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Pence Wealth Management Financial Markets Report

US FINANCIAL MARKET

  • U.S. stocks opened lower on Friday after JPMorgan Chase, the first of the major Wall Street banks to report results, posted earnings that were below expectations.
    • For the week, the Dow is down 2%, the S&P is down 2.2% and the Nasdaq is down 2.6%.
    • Concern earnings growth is slowing, valuations are stretched and that speculators got too bullish has erased $700 billion from the value of American equities in the past week. 
    • The Nasdaq suffered its biggest drop in two-and-a-half years on Thursday since Europe’s debt crisis. 
  • JPMorgan profit weaker than expected as trading revenue drops. Net income fell 19% to $5.27 billion from $6.53 billion in the same quarter of 2013. Total net revenue fell 8.5% to $22.99 billion, falling well short of the average estimate of $24.53 billion.
  • Wells Fargo profit beats estimates, sets aside less for bad loans. Net income rose 14% to $5.89 billion from $5.17 billion a year earlier. Total net revenue fell 3.3% to $20.6 billion from $21.3 billion in the quarter last year.
    • Wells Fargo’s mortgage business, which provides nearly one in five U.S. home loans, continued to suffer from a drop in refinancing activity. Income from mortgage banking fell to $1.5 billion from $2.8 billion in the first quarter of 2013.
    • Wells Fargo’s new home loans fell to $36 billion in the quarter from $109 billion a year earlier and $50 billion in the fourth quarter.
    • Wells Fargo had $27 billion of mortgage applications in the pipeline at the end of the quarter, up from $25 billion at the end of the fourth quarter.
  • U.S. regulators close Ford F-150 probe without request for recall. Last May, the National Highway Traffic Safety Administration opened an investigation into F-150 pickups from model years 2011 to 2013, after receiving 525 complaints. NHTSA was satisfied that the problem was solved without Ford conducting a recall.
  • Google to sell Glass to public next week. Google will take online orders for its Glass wearable gadget on April 15, in its biggest push to get the $1,500 wraparound Web-ready glasses out to the U.S. public. Google did not say how many pairs it would sell, but said that the quantity would be limited.
  • More than two months after PIMCO’s former CEO Mohamed El-Erian announced his resignation from the world’s biggest bond manager, Bill Gross is still looking for a reason. “He simply said he was not the man to take the company forward,” Gross said. “I would say, ‘Come on, Mohamed, tell us why’.” When he does retire, one of the six deputy CIOs named after El-Erian’s exit could be a potential heir, Gross said.

US ECONOMY & POLITICS

  • The Thomson Reuters/University of Michigan’s consumer sentiment index rose to 82.6 from 80 a month earlier. The median estimate in a Bloomberg survey of 66 economists called for the measure to increase to 81. 
  • Producer prices hint at some inflation building up. U.S. producer prices recorded their largest increase in nine months in March as the cost of food and services surged.
    • Producer price index (PPI) for final demand increased 0.5% last month after slipping 0.1% in February. The so-called core PPI for final demand had declined 0.2% in February.
    • In the 12 months through March, producer prices advanced 1.4%.
    • In the 12 months through March, core PPI for final demand rose 1.4%.
    • Last month, food prices jumped 1.1%. Food prices were pushed up by a surge in the cost of pork, which saw its largest rise since August 2008. Sausage, deli meat and boxed meat prices rose by the most since August 1980, in part reflecting a drought in the West.
  • U.S. Global Growth Engine Putt-Putts Instead of Purring. As the IMF declares the strengthening U.S. economy is providing a “major impulse” to the world, economists are questioning just how powerful it will prove to be. The U.S. contribution to global expansion from 2014 to 2019 will likely average about two-thirds that of the quarter-century before the recession started in 2007. The IMF estimates imply the U.S. will contribute about 0.52 percentage point to global growth averaging 3.9% annually from 2014 to 2019.

EUROPE & WORLD

  • U.K. House Prices Record Biggest Annual Increase since 2010. Prices in England and Wales rose 7.2% from a year earlier to 262,291 pounds ($440,000).
  • Volkswagen, Europe’s biggest carmaker, sold 5.8% more autos in the first quarter, marking a delivery record for the period as the Audi luxury brand attracted buyers. Sales rose to 2.4 million vehicles from 2.27 million a year ago. Audi deliveries rose 12% to 412,800 vehicles in the quarter.
  • Alibaba to buy AutoNavi for $1.5 billion. AutoNavi is a Chinese digital mapping and navigation firm.

TODAY in HISTORY

  • Napoleon was exiled to the island of Elba (1814)
  • The treaty ending the Spanish-American War took effect (1899)
  • Iowa imposed the first state cigarette tax (1921)
  • President Harry Truman fired General Douglas McArthur (1951)
  • President Lyndon B. Johnson signed the 1968 Civil Rights Act (1968)

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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