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Pence Wealth Management Financial Markets Report

US FINANCIAL MARKET

  • U.S. stocks opened higher on Monday, rebounding from a decline in the previous session on the back of merger and acquisition activity in the pharmaceuticals sector.
    •  Obama administration imposed sanctions on seven Russian officials and 17 companies linked to Russian President Vladimir Putin’s inner circle involved in banking, energy and infrastructure.
    • The S&P 500 traded at 15.9 times estimated earnings on April 25. The gauge’s multiple has surged 44% since reaching an almost three-year low of 11 times in October 2011.
    • Money managers are turning on stocks that have delivered the best returns during the bull market: small caps. Hedge funds short small caps most since ’04 Russell falls. The gauge of the smallest companies stands 7.1% below its 2014 high
    • The Russell 2000 last month reached a valuation of 10.8 times its members’ annual earnings before interest, taxes, depreciation and amortization, according to data compiled by Bloomberg. That was the highest since at least 1995 and compares with an average weekly ratio of 7.7 times Ebitda, the data show. The valuation was at 10.2 at the end of last week.
  • Pfizer still wants AstraZeneca after bid rejected. Pfizer is working on its next move in a potential $100 billion battle for Britain’s AstraZeneca Plc after having two bids rejected.
    • The world’s largest drugmaker said on Monday it made a 58.8 billion pounds ($98.9 billion) bid approach to AstraZeneca in January and had contacted its British rival again on April 26 seeking further discussions about a takeover.
    • AstraZeneca urged its shareholders to take no action over the approach by U.S. drugmaker Pfizer on Monday and said it remained confident in its independent strategy
    • The renewed approach comes amid a wave of mergers and acquisitions in the sector, pushing the value of deals to $153 billion so far this year.
  • Corning reports 26% rise in revenue, slightly missing analysts’ average estimate. Specialty glass maker, best known for its Gorilla glass used in smartphones, reported net income of $301 million in the first quarter from $494 million a year earlier. Revenue rose to $2.29 billion from $1.81 billion.
    • Corning expects LCD glass price declines to be “significantly less” in the current quarter compared with the first quarter
    • Core sales from the display technologies business, which makes LCD panels for Sony, LG, and Lenovo Group and brings in more than a third of the company’s revenue, grew 58%.
  • Comcast offered to sell 1.4 million pay TV subscribers to Charter Communications for $7.3 billion as part of a transaction aimed at winning regulatory approval for its proposed $45 billion takeover of Time Warner Cable. 
    • Comcast also said it would divest another 2.5 million subscribers into a new publicly traded company, dubbed SpinCo for now, to be one-third owned by Charter and two-thirds by Comcast shareholders
    • Comcast would have less than 30% of the U.S. residential cable or satellite TV market after the deal, the company said in a statement.
  • Bank of America suspends $4 billion buyback and dividend increase after capital miscalculation. Bank of America said the miscalculation was related to the treatment of structured notes after the purchase of Merrill Lynch at the height of the financial crisis.
  • Boeing has lined up Japanese companies, including Mitsubishi Heavy Industries and Kawasaki Heavy Industries, to build one-fifth of its latest plane, the 777X. Boeing’s current production rate for the 777 is 8.3 a month.
    • Norwegian Air suspends talks to buy 20 new Boeing Dreamliners because of a delay in receiving U.S. Department of Transportation approval for its long haul plans.
  • Toyota is moving its U.S. sales headquarters from southern California to suburban Dallas.
  • Siemens to cut thousands of jobs as part of new strategy.
  • Old normal returns as Pimco foresees `new destination’ for U.S. The “new normal” U.S. economy is starting to look more like a classic expansion. Behind the improved outlook:
    • Consumers spending more freely after working down their debts, less drag from government budget restraint, a housing recovery and continued easy monetary policy.

US ECONOMY & POLITICS

  • U.S. pending home sales jump and end losing streak. Pending Home Sales Index increased 3.4% to 97.4. The increase beat economists’ expectations for a 1.0% advance. Despite last month’s surge, pending home sales were still down 7.9% compared to March of last year. A reading of 100 is equal to the average level of contract activity in 2001, according to the Realtors group.
  • California drought spurs bonds for 30-mile water tunnels. California water agencies plan to sell the first $200 million in bonds toward a $25 billion project to bolster supplies for about 25 million people as the worst drought in a century threatens farms and cities.

EUROPE & WORLD

  • The government doesn’t oppose GE’s proposal, and a meeting in Paris today between Immelt and President Francois Hollande focused on protecting jobs and maintaining the independence of France’s nuclear industry.

TODAY in HISTORY

  • Maryland became the 7th state in the United States (1788)
  • Benito Mussolini was executed (1945)
  • Boxing champion Muhammad Ali refused to be inducted into the Army (1967)
  • The U.S. Dept. of Agriculture unveiled its first “food pyramid” (1992)
  • Dennis Tito became the first space tourist (2001)

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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