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Pence Wealth Management Financial Markets Reports

US FINANCIAL MARKET

  • U.S. stocks edged lower at the open on Monday following the best two-day performance in four months on the S&P 500 and ahead of new Federal Reserve Chair Janet Yellen’s first testimony before lawmakers on Tuesday.
    • U.S. stocks have too much momentum to make betting against the Standard & Poor’s 500 Index a winning strategy and the gauge will probably reach 1,900 next quarter, according to money manager Laszlo Birinyi.
    • Birinyi, the founder of Birinyi Associates Inc. and one of the first analysts to advise clients to buy when stocks were bottoming after the 2008 financial crisis, said in a phone interview Feb. 7 that the benchmark gauge for U.S. equities will increase almost 6 percent by July. It fell 5.8 percent in the three weeks starting Jan. 15.
    • Traders are making unprecedented use of the options market (specifically the VIX) to bet on a rebound in U.S. stocks. Ownership of VIX puts reached a record high on Feb. 6.
  • The world’s biggest planemaker Boeing expects nearly half of the world’s air traffic growth will be driven by the Asia-Pacific region over the next 20 years. Boeing estimated Asia-Pacific’s fleet size would blow out to 14,750 over the next 20 years, from 5,090 in 2012.
    • Singapore Airlines has begun weighing a potential order for dozens (40) of wide-body jets as it compares Boeing’s revamped 777X against Europe’s Airbus A350, three sources familiar with the matter said. The deal is potentially worth $15 billion at list prices.
    • The 777X was launched with record orders at the Dubai Airshow in November. The larger of two variants, the 777-9X, will carry 406 passengers and enter service in 2020.
    • Boeing launched the latest version of its most profitable plane in an attempt to leapfrog Airbus’s 350-seat A350-1000.
  • Carl Icahn said he sees no reason to persist with his proposal that Apple buy back $50 billion of its shares, given the recent share repurchases by the iPhone maker. Last week, Apple repurchased $14 billion of its stock in the two weeks since it reported disappointing first-quarter results, a company spokesman said.
    • Excluding the latest purchases, Apple returned $7.7 billion to shareholders through dividends and buybacks in the December quarter, bringing the total under its capital return program to $43 billion.
  • Internet portal Yahoo is partnering with consumer reviews website Yelp to beef up local results in its search engine, the Wall Street Journal reported on Saturday. Yahoo’s search engine will incorporate Yelp’s listings and reviews and the feature will be launched in the coming weeks.
  • Fiat Chrysler said on Monday that its Chrysler Group unit closed a deal to raise debt worth $5 billion to repay early an existing bond issued to healthcare trust VEBA. Fiat reiterated that the refinancing would reduce debt-servicing costs by about $134 million between 2014 and 2016.
  • Toyota Motor said on Monday it would stop making cars and engines in Australia by the end of 2017.
    • Toyota’s decision follows the planned exits of General Motors and Ford Motor announced last year and would leave no global automaker remaining in Australia as high costs and a strong currency make it an unattractive production base.
  • German luxury car maker BMW is set to sell more vehicles in January compared to last year thanks to rising demand in China, where group deliveries surged more than 20 percent.
    • German rivals Audi and Mercedes-Benz posted double-digit gains in January deliveries, with Chinese sales up 18 percent and 45 percent respectively.
  • Nestle, the world’s biggest food company, is looking at ways to reduce its $30 billion stake in cosmetics firm L’Oreal. The Swiss company owns a 29.5 percent stake in L’Oreal.

US ECONOMY & POLITICS

  • Republicans who control the U.S. House of Representatives have penciled in a possible vote next week on legislation to raise the debt limit as the Treasury warned on Friday that it could start to face payment problems after February 27.
    • A temporary extension of the debt ceiling ($17 trillion borrowing cap) expired on Friday, forcing the U.S. Treasury Department to resort to extraordinary accounting measures to ensure that it can continue to borrow to pay federal obligations.
  • U.S. consumer credit in December grew by the most in nearly a year due to a sharp increase in credit card usage, a potentially positive sign for the economy. Total consumer credit rose by $18.8 billion to $3.1 trillion, the Federal Reserve said.
    • Revolving credit, which mostly measures credit-card use, rose by $5 billion in December after climbing $465 million in November. 
    • Non-revolving credit, which includes auto loans as well as student loans made by the government, increased $13.8 billion in December.
  • In the two years ended 2013, 80 percent of the decrease in labor force participation was due to retirement, according to calculations by Shigeru Fujita, a senior economist at the Federal Reserve Bank of Philadelphia. The share of Americans in the labor force, known as the participation rate, is hovering around an almost four-decade low as the population ages and discouraged job seekers give up looking for work. 
    • The labor-force participation rate for all ages was 63 percent last month, within 0.2 percentage point of its lowest level since March 1978, according to Labor Department data.
    • The term ‘baby boomers” refers to the cohort of people born in the U.S. from 1946 to 1964, when a dramatic increase in birth rates followed World War II. The generation grew up in a time marked by change and protest, ranging from the civil rights movement and the Vietnam War to a counterculture popularized by former Harvard University psychologist Timothy Leary’s phrase — “Turn on, tune in, drop out” — that embraced drug use and questioned authority.
  • Arizona got snubbed by Apple in 2012 when the iPhone maker picked Texas to build a new operations hub. So last year, when Apple was searching for a place to house a factory that makes a stronger glass for its gadgets, Mesa pulled out the stops. The city offered tax breaks, built power lines, fast-tracked building permits and got the state to declare a vacant 1.3 million-square-foot facility that Apple was exploring a foreign trade zone.  

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 EUROPE & WORLD

  • Britain’s Vodafone has made an offer to buy Spain’s largest cable operator Ono, which has an enterprise value of at least 7 billion euros ($9.5 billion).
  • Barclays said earnings dropped by a quarter to 5.2 billion pounds ($8.5 billion) last year from the year before, missing analysts’ forecasts and raising expectations the bank will step up cost cutting as investment bank earnings wane.
  • China’s export and import growth likely cooled in January, a Reuters poll showed, underlining a broader slowdown in the world’s second-largest economy.
  • China’s catering sector grew at its slowest pace in more than two decades in 2013 as diners avoided splashing out in luxury restaurants during an anti-corruption campaign targeting official excess.
  • Gold consumption and production in China expanded to records as prices that slumped into a bear market spurred sales of jewelry and bars.
  • The companies working to widen the Panama Canal and the waterway’s administrator on Friday each made new proposals aimed at reviving the multibillion dollar project, after talks broke down this week amid a cost spat and work ground to a halt. The widened canal would allow bigger ships to ferry cargo such as grains, chemical products and vehicles between the Atlantic and the Pacific oceans. Delays to a 2015 completion deadline could cost Panama’s government millions of dollars in toll revenue.

TODAY in HISTORY

  • Treaty of Paris signed, ending the French and Indian War. France ceded Canada and all its North American territories east of the Mississippi to Great Britain (1763)
  • The 25th Amendment was ratified, establishing presidential succession (1967)
    • Prior to the ratification of the 25th Amendment, there was no provision for filling a vacancy in the vice presidency. When a president died in office, the vice president succeeded him, and the vice presidency then remained vacant.
      • The Vice President Joseph Biden
      • Speaker of the House John Boehner
      • President pro tempore of the Senate Patrick Leahy
      • Secretary of State John Kerry
      • Secretary of the Treasury Jacob Lew
      • Secretary of Defense Chuck Hagel
      • Attorney General Eric Holder and so on
  • IBM’s computer, Deep Blue, beat the world chess champion, Garry Kasparov, in the first game of their match (1996)

deep blue

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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