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Pence Wealth Management Financial Markets Report

US FINANCIAL MARKET

  • U.S. stocks fell for a second day as economic data signaled a slowdown in manufacturing and concern increased over the crisis in Ukraine.
    • Russia Facing Recession as Sanctions Likely to Intensify. Standard & Poor’s and Fitch Ratings cut their outlook on Russia’s credit grade to negative from stable, suggesting a downgrade is most likely next.
    • World Leaders Discuss Ukraine as Worry Grows Over Russia. Leaders of the U.S., the European Union, China, Japan and others meet today.
    • Investigators concluded that Malaysian Air Flight 370 crashed in the southern Indian Ocean, ruling out theories of a detour over Asia, even as the search for wreckage from the jetliner drags on.
  • Apple is in talks with Comcast to enter into a deal for a streaming-television service that would allow Apple set-top boxes to bypass congestion on the web.
    • Apple shares could rise by 20% over the next year, fueled by sales of a new version of its iPhone smartphone that is expected to have a bigger screen, according to an article in the March 24 edition of Barron’s. The iPhone 6, expected in late summer or fall, is certain to have a bigger screen than earlier versions.
  • Options traders are more bullish on AT&T than any time since Apple chose it as exclusive carrier for the original iPhone. Bets that AT&T shares will rally are the most expensive in almost seven years relative to bearish wagers. AT&T shares sank 9.2% in January and February.
  • Cisco joins cloud computing race with $1 billion plan. Cisco said it will spend $1 billion over the next two years to enter a market currently led by the world’s biggest online retailer Amazon.com. It will build data centers to help run the new service called Cisco Cloud Services.
  • Credit Suisse has agreed to pay $885 million to resolve claims by a U.S. regulator that the Swiss bank misled Fannie Mae and Freddie Mac into buying mortgage-backed securities that later went sour. This includes nearly $9.8 billion in settlements of litigation with such banks as JPMorgan, Citigroup, Deutsche Bank, Morgan Stanley, and Societe Generale.
  • Sprint cut 330 jobs and closed 55 stores around the country this week, as part of an ongoing plan to shrink its workforce in 2014.
  • Divergent,” the first film in Lions Gate Entertainment’s new teen-warrior series, opened in first place with sales of $56 million in domestic theaters. BoxOffice.com had forecast $54 million in receipts for “Divergent,” lowered twice from $68 million initially. 
    • For Lions Gate, the film performed as the studio hoped and highlighted efforts to reach young fans. The studio enjoyed as young audiences flocked to its earlier productions “Twilight” and “The Hunger Games.”
  • In one corner of the U.S. equity market, investor enthusiasm is exceeding the frenzy of the Internet bubble. Small-cap shares tracked by the Russell 2000 Index have rallied for seven straight quarters, the longest stretch ever, sending valuations 26% above levels at the height of the 1990s rally. 
    • The Russell 2000 is trading for 49 times reported earnings, compared with a multiple of 39 in March 2000. The S&P 500 has a price-earnings (PE) ratio of 17.2, close to its average since 1937, data compiled by Bloomberg and S&P show.

US ECONOMY & POLITICS

  • U.S. manufacturing activity slowed in March. Markit’s preliminary U.S. Manufacturing Purchasing Managers Index (PMI) slipped to 55.5 from 57.1 in February.  Economists’ had expected reading of 56.5. The new orders component fell to 58.0 from 59.6. Output edged down to 57.5 from 57.8.
  • Many business economists expect the Federal Reserve to start raising U.S. interest rates as early as this year. NABE survey published on Monday found that a third of economists expected the first rate hike this year. Fifty-three% anticipated an increase in 2015.
  • Fed corrects stress test results, says most changes minor. The revisions did not cause any additional banks to dip below the 5% minimum for top-tier capital in the Fed’s annual stress tests. Most of the 30 banks in the test either had no change in their capital ratios under stress.

EUROPE & WORLD

  • China brakes as euro zone gears up.
    • China’s flash Markit/HSBC Purchasing Managers’ Index (PMI) fell to an eight-month low of 48.1 in March from February’s final reading of 48.5. 
    • The euro zone’s composite PMI edged down to 53.2 from February’s 32-month high but Markit said it indicated a 0.5% economic expansion this quarter.
  • Argentina will put downward pressure on world food prices by exporting more soy this year.
  • South Korea expects to pay around 7.34 trillion won ($6.79 billion) for 40 Lockheed Martin F-35 fighter jets. South Korea is the 10th country to make a firm commitment to buy the new Lockheed fighter, joining the United States, Britain, Australia, Norway, Italy, the Netherlands, Japan, Israel and Turkey.
  • Singapore’s Tiger Airways has placed an order for 37 Airbus A320neo aircraft worth $3.8 billion at list prices.
  • Turkey downed a Syrian warplane that crossed into its airspace yesterday.

TODAY in HISTORY

  • Queen Elizabeth I died at age 69 after ruling England for more than 40 years (1603)
  • Robert Koch announced the discovery of the tuberculosis bacillus (1882)
  • Rock ‘n’ roll star Elvis Presley joined the U.S. army for two years (1958)
  • NATO begins launching air strikes in an attempt to force Serbia to cease hostilities against ethnic Albanians in Kosovo (1999)
  • Halle Berry became the first African-American actress to win a best actress Oscar and Denzel Washington became the second African-American actor to get the best actor award (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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