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Pence Wealth Management Financial Markets Report

US FINANCIAL MARKET

  • U.S. stocks rose at the open for a third day amid improving U.S. consumer confidence and speculation that the Federal Reserve will continue to support the economy.
  • Citigroup has discovered fraud in its Mexico subsidiary and is reducing its previously reported 2013 net income by $235 million.
  • EBay founder and Chairman Pierre Omidyar rejected investor Carl Icahn’s call to separate the company’s fast-growing PayPal payments unit, saying the businesses were better off together.
  • Monster Beverage reported sales that beat analysts’ estimates
  • Apple won the dismissal of a 1.57 billion-euro ($2.2 billion) lawsuit in Germany over technology used to decide priority for calls on mobile networks.

US ECONOMY & POLITICS

  • The US economy grew at a slower pace in the fourth quarter than previously estimated as consumer spending and exports were less robust than initially thought. Federal Reserve Chair Janet Yellen said yesterday that the central bank may consider changing its strategy for reducing asset purchases should the economy weaken. 
    • GDP expanded at a 2.4% annual rate. Economists polled by Reuters had expected growth would be cut to a 2.5% pace.
    • That was down sharply from the 3.2% pace reported last month and the 4.1% logged in the third quarter.
    • Even with the revision, the second-half growth pace was a stellar 3.3% and a jump from 1.8% in the first six months of the year.
    • Consumer spending, which accounts for more than two-thirds of U.S. economic activity, was cut to a 2.6% rate, still the fastest pace since the first quarter of 2012. It had previously been reported to have grown at a 3.3% pace.
    • Government spending fell at a 5.6% pace from the previous three months, subtracting about 1 percentage point from overall growth.
    • Fed Chair Janet Yellen told lawmakers on Thursday that the cold weather had played a role in the weakening data. Despite the first quarter’s weak start, economists remain optimistic that growth this year will be the strongest since the recession ended almost five years ago. For all of 2013, the economy grew 1.9%.
  • Consumer sentiment rose marginally in February even as concerns about the extreme weather persisted.
    • The Thomson Reuters/University of Michigan’s consumer sentiment index for February came in at 81.6, slightly above the 81.2 in both the preliminary February number and the final January reading. It was also slightly above the median forecast of 81.3 among economists polled by Reuters.
    • The survey’s barometer of current economic conditions edged up to 95.4. It was 96.8 in January.
    • The gauge of consumer expectations was 72.7, up from January’s 71.2.
  • The National Association of Realtors said its pending home sales index, based on contracts signed last month, rose 0.1% to 95.0 in January. The increase followed a revised 5.8% December drop.
    • Economists consider pending home sales a leading indicator because they track contract signings. Existing home sales are tabulated when a contract closes, typically a month or two later. Recent data indicate adverse weather was one reason for depressed housing activity. 

 EUROPE & WORLD

  • Euro zone inflation stabilized in the European Central Bank’s “danger zone” in February but did not fall as expected. Consumer prices in the 18 countries sharing the euro rose an annual 0.8% this month
  • Japan’s factory output rose in January at the fastest pace in more than two years and core inflation hovered at five-year highs, suggesting the economy has enough momentum to withstand an expected hit from a sales tax hike scheduled for April.
    • Japan’s industrial output rose 4.0% in January.
    • Japan’s core consumer price index (CPI), which excludes fresh food prices but includes oil products, rose 1.3% year-on-year in January, ahead of the median estimate for a 1.2% annual increase.
  • Four years after threatening to splinter Europe’s monetary union, Greek bond yields are back below 7% as signs Europe is putting the debt crisis behind it boost demand for the region’s assets.
  • Norway’s sovereign wealth fund, the world’s largest, gained 692 billion kroner ($115 billion) last year as stocks rallied. The Government Pension Fund Global returned 15.9% in 2013, after rising 13.4% the year before. The $840 billion fund’s stocks returned 26.3%, while its bond investments climbed 0.1%. Real estate investments gained 11.8%.
  • Mt. Gox: a quick rise and even faster fall. Mt. Gox filed for bankruptcy on Friday but Bitcoin insiders say its downfall began nearly a year ago as the virtual currency exchange tangled with regulators.
  • China Eastern Airlines has ordered 70 A320neo aircraft from Airbus for $6.37 billion. The aircraft are scheduled to be delivered from 2018 to 2020.
  • Mitsubishi Heavy Industries has lost a potential deal to supply tank engines to Turkey because of restrictions that remain in place on Japan’s military exports. Turkey’s undersecretary for state-run defense industries, told reporters that the potential deal had been quietly dropped in talks with Tokyo.

TODAY in HISTORY

  • James Watson and Francis Crick described their theory that two DNA strands were coiled in a double helix (1953)

Sources: Reuters, Bloomberg.

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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