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Pence Wealth Management Financial Markets Report

US FINANCIAL MARKET

  • U.S. stocks fluctuated at the open, with benchmark indexes trading near records, as data on jobless claims and services missed estimates while the ECB indicated it would take action to head off deflation.
  • Google splits into GOOG and GOOGL today. You’re about to get twice as many shares after 2-for-1 stock split: Two shares for every one you owned.
    • One set of shares, called Class A, will trade under a new ticker symbol, “GOOGL.”
    • The other, Class C, will be listed under the company’s historic ticker, “GOOG.”
      • A new “C” class of Google shares gives its owners zero votes.
      • Google’s “A” class shares get one vote apiece.
    • Google’s “A” and “C” shares are expected to trade at roughly the same value.
    • Google agreed to an unusual arrangement as part of a settlement with disgruntled investors in October in which it will reimburse holders of the Class C shares should they fail to keep up with the existing A stock.
    • Google’s “B” shares get 10 votes each. Most of those are owned by Google’s founders, Sergey Brin and Larry Page. The founders control 56 % of the vote through their B shares, which don’t trade publicly.
  • Amazon leaps into home entertainment fray with $99 Fire TV. The square device, which just about fits in the palm of one hand, streams content from Netflix, Hulu and other video services – much like Apple TV or Google’s Chromecast.
    • Amazon promised that Fire TV would be faster and easier to use than Apple TV, Google’s Chromecast or Roku’s streaming video device.
    • Analysts were split on Amazon’s prospects. Some said its strategy to pitch the Fire TV as an option for casual gamers would set the box apart.
    • Others were disappointed Amazon did not undercut its rivals’ prices in keeping with its pricing strategy on the original Kindle Fire tablet.
    • If Fire TV takes off, it could help shape the way consumers shop online. Fire TV viewers may eventually be able to use their remote to buy a product directly off a commercial.
  • Microsoft to offer Windows for free on all phones and tablets. Up to now, Microsoft has charged phone and tablet makers between $5 and $15 per device to use its Windows system.
    • The move comes a week after new Microsoft CEO unveiled new versions of Word, PowerPoint and Excel applications for Apple’s iPad.
    • Microsoft’s move to make Windows free for some consumer devices bucks a central tenet of Bill Gates’ original philosophy, that software should be paid for, which led to Microsoft’s massive financial success over the last four decades. But analysts said it is a realistic reaction to the runaway success of free Android.
    • Microsoft formally announced it has developed a voice activated phone assistant feature called Cortana, a direct rival to Apple’s Siri.
  • Options traders are betting new Apple products will propel the world’s largest company after it rebounded from the worst monthly loss in a year. Apple may release the latest version of its iPhone in August or September.
    • Sales will increase 6 % to $181 billion this year and another 6 % to $192 billion in 2015, analysts’ estimates compiled by Bloomberg show.
    • Apple has $159 billion in cash and is in the midst of a buyback and dividend plan that will return $100 billion to shareholders.
  • Citigroup faces criminal inquiry for fraud at Mexico unit. Federal authorities have opened an investigation into a $400 million fraud. Amazon will also sell a separate controller for gaming that costs $39.99.

US ECONOMY & POLITICS

  • Jobless claims edge unexpectedly higher. Initial claims for state unemployment benefits increased 16,000 to a seasonally adjusted 326,000. Economists had forecast first-time filings for jobless aid rising to 317,000.
    • The government’s closely watched employment report on Friday is expected to show nonfarm payrolls increased by 200,000 jobs last month after rising 175,000 in February, according to economists. The unemployment rate is seen falling one-tenth of a percentage point to 6.6 %.
  • The trade gap increased 7.7 % to $42.3 billion in February, the largest since September last year, as exports fell to their lowest level in five months. Economists had forecast the trade deficit falling to $38.5 billion.
    • Exports slipped 1.1 % to $190.4 billion in February. That was the lowest level since September. Imports edged up 0.4 % to $232.7 billion.
      • Exports to China fell 4.6 % in February. Imports from that country tumbled 19.5 %.
    • Declining petroleum imports as a domestic energy production boom reduces the nation’s dependency on foreign oil have helped to shrink the trade deficit. That saw the current account deficit hitting a 14-year low in the fourth quarter of 2013.
  • The Institute for Supply Management’s (ISM) services index advanced to 53.1 last month from 51.6 in February. Economists predicted an increase to 53.5. Readings above 50 mean that activity expanded.
  • Services sector growth accelerates in March. Markit’s service sector purchasing managers’ index (PMI) rose to 55.3 in March from 53.3 in February, though the figure was slightly below the preliminary read of 55.5 released last week.
    • Employers in the service sector, which accounts for about three-quarters of the U.S. labor market, continued to add employees, but at the slowest rate since March 2013. Employment index came in at 51.8 in March, compared with 51.9 in February.
    • Markit’s final composite PMI, a weighted average of manufacturing and services indexes, rose to 55.7 in March from 54.1 in February. The preliminary reading was 55.8.
    • The employment component of the composite index was 52.2, compared with 52.3 in February, and was also the lowest since March 2013.
  • Fed should hike rates in second half of 2015, San Francisco Fed President Williams.

EUROPE & WORLD

  • Brazil may end tightening after raising rates to two-year high. Brazil raised interest rates by 25 basis point to 11 %. All of the 62 analysts surveyed by Reuters had predicted the increase.
  • ECB says ready to act if ‘lowflation’ lingers too long. The ECB held its main interest rate at a record low of 0.25 % and the rate for bank deposits at central banks at zero.
    • Euro zone inflation fell to 0.5 % in March, levels last seen when the economy was deep in recession in 2009.
    • Euro zone businesses started 2014 with their best quarter in three years. The Markit’s Composite Purchasing Managers’ Index (PMI) pointed to first-quarter growth of 0.5 %.
    • The German, French and Spanish service industry PMIs were all solid last month although Italy’s unexpectedly fell back into contraction territory. Britain’s dominant services sector also expanded steadily in March.
    • Spain services sector grows for fifth straight month in March. France’s services sector returned to growth in March. France’s Markit PMI came at 51.5, up from 47.2 in February.
  • Global food prices rose to their highest in almost a year in March, led by unfavorable weather for crops and political tensions over Ukraine.
    • The Food and Agriculture Organization’s (FAO) price index, which measures monthly price changes for a basket of cereals, oilseeds, dairy, meat and sugar, averaged 212.8 points in March, up 2.3 % from February.

TODAY in HISTORY

  • First pony express service began (1860)
  • Outlaw Jesse James was shot in the back by Bob Ford, one of his own gang members, reportedly for a 10,000 reward (1882)
  • President Truman signed the Marshall Plan, which would foster the recovery of war-torn Europe (1948)
  • U.S. commerce secretary Ronald Brown died in plane crash in Croatia (1996)

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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