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Pence Wealth Management Financial Markets Report

US FINANCIAL MARKET

  • U.S. stocks opened higher as merger activity and expectations for rates cuts by the European Central Bank stoked bids for equities even after the benchmark S&P 500 index closed at a record on Friday.

o    Investors have been watching tensions between Russia and Ukraine as well as developments in Thailand after last week’s coup.

o    Traders are loading up on VIX call options as history shows there’s a good chance stock-market volatility is about to increase.

o    Calls on the measure, which become more valuable during times of market stress, outnumbered ones betting on a decrease in market swings by 3.4-to-1 this month, the most since 2008.

  • Pilgrim’s Pride offers to buy Hillshire in $6.4 billion deal.

o    Pilgrim’s Pride, the world’s second largest chicken producer, said it offered to buy packaged food company Hillshire Brands in a $6.4 billion deal as it looks to add pork and beef products to its portfolio.

o    Pilgrim’s offer comes days after Hillshire, known for its Jimmy Dean sausages and Hillshire lunch meats, offered to buy Pinnacle Foods in a $4.3 billion deal. Pinnacle’s brands include Birds Eye frozen vegetables and Vlasic pickles.

  • Pfizer ended its six-month effort to buy AstraZeneca yesterday. Pfizer wasn’t convinced that AstraZeneca was serious about negotiating.
  • Twitter is getting bigger in Asia amid slowing user growth. People outside the U.S. accounted for 78 % of Twitter’s active users in the first quarter, yet only 28 % of its revenue was from international sources.

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US ECONOMY & POLITICS

  • U.S. consumer confidence rises in May.

o    The Conference Board’s index of consumer attitudes rose to 83 in May from a downwardly revised 81.7 in April. Economists had expected a reading of 83.0.

o    The expectations index rose to 84.8 in May from a downwardly revised 83.9 in April, while the present situation index increased to 80.4 versus an upwardly revised 78.5 last month.

  • Orders for durable goods climbed for a third month in April.

o    Durable goods orders increased 0.8 %.

o    Economists had forecast orders falling 0.5 %.

o    Orders excluding transportation rose 0.1 % after increasing 2.9 % in March. Core capital goods shipments fell 0.4 % last month. Orders for defense capital goods jumped 39.3 %.

  • Home prices in 20 U.S. cities rise at slower pace in March.

o    The Standard & Poor’s/Case Shiller gauge of house prices in 20 metropolitan areas increased 12.4 % in March from a year ago.

o    All 20 cities in the index showed a year-over-year gain, led by a 21.2 % climb in Las Vegas and a 20.9 % advance in San FranciscoCleveland showed the smallest year-over-year increase, with prices rising 3.9 %.

  • U.S. services sector expands at faster pace in May. Markit’s “flash” services Purchasing Managers Index (PMI) hit 58.4 in May compared with April’s final reading of 55.0.

EUROPE & WORLD

  • World shares hover near record high on expectations the European Central Bank will extend more than five years of easy monetary policy when it meets next week.
  • ECB chief Mario Draghi on Monday bolstered the view that the bank will cut euro zone interest rates again next week.

o    Euro zone inflation seen well below 2 % in 2014-15.

  • China said to study IBM servers for bank security risks.

o    Government agencies are asking banks to remove the IBM servers and replace them with a local brand as part of a trial program.

o    The review fits a broader pattern of retaliation after American prosecutors indicted five Chinese military officers for allegedly hacking into the computers of U.S. companies and stealing secrets.

TODAY in HISTORY

  • St. Petersburg was founded by Czar Peter the Great (1703)
  • The Queen Mary left England on its maiden voyage, arriving in France four hours later (1936)
  • Golden Gate Bridge in San Francisco opened (1937)
  • 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. Sources: Reuters, Bloomberg.

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