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Pence Wealth Management Financial Markets Report

US FINANCIAL MARKET

  • U.S. stocks opened low on Monday on concern China’s economy is continuing to lose momentum and as pro-Russian separatists ambushed Ukrainian forces, escalating a conflict that has kept global markets on tenterhooks recently. However, stocks erased losses later as data showed service industries expanded in April at the fastest pace in eight months, offsetting declines in financial shares.
    • Hedge funds cut gold bets to 11-week low on U.S. growth. The net-long position in gold fell 0.7% to 89,954 futures and options.
  • PFIZER SALES DISAPPOINT AS ASTRAZENECA OFFER SIMMERS. Pfizer reported quarterly revenue well below Wall Street expectations on falling sales of generic medicines.  Revenue fell 9% to $11.35 billion, which was $730 million below Wall Street expectations. Revenue would have fallen 6%, if not for the stronger dollar.
    • The largest U.S. drugmaker earned $2.33 billion in the quarter. That compared with $2.75 billion in the year-earlier period, when the company reported gains from the transfer of product rights.
  • BERKSHIRE QUARTERLY PROFIT HURT BY WINTER WEATHER AND INSURANCE. First-quarter net income fell to $4.71 billion from $4.89 billion. Overall, Berkshire revenue rose 4% to $45.45 billion. The company’s market value tops $316 billion.
    • Berkshire owns tens of billions of dollars of stocks such as American Express, Coca-Cola, IBM, and Wells Fargo.
    • Results were also hurt by an 80% drop in gains from derivatives, mainly related to contracts whose value grows faster when the stock market rises. 
    • Operating profit from insurance fell 31% to $1.18 billion.
    • Operating profit from noninsurance businesses rose 5% to $2.35 billion.
    • This was despite a 9% drop at his railroad company BNSF to $724 million, which Berkshire said resulted from “severe weather conditions and service-related challenges.
    • Buffett in 2013 missed his five-year target for the first time since taking over the company in 1965. Berkshire’s per share net worth grew 91% after taxes from 2009 to 2013, while the Standard & Poor’s 500 including dividends rose 128% before taxes.
  • TARGET CEO RESIGNS AFTER LAST YEAR’S CYBER-ATTACK. Target had announced in December it was the victim of a cyber-attack that resulted in the theft of at least 40 million payment card numbers and 70 million other pieces of customer data.
  • JPMORGAN SAID ITS FIXED-INCOME AND EQUITIES TRADING REVENUE WILL FALL ABOUT 20% from last year’s second quarter.
  • U.S. JURY ORDERS SAMSUNG TO PAY APPLE $120 MILLION. The amount was far less than Apple had sought.
  • TWITTER INSIDERS SET TO HOLD STOCK EVEN AS LOCKUP EXPIRES. About 480 million shares from Twitter insiders will become eligible for sale tomorrow for the first time since the IPO.
  • APPLE IS BUILDING A TEAM OF SENIOR MEDICAL TECHNOLOGY EXECUTIVES, raising hackles in the biotechnology community and offering a hint of what the iPhone maker may be planning for its widely expected iWatch and other wearable technology.
  • BILL GATES ON TRACK TO OWN NO MICROSOFT STOCK IN FOUR YEARS. Gates, who started the company that revolutionized personal computing with school-friend Paul Allen in 1975, has sold 20 million shares each quarter for most of the last dozen years under a pre-set trading plan. Assuming no change to that pattern, Gates will have no direct ownership of Microsoft shares at all four years from now.
    • Gates now owns just over 330 million Microsoft shares.
    • Gates owned 49% of Microsoft at its initial public offering in 1986. Microsoft has 8.26 billion outstanding shares today.
  • COMCAST TO BRING ITS X1 SERVICE TO L.A., NEW YORK within year of merger. Features offered by the cloud-connected X1 cable box system could help Comcast pick up subscribers in major cities where Time Warner Cable’s growth has stalled in recent years. 
  • FORD RECALLS ABOUT 4,000 SUPER DUTY F-SERIES TRUCKS for transmission issue. GM RECALLS NEARLY 52,000 SUVS for inaccurate fuel gauge.

US ECONOMY & POLITICS

  • U.S. SERVICE SECTOR GROWTH ACCELERATES IN APRIL. The Institute for Supply Management (ISM) said its services sector index rose to 55.2 in April from 53.1 in March, topping expectations for a read of 54.1.
    • The gauge of business activity surged to 60.9 from 53.4 in March and was well above analysts’ forecasts of 54.4.
    • The new orders index rose to 58.2, up 4.8 points from 53.4 the month before.
    • The employment index dipped to 51.3 from 53.6 in March.

EUROPE & WORLD

  • PORTUGAL SAID THAT IT WOULD EXIT ITS THREE-YEAR 78-BILLION-EURO BAILOUT THIS MONTH without a precautionary credit line.
  • CHINA’S MANUFACTURING CONTRACTED FOR A FOURTH MONTH IN APRIL. HSBC/Markit said today their purchasing managers’ index (PMI) rose to 48.1. That missed the median estimate of 48.4 and the preliminary reading of 48.3. 
  • NORWAY PICKS CITI AS CUSTODIAN OF WEALTH FUND OVER JPMORGAN. Norway’s sovereign oil wealth fund is the world’s biggest fund at $865 billion. Citi is the fourth-largest custodian in the world with about $14.5 trillion in assets under custody, while JPMorgan, with more than $20 trillion in assets under custody, is among the top three globally with State Street and Bank of New York Mellon.

TODAY in HISTORY

  • Napoleon Bonaparte died on the island of St. Helena (1821)
  • Alan Shepard became the first American in space (1961)
  • Pablo Picasso’s “Boy with a Pipe” became the most expensive painting ever sold ($104 million) (2004)

 Below is a list of the most expensive paintings sold. Price paid and year of purchase are included.

  • $250 million for The Card Players by Paul Cézanne (2011)

Card_Players-Paul_Cezanne

  • $155 million for La Rêve by Pablo Picasso (2013)
  • $142.4 million for Three Studies of Lucian Freud by Francis Bacon (2013)
  • $140 million for No. 5, 1948 by Jackson Pollock (2006)
  • $137.5 million for Woman III by Willem de Kooning (2006)
  • $135 million for Adele Bloch-Bauer I by Gustav Klimt (2006)
  • $119.9 million for The Scream by Edvard Munch (2012)
  • $110 million for “Flag” by Jasper Johns (2010)
  • $106.5 million for Nude, Green Leaves and Bust by Pablo Picasso (2010)
  • $104 million for Boy with a Pipe by Pablo Picasso (2004)

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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