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Pence Wealth Management Financial Markets Report

US FINANCIAL MARKET

  • U.S. stocks fluctuated at the open on Wednesday after data showed the economy grew at a sharply lower-than-expected pace in the first quarter, but gains in private payrolls kept losses in check.
  • EBay is preparing to bring a major portion of its foreign earnings back into the United States. The company took a $3 billion non-cash tax charge in the first quarter. The move will allow eBay to boost its available U.S. cash by about $6 billion, when needed.

o    It ended the first quarter with cash of $11.9 billion, though just $2.2 billion of that is in the United States.

o    EBay’s revenue rose a slightly better-than-expected 14 % to $4.26 billion.

  • Twitter disappoints again on user growth and views. The microblogging site reached 255 million members in the first quarter, sending year-over-year growth to 25 % from 30 % in the previous period.

o    Sales more than doubled to $250 million, topping analysts’ estimates.

o    Twitter’s net loss widened to $132.4 million from $27 million a year earlier. Excluding some items, the company broke even.

o    Mobile advertising revenue accounted for 80 % of total ad sales.

o    Twitter’s share of the $31.5 billion mobile ad market is expected to rise to 2.7 % this year from 2.4 % in 2013, trailing Facebook’s 22 % and Google’s 47 %, according to EMarketer.

  • ‘The Lego Movie’, ‘Game of Thrones’ boost Time Warner results. Time Warner is home to pay-TV channel HBO, Warner Bros movie studio and cable channels such as CNN.

o    Net income from continuing operations rose to $1.29 billion in first quarter from $754 million a year earlier. Revenue rose 9 % to $7.55 billion. Analysts had expected $6.61 billion.

o    Warner Bros revenue jumped 14 %, helped by strong performance of “The Lego Movie” and “300: Rise of an Empire”.

o    HBO revenue rose 9 %, driven by the popularity of “Game of Thrones” and the debut of “True Detective”.

  • DreamWorks Animation posted net income of $5.58 million. Revenue grew 9.4 % to $147.2 million. Its latest film, “Mr. Peabody & Sherman,” failed to attract enough kids to theaters. The next release from the company that made the “Shrek” films is “How to Train Your Dragon 2,” which opens in theaters on June 13.
  • Energizer Holdings said it plans to separate into two publicly traded companies, one for household products and the other for personal care.
  • Nuclear power producer Exelon to buy Pepco for $6.83 billion. Utilities are also seeking to consolidate as they struggle with falling electricity consumption due to increased energy efficiency and a weak economy. Pepco operates utilities in the Washington area, Delaware, Maryland and New Jersey, serving about 2 million customers.
  • Ryanair buys five more Boeing 737-800 planes. Low cost carrier is taking its order book to 180 new Boeing planes worth over $16 billion. Ryanair is Europe’s largest airline by passenger numbers.
  • Alstom accepts 10 billion euro GE offer for energy unit-paper.
  • Pimco’s Gross sees low returns, no bubbles in assets.

US ECONOMY & POLITICS

  • U.S. economy stalls on inventories and trade. GDP expanded at a 0.1 % annual rate, worse than economists’ expectations for a slowdown to a 1.2 % rate, the slowest since the fourth quarter of 2012.

o    Harsh weather partially explains the weakness in growth.

o    Businesses restocked inventories to the tune of $111.7 billion in the final three months of last year, but added only $87.4 billion more to stocks in the first quarter, the smallest amount since the second quarter of 2013.

o    Trade also undercut growth, taking off 0.83 percentage point, partly because of the weather, which left goods piling up at ports. Exports fell at a 7.6 % rate, exceeding the decrease in imports in the first quarter.

o    Together, inventories and trade sliced off 1.4 percentage points from GDP growth.

o    Consumer spending, which accounts for more than two-thirds of U.S. economic activity, increased at a 3.0 % rate, reflecting a spurt in spending on services linked to demand for heating during the winter and the Affordable Healthcare Act, which expanded health care coverage to many Americans. Personal consumption added 2 percentage points to growth.

  • U.S. private sector adds 220,000 jobs in April. Economists surveyed by Reuters had forecast that the ADP National Employment Report would show a gain of 210,000 jobs in April. Gains in the prior month were revised higher, to 209,000 from 191,000.
  • U.S. mortgage market index hits lowest since December 2000. Index of mortgage application activity fell 5.9 % in the week ended April 25. Fixed 30-year mortgage rates averaged 4.49 % in the week, unchanged from the week before.
  • U.S. Senate Democrats are pledging to hold more votes before November’s election on raising the federal minimum wage, conceding they probably won’t have enough support to move the measure forward today.

EUROPE & WORLD

  • Switzerland and Norway are the world’s most expensive economies, followed by Bermuda, Australia and Denmark, according to a new ranking by the World Bank.

o    The United States, the world’s largest economy, was in relatively affordable 25th place, lower than most other high-income countries.

o    Almost half the world’s $90.6 trillion in total economic output in 2011 came from low- and middle-income countries, the World Bank said.

TODAY in HISTORY

  • France sold Louisiana and adjoining lands to the United States as part of the Louisiana Purchase (1803)
  • Louisiana became the 18th state in the United States (1812)
  • U.S. commercial television made its official debut at the New York World’s Fair.The signal was transmitted from the Empire State Building (1939)
  • Adolf Hitler and his newly married mistress Eva Braun committed suicide (1945)
  • The Vietnam War ended with South Vietnam’s surrender to North Vietnam (1975)

 

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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