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Pence Wealth Management Financial Markets Report

US FINANCIAL MARKET

  • Stocks opened slightly higher on Tuesday after earnings from Coca Cola and Johnson & Johnson overshadowed a mixed bag of economic data.
  • Coca-Cola sales beat estimates as China volumes soar. Global case volumes rose 2 % in the quarter, while those in China rose 12 % due to increased marketing around the Chinese New Year.
    • Coke does not break out China sales separately. The business falls under its Asia-Pacific region, the company’s second-biggest market by revenue. In 2013, the region accounted for 13 % of overall sales.
    • Sales in North America, the company’s biggest market, were stable despite an unusually cold winter and the general consumer shift away from fizzy drinks.
    • Sales declined 4 % in Europe, but rose 6 % in both India and Russia.
    • Net income fell to $1.62 billion in the first quarter from $1.75 billion a year earlier. Revenue fell 4 % to $10.58 billion. Analysts on average were expecting $10.55 billion.
  • J&J beats forecasts as new drugs shine. J&J earned $4.73 billion in the first quarter. That compared with $3.5 billion in the year-ago quarter, when the diversified healthcare company took a big litigation charge. Sales rose 3.5 % to $18.1 billion in the quarter, topping Wall Street forecasts of $18 billion.
  • Nestle reports slowest first-quarter sales growth since 2009. The world’s largest food company’s revenue declined 5.1 % to 20.8 billion francs ($23.6 billion), hurt by “substantial” currency fluctuations.
  • Whirlpool Corporation increases quarterly dividend 20% based on strong growth and margin expansion. $500 million share buyback authorization also announced.
  • Zebra Tech to buy Motorola Solutions’ enterprise business, which makes rugged mobile computers, tablets and barcode scanners, for $3.45 billion in cash.
    • The deal will allow Zebra, whose products help companies such as Amazon track inventory and supply chains, to tap the opportunity presented by the profusion of devices, ranging from cars to smoke alarms, connected to the Internet. Motorola Solutions’ enterprise clients include Wal-Mart Stores and TNT Express.
    • After the sale, Motorola Solutions will be left with its core government and public safety business.
  • GE CEO Immelt may step down before his 20-year tenure ends.
  • Citigroup and Mexico’s bank regulator said they uncovered a second fraud at Citi’s local unit Banamex, as part of a wider investigation following the discovery in February of fraudulent loans to oil services company Oceanografia.
  • Serious Internet hole. Heartbleed, the result of a simple programming error, is the kind of security hole that is discovered every few years, widespread and serious enough that it sends technology companies around the world scrambling to protect their networks. Millions of smartphones and tablets running Google’s Android software are vulnerable to the bug, as are networking products from Cisco Systems and Juniper Networks.
  • Prices for shrimp have jumped to a 14-year high in recent months, spurred by a disease that’s ravaging the crustacean’s population. Restaurant chains such as Noodles & Co. and the Cheesecake Factory are taking a profit hit as prices climb. Shrimp costs rose about 35 % last quarter for Orlando, Florida-based Darden Restaurants, the company that owns Red Lobster.
  • Gold prices fell more than 2 % to $1,300 on Tuesday as strength in the dollar following forecast-beating U.S. retail sales data pushed it through key chart levels while silver hit a 2-1/2 month low. On Monday it hit a three-week high at $1,330.90, but buyers were quick to cash in gains.
  • Google to buy solar-powered drone-maker Titan Aerospace as the Web search giant ramps up plans to deliver wireless Internet access to remote parts of the world.
    • Google’s acquisition of Titan comes several weeks after rival Facebook announced plans to build solar-powered drones and satellites capable of beaming Internet access to underdeveloped parts of the world.
    • Titan is developing a variety of solar-powered “atmospheric satellites,” according to the company’s website, with initial commercial operations slated for 2015.
    • The drones, which fly at an altitude of 65,000 feet and can remain aloft for up to five years and have a 165-foot (50-meter) wingspan, slightly shorter than that of a Boeing 777.

april 15

US ECONOMY & POLITICS

  • Manufacturing in the New York region grew at a slower pace in April, a report from the Federal Reserve Bank of New York showed.
  • U.S. home builder sentiment edges up in April, still gloomy. The NAHB/Wells Fargo Housing Market index rose to 47 in April from a downwardly revised 46 in March. Economists had predicted the index would rebound to 50 in April.
    • Readings below 50 mean more builders view market conditions as poor than favorable. The April reading was the index’s third in a row to come in below 50.
  • U.S. consumer inflation boosted by higher food, rental housing costs. Consumer Price Index (CPI) increased 0.2 % in March. Economists had expected a 0.1 % rise last month.
    • In the 12 months through March, consumer prices increased 1.5 %.
    • The so-called core CPI, which strips out the volatile energy and food components, also rose 0.2 % in March after edging up 0.1 % the prior month.
    • In the 12 months through March, the core CPI advanced 1.7 %.
  • Yellen says higher capital rules may be needed for big banks.

EUROPE & WORLD

  • European stocks fall amid Ukraine violence, German data. Ukraine moves against separatists as Medvedev evokes Civil War.
  • German investor confidence falls for fourth month in April. The ZEW Center for European Economic Research’s investor and analyst expectations, which aims to predict economic developments six months in advance, slid to 43.2 from 46.6 in March. Economists forecast a decline to 45.
  • Coal returns to German utilities replacing lost nuclear. Utilities all over Germany have ramped up coal use as the nation has watched the mix of coal-generated electricity rise to 45 % last year, the highest level since 2007.
  • Britain’s inflation rate fell to the lowest in 4 1/2 years in March as gasoline and clothing prices pushed it further below the Bank of England’s target. Consumer prices rose an annual 1.6 %, compared with 1.7 % in February.
  • Ford Europe sales up 12 % in March on Germany, U.K. demand. Deliveries rose by 15,900 cars to 147,100 models. The carmaker delivered 74,700 units in its top U.K. market, a 13 % gain on year-ago levels, and posted a 19 % increase in Germany, its No. 2 European market, to 21,800 autos.
  • BMW lifts i3 electric car production 43% on higher demand. The premium manufacturer in recent weeks has raised daily output to 100 vehicles from 70. BMW has already built more than 5,000 i3s since the start of the year. BMW i3 will cost $41,350 in the U.S., and the company aimed to sell more than 10,000 in 2014.
  • China’s money supply grew less than forecast and the broadest measure of credit fell 19 % from a year earlier in March. The country will report tomorrow gross domestic product data for the first quarter in the world’s second-largest economy.
    • China GDP gauge seen showing deeper slowdown. GDP grew a seasonally adjusted 1.5 % from the previous three months, according to the median estimate in a Bloomberg.
    • Gold demand in China, which overtook India as the largest user last year, will rise about 25 % in the next four years as an increasing population gets wealthier.
  • Japan’s Fuji Heavy plans factory to make Boeing 777X wing boxes. Fuji Heavy, which makes Subaru cars, will likely spend more than 10 billion yen ($98 million) to construct the factory at the same site in Aichi Prefecture, central Japan, where it assembles wing boxes for Boeing’s 777 jets and its carbon composite 787 Dreamliner. Fuji Heavy is the sole maker of the component for both those jetliners.
  • Canada’s climate warms to corn as grain belt shifts north. The snow is piled waist-deep outside the Southern Manitoba Convention Centre as more than 400 farmers gather to consider the once-unthinkable: growing corn on the Canadian prairie.

TODAY in HISTORY

  • Samuel Johnson published his Dictionary of the English Language (1755)
  • In response to the attack on Fort Sumter three days earlier, President Abraham Lincoln declared a state of insurrection and called out Union troops (1861)
  • Titanic sank off the coast of Newfoundland on its maiden voyage after it struck an iceberg (1912)
  • Ray Kroc acquired McDonald’s and opened his first restaurant in Des Plaines, Ill., today the official McDonald’s Corporate Museum (1955)
  • Two bombs exploded at the Boston Marathon in Boston, Massachusetts, killing 3 and injuring at least 170 others (2013)

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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