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Pence Wealth Management Financial Markets Report

US FINANCIAL MARKET

  • Wall Street opened flat on Tuesday in the wake of Wall Street’s biggest weekly gain of the year as data showed that factory activity in New York state slowed this month.
  • Generic drugmaker Actavis said on Tuesday it would buy Forest Laboratories for about $25 billion in cash and stock, representing a premium of 25 % to Forest’s closing price on Friday. Activist investor Icahn holds an 11.32 % stake in Forest.
  • Coca-Cola’s global sales volumes rose less than expected.
    • The company said global sales volumes rose 1 % in the quarter. Volumes in North America fell 1 %, while those in Europe grew just 1 %.
    • Coke’s quarterly revenue fell 3.6 % to $11.04 billion. Excluding the impact of foreign exchange rates and the separation of the bottling operations, revenue rose 4 %. The company’s net income fell to $1.71 billion in the fourth quarter from $1.86 billion a year earlier.
    • The company also said it will reduce its supply and data-management costs and overhaul marketing programs to generate $1 billion in savings by 2016.
  • As the next generation of narrow-body airplanes takes to the skies later this year, makers of the new fuel-efficient engines that power them are battling for market share. Orders worth $20 billion are up for grabs in the competition between Pratt & Whitney and CFM International. Pratt is a unit of United Technologies, whereas CFM is a joint venture between General Electric and Safran.
    • Pratt and CFM have promised at least 15 % lower fuel use than current-generation engines.
    • Single-aisle planes make up more than 60 % of all commercial jets flying today, and are expected to account for 70 % of the 35,000 new commercial jets delivered over the next 20 years, a market worth nearly $2.3 trillion.
    • Jet engine sales are expected to top $500 billion over the next decade.
  • JPMorgan has downgraded Kansas City Southern to “neutral” from “overweight.” The investment firm cites increasing regulatory risk in Mexico as reason for the downgrade.
  • Netflix’s effort to secure a place for its video-subscription service on Time Warner Cable set-top boxes is on hold now that the cable operator is being sold.
    • A deal with Time Warner Cable would put pressure on other pay-TV providers to offer Netflix as well. The video-streaming pioneer, with 44.4 million online subscribers, has pitched its Web-based trove of original shows, movies and older series as a must-have for pay-TV providers who increasingly poach each other’s viewers for growth.
  • Samsung Electronics’ new high-end smartphone will have a larger 5.2-inch screen and a sharper display than the current Galaxy S. The new phone, with an improved battery and camera, will be released about the same time as an upgraded Galaxy Gear smartwatch.
  • Hewlett-Packard’s senior executives were aware of certain Autonomy sales practices months before a whistleblower flagged them, prompting HP to write down the value of Autonomy, the Financial Times reported, citing email records.
    • HP, which bought Autonomy for $11.1 billion in 2011 only to write down its value by $8.8 billion a year later, has accused Autonomy officials of accounting fraud.
  • Options traders are the most bullish on Target in almost eight years as they bet the discount retailer will recover from an attack by hackers and an expansion into Canada that has mauled earnings.
  • BHP Billiton, the world’s biggest mining company, said first-half profit rose a more-than-expected 31 % as its iron ore earnings gained and costs declined amid improving global economic growth. BHP aided by positive sentiment in the U.S. and Japan. Iron ore is the biggest contributor to BHP’s results, followed by petroleum.
  • A widening probe of the foreign-exchange market is roiling an industry already under pressure to reduce costs as computer platforms displace human traders.
    • Electronic dealing, which accounted for 66 % of all currency transactions in 2013 and 20 % in 2001, will increase to 76 % within five years. At least a dozen regulators are investigating allegations first reported by Bloomberg News in June that traders colluded to rig benchmarks in the $5.3 trillion-a-day currency market. Deutsche Bank, Citigroup., Barclays and UBS are the four biggest currency-trading banks.

US ECONOMY & POLITICS

  • U.S. homebuilder confidence suffered its largest one-month drop ever in February, hit by this winter’s relentlessly severe weather and concerns about the costs of labor and building lots. NAHB said. The NAHB/Wells Fargo Housing Market Index plunged by 10 points to 46 in February from 56 in January. All three of the index’s major components declined in February.
    • The survey’s index on homebuilders’ views on current sales conditions fell 11 points to 51, the lowest level since May, from 62 in January.
    • The gauge of expectations for single-family home sales for the next six months fell 6 points to 54, a nine-month low, from 60 the month before.
    • The component on prospective buyer traffic dropped 9 points to 31 from 40 in January.
  • A gauge of manufacturing in New York state slowed in February after hitting a 20-month high in January. The New York Fed’s “Empire State” general business conditions index fell to 4.48 from 12.51 the month before. Economists polled by Reuters had expected a reading of 9.0.
    • New orders fell to -0.21 from 10.98, while inventories fell to -5.00 from 2.44.
    • Employment gauges were mixed. The index for the number of employees fell to 11.25 from 12.20 and the average employee workweek index rose to 3.75 from 1.22.
    • The index of business conditions six months ahead rose to 38.99 in February from 37.51 in January.
  • The number of Americans getting divorced rose for the third year in a row to about 2.4 million in 2012.
    • Whatever the social and emotional impact, the broad economic effects of the increase are clear: It is contributing to the formation of new households, boosting demand for housing, appliances and furnishings and spurring the economy. Divorces are also prompting more women to enter the labor force. Divorces were at a 40-year low in 2009. The divorce rate more than doubled between 1940 and 1981 before falling a third by 2009.

EUROPE & WORLD

  • Bank of Japan Governor Haruhiko Kuroda said on Tuesday that Japan’s economy was moving in line with the central bank’s forecasts,
  • European car sales rose 5.2 % in January. Car sales totaled 967,778 vehicles last month. Europe’s car industry endured a six year slump, with sales falling to their lowest level for around 20 years.
  • China drew $10.76 billion in foreign direct investment (FDI) in January, up 16.1 % from a year earlier. The majority of the new investment, some $6.33 billion, went into China’s services industry, while investment in manufacturing fell 21.7 %, the ministry said. FDI inflows into China in 2013 rose to a record $117.6 billion.
    • China aims for around 9.5 % annual growth in industrial output in 2014, the industry ministry said on Tuesday, supporting the view that Beijing may stick with its target for economic growth of 7.5 % this year.
    • China’s industrial output rose an annual 9.7 % in 2013, when the economy expanded 7.7 %.
  • German analyst and investor sentiment fell in February due to concerns that the economic upturn in the United States could lose steam and worries about emerging market economies’ prospects in the medium-term. The Mannheim-based ZEW economic think tank’s monthly poll of economic sentiment dropped to 55.7 from 61.7 in January.
  • Japan’s Canon will buy back up to 1.6 % of its own shares.
  • BMW will build the new MINI in the Netherlands from summer 2014 onward in a move to expand production capacity beyond its plant in Oxford, England. BMW said the United Kingdom would still be the main manufacturing base for the MINI.
  • Thailand’s economic growth slowed significantly in the final quarter of 2013. The economy only grew 0.6 % from the final quarter of 2012. For full-year 2013, the growth was 2.9 %, far below the 6.5 % in 2012.
  • Gold demand fell 15 % last year as sales from bullion-backed funds and less central bank buying outpaced record consumer purchases that saw China overtake India as the largest user.

TODAY in HISTORY

  • Martin Luther, German leader of the Protestant Reformation, died (1546)
  • Pluto, the ninth planet in the solar system, was discovered by American astronomer Clyde Tombaugh (1930)
  • The first 3-D movie, Bwana Devil, opened in New York (1953)

 

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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