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Pence Wealth Management Financial Markets Report

US FINANCIAL MARKET

  • The S&P 500 hit a fresh intraday record high at the open on Friday after more jobs than expected were created in February and January’s figure was revised higher, with traders keeping an eye on lingering tensions in Ukraine.
    • U.S. stock and crude futures jumped and the dollar strengthened after the job report.
    • U.S. short-term interest-rate futures contracts fell on the jobs report, prompting some traders to price in an earlier date for a rate hike from the Federal Reserve.
      • Contracts show markets are now assigning a roughly 53% chance of a first Fed rate hike in June 2015.
    • In the Ukraine, the government said today that the results of a planned March 16 referendum on Crimea becoming part of Russia won’t stand. 
    • Russia said Ukraine must pay off almost $2 billion it owes it for natural gas by today and signaled it may cut supplies.
  • Fund investors worldwide poured $7.5 billion into stock funds in the week ended March 5, marking the fourth straight week of inflows into the funds, data from a Bank of America report showed.
    • Emerging market stocks posted $3.8 billion in outflows, extending their record outflow streak to 19 straight weeks.
    • Investors pulled $1.8 billion from bond funds, marking their first outflows in five weeks, but funds that specialize in high-yield bonds attracted $1.9 billion.
    • Funds that mainly hold safe-haven U.S. Treasuries posted $8.8 billion in outflows.
  • U.S. household net worth jumped to a new high at the end of last year, as the value of real estate and share holdings rose and bank accounts swelled.
    • Household net worth was $11.8 trillion greater than its pre-recession peak of $68.8 trillion reached in the second quarter of 2007. However, when adjusted for inflation, household net worth was still below its pre-recession peak.
    • The Federal Reserve said on Thursday net worth increased 3.8% (or $2.95 trillion) to $80.66 trillion in the fourth quarter.
    • The Fed said household net worth rose 14% in the full year, driven by a $5.6 trillion rise in the value of shares and a $2.3 trillion increase in the value of real estate.
    • Increases in housing wealth make it easier for families to borrow against the equity in their homes, while overall wealth gains make consumers feel generally more comfortable spending their money.
  • Sales at many major U.S. retailers rose in February, as shoppers ventured out later in the month after a dismal start when ice, cold and snow kept many of them at home.
    • Costco Wholesale on Thursday said U.S. sales rose 3%.
    • L Brands reported a better-than-expected 2% rise, lifted by gains at its Victoria’s Secret lingerie chain.
    • Gap reported a 7% decline in comparable sales, and said 450 of its stores were closed at some point or other in February because of the weather.
    • Teen apparel Zumiez said its same-store sales rose 2%.
  • Cerberus Capital to buy Safeway for about $9.4 billion. Safeway is the second-largest U.S. mainstream grocery store operator in the US. The deal combines Safeway with Cerberus’ Albertsons chain, creating a dominant grocery franchise on the West Coast. It also creates a grocery network of more than 2,400 stores and 250,000 employees.
  • Disney will lay off 700 employees, roughly one-quarter of the interactive games and online division. Walt Disney overhauled its struggling interactive division in a sweeping reorganization that will reduce the number of video games it develops and alter its advertising strategy to focus more on the fast-changing mobile market. This division has for years been a persistent money loser and a small but significant drag on a corporate empire.
  • Comcast bought Freewheel, a startup that personalizes and inserts online video ads for media clients, as it tries to boost its digital advertising business. The companies did not reveal financial details but a source familiar with the transaction valued it at $360 million.
    • Freewheel’s website said its clients range from media companies such as 21st Century Fox and Viacom to Comcast competitors like Dish Network and DirecTV.
  • GE will stop paying its senior executives dividends on stock awards that have not yet vested, after investors urged the company to end the long-held perk. At GE’s annual dividend payout of 88 cents a share, those executives in 2014 are in line to receive a combined $914,000 on stock they don’t own.
  • Boeing will end pension plans for 68,000 nonunion employees, including its CEO, marking the latest step in the company’s shift away from defined-benefit plans. The change takes effect January 1, 2016.
  • Twitter paid $36 million to acquire 900 patents from IBM. The agreement was signed in December and announced in January without financial details. Twitter now has 956 patents and about 100 filed patent applications in the U.S.
  • Pimco’s Gross declares El-Erian is ‘trying to undermine me’ by talking to The Wall Street Journal about deepening tensions between the two executives who have been jointly running the world’s largest bond house.
  • Carlyle’s assets at its commodities hedge fund Vermillion fell by more than half in the nine months to December, suggesting investor redemptions at the fund after some negative returns. This year, commodities have performed more strongly after an energy markets rally powered by brutal winter weather and a run-up in coffee and livestock driven by supply concerns.

US ECONOMY & POLITICS

  • U.S. job growth rose more than expected in February, easing fears of an abrupt slowdown in economic growth and keeping the Federal Reserve on track to continue reducing its monetary stimulus.
    • Employers added 175,000 jobs to their payrolls last month after creating 129,000 new positions in January.
    • The unemployment rate, however, rose to 6.7% from a five-year low of 6.6%.
    • Economists had forecast nonfarm payrolls rising 149,000 and the unemployment rate to hold steady at 6.6%.
    • The survey also showed 601,000 people with jobs stayed at home because of the bad weather last month, the highest level for February since 2010.
    • The labor force participation rate, or the proportion of working-age Americans who have a job or are looking for one, was steady at 63% in February.
    • Average hourly earnings rose nine cents in February. The length of the workweek fell to an average of 34.2 hours from 34.3 hours, likely because of the severe weather.
  • The U.S. trade deficit was little changed in January as a rebound in exports matched an increase in imports.
    • The trade gap was at $39.1 billion from December’s revised shortfall of $39.0 billion. 
    • When adjusted for inflation, the trade gap dipped to $48.5 billion in January from $49.2 billion the prior month.
    • Exports increased 0.6% to $192.5 billion.
    • Imports also rose 0.6% to $231.6 billion.
  • Atlanta Fed President Dennis Lockhart said that the central bank should keep reducing its policy accommodation even if the February jobs report on Friday falls short of expectations.
  • Federal Reserve Bank of St Louis President James Bullard had the biggest impact on bond markets of all Fed policymakers in 2013, according to a new tally. Research by Macroeconomic Advisers showed Bullard, seen as a policy centrist, beat former Fed Chairman Ben Bernanke for the mantle of most market-moving U.S. central banker, although the Fed chief had a bigger impact on a per-speech basis.
  • Detroit reaches $120 million loan deal with Barclays. The loan will allow Detroit to invest in services and speed its path out of bankruptcy.

 EUROPE & WORLD

  • A Japanese American man thought to be the reclusive multi-millionaire father of Bitcoin emerged from a modest Southern California home (in Temple City) and denied involvement with the digital currency before leading reporters on a freeway car chase to the local headquarters of the Associated Press. Newsweek estimates his wealth at $400 million.
  • Airbus orders more frequent A380 wing fatigue checks after discovering unexpected levels of metal fatigue during testing on an A380 factory mock-up. The double-decker A380 entered service in 2007 with Singapore Airlines followed by the largest customer, Emirates, which would be first in line to carry out the increased checks.
  • Samsung defeated Apple’s bid for a court order barring U.S. sales of some Samsung smartphones that were found to infringe Apple patents in a ruling that may affect a trial over current products.

TODAY in HISTORY

  • Alexander Graham Bell received a patent for the telephone (1876)
  • Adolf Hitler broke the Treaty of Versailles and the Locarno Pact when he ordered troops to march into the Rhineland (1936)

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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