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Pence Wealth Management Financial Markets Report

US FINANCIAL MARKET

  • U.S. stocks rose at the open on Friday lifted by remarks from China’s Premier Li Keqiang that the Chinese government was ready to take steps to support its economy and as technology and consumer shares rebounded and data showed household purchases rose the most in three months.
  • PG&E expects to face criminal charges for the 2010 explosion of one of its natural gas pipelines that killed eight people in San Bruno, California.
    • PG&E, owner of California’s largest utility, has committed to spending more than $2.7 billion to upgrade pipelines and make other improvements since the explosion, and it’s settled legal claims worth almost $500 million. The company also faces a proposed $2.25 billion penalty from state regulators.
  • NHTSA says finds no ‘defect trend’ in Tesla Model S sedans. U.S. safety regulators said they closed an investigation into fires involving electric sports car maker Tesla’s popular Model S sedans after finding no “defect trend”.
  • Microsoft CEO signals new course with Office for iPad. Microsoft’s new CEO, Satya Nadella, finally unveiled Office for Apple’s iPad.
    • Microsoft’s Office 365 Home Premium, designed for home consumers, costs $100 a year. For businesses it costs $60 or more per year, depending on features. 
    • Apple gets its standard 30 %  cut of new Office 365 Home subscriptions sold through its app store.
    • Analysts have estimated that Microsoft could rake in anywhere from $840 million to $6.7 billion a year in revenue from iPad-native Office.
  • BlackBerry reported a much smaller-than-expected quarterly loss. The company said its net loss was $423 million. Revenue fell to $976 million from $2.68 billion.
    • BlackBerry plans to introduce high-end smartphones that cater to keyboard aficionados in the coming 18 months, in an effort to win back core corporate and government clients who have shunned the company’s touch-screen devices.
  • Intel takes ‘significant’ stake in Big Data startup Cloudera.
    • Cloudera, like rivals HortonWorks and Pivotal, focuses on helping corporate customers manage data through “Hadoop,” an open-source software system that can sort and handle the massive amounts of information, increasingly called Big Data, generated through the Internet and mobile devices.
  • Wal-Mart sues Visa for $5 billion, over excessively high card swipe fees. In December, a federal judge approved a $5.7 billion class action settlement between merchants and Visa and MasterCard.
    • Wal-Mart, Amazon.com, and Target were among those opting out of the monetary components of the settlement to have the freedom to seek damages on their own.
  • Judge rules Goldman must face lawsuit over mortgage securities. The lawsuit is one of thousands filed against Goldman and other banks over mortgage securities that collapsed in value in the wake of the 2007-2008 financial crisis.
  • GM unit Opel will make two additional vehicles at its plant in Germany, including a Buick destined for the US. The move forms part of a strategy to intertwine the Opel and Buick product ranges to share development costs, while focusing Opel sales in Europe, and Buick sales in the US and China.
  • Ford investing $500 million to make new engine and create 300 jobs to upgrade an Ohio engine plant to make the new 2.7-liter six-cylinder EcoBoost engine for its best-selling F-150 pickup trucks.
  • Mercedes-Benz has the lowest recall rate for its vehicles and BMW was the quickest to commence a recall campaign, a long-term study of safety recalls in the US showed. General Motors had the third-lowest recall rate in the 30-year study. Automakers with the highest recall rates were Hyundai.
  • Bankers still have 10 trillion reasons to lend. Banks hold in deposits in the U.S., which exceeded the value of all loans by a record $2.5 trillion last month. Cash deposited at banks increased to the record level, compared with loan assets of $7.5 trillion, the Fed data showed. This is a reversal from October 2008 when loans exceeded deposits by $205 billion. 

US ECONOMY & POLITICS

  • U.S. consumer spending rose in February. Consumer spending increased 0.3% last month after rising by a revised 0.2% in January. Economists had forecast consumer spending rising 0.3 % in February.
    • When adjusted for inflation, consumer spending rose 0.2% in February after gaining 0.1% in January.
  • Income rose 0.3% last month after rising by the same margin in January. Income at the disposal of households after adjusting for inflation rose 0.3%.
  • The saving rate, which is the percentage of disposable income households are socking away, rose to 4.3% last month from 4.2% in January.
  • Prices in February rose 0.9% from a year ago, compared to a 1.2% advance in January over the previous 12 months. February’s increase was the smallest since October.
  • U.S. consumer sentiment fell in March. The Thomson Reuters/University of Michigan’s consumer sentiment index came in at 80.0, up a tick from the preliminary 79.9 March reading but down from an 81.6 the month before. It was slightly below the median forecast of 80.5 among economists.
  • Chicago Fed’s Evans sees no rate rise before mid-2015.

EUROPE & WORLD

  • Surge in consumer confidence helped boost economic sentiment in the euro zone in March to its highest level since July 2011. Economic sentiment across the 18-nation bloc increased to 102.4 this month from 101.2 in February, exceeding market expectations of 101.4.
    • Sentiment in the Netherlands jumped by 2.3 points to 100.3, followed by a 2.2 improvement in Spain.
    • Italy rose by 1.3 points, France by 0.7.
    • Morale in Germany, Europe’s strongest economy, brightened by 0.4 point.
    • Unemployment in the euro zone remains close to record highs at 12%, even though job creation in the last quarter of 2013 rose for the first time in nearly three years.
    • The business climate index for the 9.5 trillion euro economy was broadly unchanged at 0.39 in March, compared with 0.36 in February.
  • The pace at which euro zone banks are repaying their crisis loans to the ECB has slowed significantly as extra cash in the system reaches critically low levels.
    • Banks will return 1.558 billion euros ($2.14 billion) to the ECB on April 2, a lot less than this week’s repayments of 18.909 billion euros and also far below the 9 billion forecast in a Reuters poll.
    • This meant that excess liquidity – the amount of money banks have beyond what they need for their day-to-day operations – fell to 104 billion euros on Friday, the lowest since late 2011.
    • It peaked in early 2012 at around 800 billion euros.
  • Lufthansa pilots will hold a three-day strike from April 2 to April 4 as they seek to pressure the German airline in pay and contract negotiations.
  • Japan February consumer inflation steady, spending hit by weather. The 1.3% annual gain in the core consumer price index, which includes oil products but excludes volatile fresh food prices, matched the median estimate. Retail sales grew an annual 3.6% in February, exceeding the median estimate for a 3.2% annual gain, but below January’s 4.4%. Household spending tumbled 2.5% after inflation in the year to February, versus the median estimate for a 0.1% increase.
  • Qatar announced contracts worth about $23 billion on Thursday to buy attack helicopters, guided missiles, tankers and other weapons from Boeing, Airbus and other arms makers as the Gulf state accelerates its military build-up. The world’s top liquefied natural gas (LNG) exporter announced deals with about 20 global companies.
    • Boeing confirmed that the announcement included a contract to buy 24 AH-64E Apache attack helicopters and three Boeing 737 Airborne early warning and control (AEW&C) aircraft. The deal for the helicopters was valued at 8.9 billion riyals.
    • Qatar also committed to buy a Patriot missile defense system built by Raytheon equipped with PAC-3 missiles made by Lockheed.

TODAY in HISTORY

  • Nathaniel Briggs patented a washing machine (1797)
  • The cities of Constantinople and Angora changed names to Istanbul and Ankara, Turkey (1930)
  • Supreme Court rules unanimously that an anonymous tip does not justify a stop-and-frisk action against a person (2000)

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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