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Pence Wealth Management Financial Markets Report

US FINANCIAL MARKET

  • U.S. stocks fell at the open on Wednesday, putting the S&P 500 on track for a third straight decline, as concerns grew over the strength of China’s economy.
    • Wall Street cash bonus highest since crash. The cash bonus pool jumped 15 % to $26.7 billion in 2013, pushing the average cash bonus was $164,530, according to the New York state comptroller’s annual estimate. The increased bonuses came as Wall Street posted a fifth consecutive year of profits after record losses during the 2008 financial crisis.
    • About 70 % of S&P 500 companies beat analysts’ profit estimates for the latest quarter, data compiled by Bloomberg show.
  • Is the S&P 500 overvalued?
    • The forward 12-month P/E ratio for the S&P 500 now stands at 15.4, based on the price 1877.03.
    • The current forward 12-month P/E ratio is above both the 5-year average (13.2) and the 10-year average (13.8), but it is still below the 15-year average of 16.0.

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  • Men’s Wearhouse is acquiring rival Jos. A. Bank Clothiers for about $1.8 billion.
  • Indian budget airline SpiceJet has signed a deal with Boeing to buy 42 737 MAX jets in a deal worth $4.4 billion at list prices. Delivery of the new jets will begin in 2018. Payments for the order will be closer to the delivery date.
  • Wal-Mart said that U.S. sales have improved since mid-February after cold and snowy weather dented business in the first half of that month.
  • Federal prosecutors open criminal probe of GM recall. Federal prosecutors are examining whether GM is criminally liable for failing to properly disclose problems in some vehicles that were linked to 13 deaths and led to a recall last month.
  • Governor Chris Christie’s administration blocked Tesla Motors from direct auto sales in a move the company said could shutter its only two stores in New Jersey. Elon Musk wants to keep selling electric cars directly to the public in New Jersey, but on Tuesday the state said no. The state requires sales of all new cars to go through franchises. Most traditional auto companies sell cars through franchised dealerships.
  • One of the top executives of Twenty-First Century Fox has raised questions about Comcast’s potential dominance of the U.S. broadband Internet market if regulators allow its $45.2 billion merger with Time Warner Cable to be completed.
  • Steven A. Cohen, whose hedge fund SAC Capital Advisors pleaded guilty to insider trading, is changing the name of his firm to Point72 Asset Management.
  • Cash Abroad Rises $206 Billion as Apple to IBM Avoid Tax.
    • The largest U.S.-based companies added $206 billion to their stockpiles of offshore profits last year.
    • The multinational companies have accumulated $1.95 trillion outside the U.S., up 11.8 % from a year earlier.
    • GE’s $110 billion leads U.S. companies, followed by Microsoft’s $76.4 billion, Pfizer’s $69 billion, Merck’s $57.1 billion and Apple’s $54.4 billion. The top 15 companies now hold $795.2 billion outside the U.S., up 10.6 %.

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US ECONOMY & POLITICS

  • Fed set to ditch ‘threshold’ guidance under Yellen. Fed policymakers will probably decide next week to scrap their threshold of a 6.5 % unemployment rate for considering a rate rise.
  • U.S. to publish GDP by industry data next month. The U.S. government will unveil a new data series next month that will offer deeper insight into how the nation’s industries impact the broader economy, and provide more timely data on the business cycle.
    • The Bureau of Economic Analysis (BEA) has been working on the series since 2003. The report will initially cover 22 industries ranging from agriculture to construction and arts, entertainment, recreation, accommodation and food services, and there are plans to expand the number to 69 later on.
  • The composition of the January JOLTS report was on the softer side. January job openings were slightly lower than expected at 3.974 million (vs. consensus 4.015 million).
  • Americans Split on Obama as 69% Back Minimum Wage Hike. Americans are evenly split, with 48 % approving of Obama’s job performance, up from 42 % in December — the biggest positive change of his presidency. Even so, majorities still disapprove of Obama’s performance across a broad spectrum of issues.

EUROPE & WORLD

  • Brazil’s economy faces trouble after World Cup and election. Economists currently expect Brazil’s GDP to grow 1.68 % this year, and 2 % in 2015. The economy grew 2.3 % in 2013.
  • Ukraine’s interim Prime Minister Arseniy Yatsenyuk meets U.S. President Barack Obama and Secretary of State John Kerry in Washington today. Yatsenyuk addresses the United Nations Security Council in New York tomorrow.
  • Toyota Motor agreed to increase base wages in Japan for the first time since 2008 as the nation’s largest company heads for record profits. The average Toyota Motor Workers’ Union member will earn 2,700 yen ($26) more in base pay per month.

TODAY in HISTORY

  • Juliette Gordon Low founded the Girl Scouts (1912)
  • Mohandas Gandhi began his 200-mile march to protest the British salt tax (1930)
  • President Truman established the “Truman Doctrine” to aid in the containment of Communism (1947)
  • The Church of England ordained women priests for the first time in 460 years (1994)
  • The color-coded terror alert system was unveiled by Homeland Security chief Tom Ridge (2002)

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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