 184,000 from 130,000.
  • The unemployment rate could fall substantially early next year as belt-tightening in Washington throws more than a million long-term unemployed Americans off the benefit rolls.
    • Goldman Sachs expects an expiration of emergency benefits would reduce the jobless rate by between 0.1 and 0.2 percentage point in early 2014.
    • Emergency jobless benefits for 1.3 million long-term unemployed people are set to run out on January 1 unless the U.S. Congress agrees on an extension. The emergency unemployment compensation program was introduced in 2008. It has paid out more than $225 billion to cushion the long-term unemployed as the economy struggled to heal from the recession.
  • U.S. consumers buyers are taking out bigger car loans with longer pay-back periods as lenders offer lower interest rates and accept borrowers with weaker credit ratings.
    • The average loan on a new car climbed to $26,719 in the third quarter, up by $756 from a year earlier.
    • Despite borrowing so much more, average monthly payments on new car loans rose only $6 to $458.
    • The average interest rate fell to 4.27 % from 4.53 % a year earlier.
    • Major automakers reported their best U.S. sales month in 6-1/2 years in November as the industry’s annual U.S. sales pace reached 16.41 million vehicles, the best showing since February 2007.
  • Applications for U.S. home loans tumbled in the latest week. The MBA’s adjusted index of mortgage application activity, which includes both refinancing and home purchase demand, sank 12.8 % in the week ended November 29. The data marked the fifth straight weekly drop for the index, taking it to its lowest level since early September.

EUROPE & WORLD

  • Energy ministers from OPEC countries agreed today to keep the group’s target for crude output unchanged at 30 million barrels a day.
    • Prices are stable. Brent crude, the benchmark used to price more than half of the world’s crude, was at $112.11 a barrel as of 1:25 p.m. in London. It averaged $108.57 since the start of the year, compared with $111.68 in 2012 and $110.85 in 2011.
  • EU antitrust regulators vowed to keep investigating rate- rigging on Wednesday as they slapped a record 1.7 billion euro ($2.3 billion) penalty on six financial institutions including Deutsche Bank, RBS and JPMorgan.
    • Deutsche Bank received the highest fine of 725.4 million euros.
  • Markit’s November Eurozone Composite Purchasing Managers’ Index (PMI), which monitors activity at thousands of firms across both the services and manufacturing industries, slipped to 51.7 from 51.9 in October.
    • A buoyant Germany was not enough to stop the 17-nation euro zone’s private sector losing momentum in November, dragged backwards by a downturn in France - the bloc’s second biggest economy – and a continued recession in Italy.
    • Britain, which does not use the euro, broke a run of upside data surprises but still provided a strong economic backdrop for a twice-yearly government budget update due later this week.
  • China’s HSBC/Markit services PMI stood little changed at 52.5 in November.
  • Hewlett-Packard is set to cut 1,124 jobs in Britain as part of plans to lay off 27,000 employees globally by the end of 2014, the company said on Wednesday.
  • India and Japan are stepping up the pressure for cheaper liquefied natural gas (LNG) with potential joint tenders as two of the world’s biggest gas buyers try to ease the pain of high prices and rising demand.
    • Asian prices are now more than FOUR times the cost of natural gas in the United States, where a boom in shale oil and gas has sharply reduced prices.
    • If Asian buyers cannot get a better deal on LNG prices, they could switch increasingly to coal, industry observers say. Japan is burning so much coal that LNG imports could dip in 2013 for the first time in four years.

TODAY in HISTORY

  • George Washington delivered his farewell address to his officers at Fraunces Tavern in New York City (1783)
  • James Monroe of Virginia was elected (by electors) the fifth president of the United States (1816)
  • The Senate approved U.S. participation in the United Nations (1945)

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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