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Pence Wealth Management Financial Markets Report

US FINANCIAL MARKET

  • U.S. stocks fluctuated at the open on Wednesday, following two days of gains, as investors awaited comments from Federal Reserve Chair Janet Yellen at the conclusion of a two-day Fed policy meeting.
    • The S&P 500 advanced 1.7 % in the last two days as Russia pledged not to seek territory beyond Crimea.
    • Homebuilders rallied after KB Home reported revenue that topped analysts’ estimates as selling prices rose.
  • Winter storms hurt FedEx third-quarter results. FedEx posted lower-than-expected results. For the third quarter, the company earned $378 million on revenue of $11.3 billion, missing forecasts of $11.43 billion.
  • Oracle quarterly results disappoint Wall Street. Oracle posted higher third-quarter revenue and profit that failed to satisfy investors looking for signs of a sustained turnaround. For the third quarter, Oracle said overall revenue rose 4 % to $9.31 billion. That was a little below the $9.36 billion analysts had expected on average. Net income was $2.56 billion, up 2 %.
  • Adobe forecasts results above estimates as web subscriptions rise. Adobe Systems net added 405,000 paid users for its Creative Cloud suite, which includes Photoshop, Illustrator and Flash software, taking its total user base to 1.84 million as of February 28. Net income fell to $47 million in the first quarter from $65.1 million a year earlier. Revenue fell about 1 % to $1 billion, but came above the average analyst estimate of $973.1 million.
  • Toyota will pay $1.2 billion to resolve a criminal probe into its handling of consumer complaints over safety issues. Toyota admitted it misled American consumers by concealing and making deceptive statements about two safety issues. The settlement resolves a four-year investigation by U.S. authorities.
  • Google Won’t Face Group E-Mail Privacy Lawsuit: Judge. Google won a major victory in its fight against claims it illegally scanned private e-mail messages to and from Gmail accounts.
  • JPMorgan to sell physical commodities business to Mercuria for $3.5 billion. In February, Mercuria, led by two former Goldman Sachs executives, became the front-runner to buy the physical commodities unit, one of the most powerful oil and metals desks on Wall Street. Mercuria posted a $343 million profit in 2012 on revenue of $98 billion.
  • Sony Pictures Entertainment plans to cut 216 jobs in California. Sony Pictures has about 6,500 employees worldwide. Sony hired consultancy Bain & Co to identify more than $100 million in cost cuts through layoffs and other means.
  • Japan’s Suntory Pacific won U.S. antitrust approval this month to buy Jim Beam. Bourbon makers sold 6.8 % more in 2013 than in 2012 in the United States, with revenue jumping 10.2 % to $2.4 billion. Jim Beam as a brand began when corn farmer Jacob Beam distilled his first whiskey in 1795 in Bullitt County, Kentucky, where it is still made.
  • BMW eyes U.S. production hike in push for sales record. It releasing 12 new models as it chases record sales and a rise in pretax profit of up to 10 % this year. BMW’s plant in Spartanburg, South Carolina, is being readied to reach an annual production capacity of around 350,000 vehicles, up from 300,000 at the end of 2013. It makes sport utility vehicles including the X3, X4, X5 and X6 models. Investments made at plants in China will allow BMW to raise production capacity there to 400,000 cars, from 300,000 in 2013.
  • Porsche will replace the engines in all of its current model year 911 GT3 sports cars and has told owners to stop driving the cars because they could catch fire. The two-seat sports car has a base price of about $131,000 (94,200 euros) in the US and about 137,000 euros ($191,000) in Europe.

US ECONOMY & POLITICS

  • The Federal Reserve is set to trim its bond-buying stimulus for a third time in a row on Wednesday, and will probably rewrite its guidance on when it might eventually raise interest rates. It would bring the monthly total purchases of Treasuries and MBS to $55 billion.
  • U.S. current account gap hits 14-year low in fourth quarter. The current account gap narrowed to $81.1 billion. That was the smallest since the third quarter of 1999. It represented 1.9 % of GDP. The smallest share since the third quarter of 1997. For all of 2013, the current account deficit averaged 2.3 % of GDP, the smallest since 1997. The shortfall on the current account has shrunk from a peak of 6.2 % of GDP in the fourth quarter of 2005, in part because of a significant increase in the volume of oil exports.
  • Companies with investments in Russia — such as GE and Boeing — are growing concerned as the U.S. prepares to impose tougher sanctions over the crisis in Crimea that may spur retribution against corporate interests. Almost 100 chief executive officers with the Business Roundtable are set to meet in Washington today with Defense Secretary Chuck Hagel.

EUROPE & WORLD

  • European leaders struggled to devise a unified response to punish Russian President Vladimir Putin for annexing Crimea as tensions rose in the breakaway Black Sea region. With Russian officials shrugging off visa bans and asset freezes, European Union leaders meeting tomorrow will seek to overcome differences on how to pressure Putin.
  • Russia Sanctions Could Put Germany Inc. on the Front Lines of Trade War. Among EU nations, Germany is by far Russia’s most active trading partner.
    • It’s well-known that Germany depends heavily on Russian oil and gas, which accounts for the bulk of the €39.8 billion ($55.4 billion) it imported from the giant to the east in 2012.
    • What may be more surprising is that Germany sells Russia almost as much as it buys, with exports totaling €37.9 billion in 2012—accounting for 31 % of all European exports to Russia. Some 6,000 German companies are active in Russia, selling everything from pharmaceuticals to cars and machine tools.
    • Opinion polls suggest that the German public has little appetite for tough sanctions.
  • Britain’s unemployment rate held steady at 7.2 %.
  • China Mobile Under Pressure as IPhones, WeChat Curb Profit. China Mobile faces a triple whammy of apps, iPhone subsidies and regulations that likely will cost the world’s largest carrier as much as $1.8 billion in profit this year. The headwinds come as China Mobile commits an estimated $34.8 billion to capital expenditures, primarily to build a faster network. China Mobile will release full-year 2013 earnings tomorrow in Hong Kong.
    • Companies including Alibaba, the nation’s biggest e-commerce company, and Youku Tudou, owner of its biggest video websites, are benefiting as more Chinese go online to shop and find entertainment. Yet China’s carriers have to build the Internet infrastructure that gives consumers access to those sites.
  • Japan’s biggest companies have a case of SoftBank envy. Billionaire Masayoshi Son, 56, has boosted SoftBank Corp.’s market value to $99 billion since founding the business in 1981. SoftBank invested an initial $20 million in Alibaba.com in 2000 and now owns about 37 % of Alibaba, worth more than $56 billion.

TODAY in HISTORY

  • The United States Senate voted down signing the Treaty of Versailles for the second time (1920)
  • Nevada state legislature legalized gambling (1931)
  • The Academy Awards were first televised (1953)
  • Operation Iraqi Freedom is launched with air strikes on Baghdad, the beginning of the war with Iraq (March 20 in Iraq) (2003)

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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