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Pence Wealth Management Financial Markets Report

US FINANCIAL MARKET

  • U.S. stocks rose at the open on Tuesday boosted by deals in the healthcare sector and upbeat results, while Facebook and Netflix lifted the Nasdaq.
  • Valeant and Ackman offer to buy Botox maker Allergan for $47 billion. Valeant offered to pay $48.30 a share in cash and 0.83 of its common share for each Allergan share, valuing Allergan at $152.88 a share, a premium of over 7 % to the company’s closing price on Monday.
  • Comcast’s profit rises. Comcast posted higher first-quarter revenue and net income on Tuesday showing it could add video subscribers for two quarters in a row, a rare sight in the cable industry.
    • Comcast reported net income of $1.87 billion compared with $1.44 billion a year earlier. Revenue rose 14 % to $17.41 billion from $15.31 billion. Analysts on average expecting $17.04 billion.
    • Comcast added 24,000 net video subscribers in the first quarter, which surprised Wall Street analysts who expected a loss of 26,000 net subscribers.
    • Comcast’s high speed Internet growth slowed in the quarter. It added 383,000 net subscribers, fewer than a year ago and missing estimates. Revenue from cable subscriptions, including high-speed Internet and phone, rose 5.3 % to $10.8 billion.
    • The Sochi Olympics generated more than $1.1 billion in revenue in the quarter, Comcast said. This helped boost revenue at the NBC broadcast network by 73 % to $2.6 billion. NBC Universal’s total revenue rose 8.1 % to $6.88 billion.
  • Lockheed boosts profit 23 %, lifts 2014 outlook. The company reported net earnings of $933 million for the quarter, up from $761 million in the first quarter of 2013. Revenues declined 3.8 % in the quarter to $10.7 billion.
    • Lockheed, maker of the F-35 fighter jet, satellites and coastal warships, said U.S. government budget cuts continued to depress revenues in 2014, with sales to the U.S. military likely to drop by 6.0 % in 2014 after a 4.0 % drop in 2013. But earnings and cash flow from operations remained strong, and foreign sales had offset the drop in U.S. orders.
    • F-35 will account for about 16 % of Lockheed’s revenues in 2014, and that percentage is expected to continue increasing in coming years. By 2018 or 2019, when the program reaches full rate production, the F-35 will account for about 25 % of Lockheed’s overall revenues.
  • United Tech broad revenue growth helps profit beat Street. The diversified manufacturer of elevators, jet engines and climate control systems, also lifted the low end of its 2014 earnings forecast. Revenue rose 2.4 % to $14.75 billion, just ahead of analyst estimates. First-quarter net income fell 4 % to $1.21 billion.
  • Canadian Pacific tops profit estimates with labor savings. Net income rose 17 % to C$254 million ($231 million). Revenue increased 0.9 % to C$1.51 billion, topping the C$1.5 billion average projection.
    • Unseasonably cold weather in the first three months of 2014, with temperatures falling to as low as minus 37 degrees Celsius (minus 35 Fahrenheit) in central Canada, forced Canadian Pacific to run slower trains. Average train speed dropped 12 % to 15.9 miles per hour, while average dwell time jumped 56 % to 10.3 hours.
    • Revenue from industrial and consumer products, which includes crude oil, jumped 11 %.
    • Grain sales advanced 4.1 %.
  • Netflix plans to raise prices as U.S. streaming subscribers grow. The company, which now has 48.4 million streaming subscribers worldwide, announced the new prices, along with quarterly results.
    • Netflix said it intends to raise the monthly subscription price for new customers by $1 or $2 a month to help the company buy more movies and TV shows and improve service for its 48 million global subscribers. Investors welcomed the announcement by Netflix.
    • The company said in its earnings report it added 2.25 million customers to its U.S. streaming business during the quarter. In international markets, its customer base reached 12.7 million, a gain of 1.8 million during the quarter.
    • Netflix predicts it will sign up 1.46 million new subscribers this quarter, including about 520,000 in the U.S.
    • Net income for the quarter reached $53 million, an increase from $3 million a year earlier.
    • Sales advanced 24 % to $1.27 billion, matching projections.
  • McDonald’s profit falls, U.S. diners not “lovin’ it”. McDonald’s posted a lower quarterly profit as high beef costs bit into margins and fewer customer visits resulted in a bigger-than-expected decline in sales at the fast-food chain’s established U.S. restaurants. Net income fell to $1.2 billion. That compares with a profit of $1.27 billion a year earlier.
  • Harley-Davidson posts higher-than-expected profit. The Milwaukee-based company reported first-quarter net income of $265.9 million, up from $224.1 million a year earlier. Sales rose 10.2 % to $1.73 billion. Harley-Davidson said it had shipped 80,682 motorcycles to its independent dealers and distributors worldwide during the quarter.
  • Tesla expects big investment on charging stations in China.

US ECONOMY & POLITICS

  • U.S. house prices rose 6.9 % in the 12 months through February, the smallest gain in a year, in a sign that the housing market’s recovery is cooling. Prices climbed 0.6 % on a seasonally adjusted basis from January.
  • U.S. existing home sales hit 1-1/2 year low in March. Home sales slipped 0.2 % to an annual rate of 4.59 million units, the lowest level since July 2012. The decline was, however, less than economists’ expectations for a fall to a 4.55-million pace.

EUROPE & WORLD

  • Novartis and GSK trade assets as pharma industry reshapes. Novartis and GlaxoSmithKline traded over $20 billion worth of assets on Tuesday, aiming to bolster their best businesses and exit weaker ones as the drugs industry reshapes to cope with healthcare spending cuts and generic competition.
    • Novartis is buying GSK’s oncology products (cancer drugs) for $14.5 billion and GSK acquiring Novartis’ vaccines business for $7.1 billion plus royalties.
    • In addition, Novartis is selling its animal health arm to Eli Lilly for approximately $5.4 billion.

TODAY in HISTORY

  • Pedro Alvares Cabral discovered Brazil and claimed it for Portugal (1500)
  • Henry VIII became king of England (1509)
  • The Spanish poet Cervantes died in Madrid (1616)
  • Congress authorized the inscription “In God We Trust” on coins minted as U.S. currency (1864)
  • The land rush in Oklahoma began when it was opened to settlers ((1889)
  • The first Earth Day was observed (1970)
  • Richard M. Nixon died of a stroke at the age of 81 (1994)

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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