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Pence Wealth Management Financial Markets Report

US FINANCIAL MARKET

  • U.S. stocks fluctuated at the open, after reversing earlier gains, as Internet stocks tumbled for a second day while investors analyzed comments from Federal Reserve Chair Janet Yellen.

o    Some 22 S&P 500-listed companies – including Twenty-First Century Fox and Allergan — report earnings today. Tesla Motors will also post first-quarter earnings today.

o    Of the 422 index members to have released results this season, 75 % have beaten estimates for profit, while 52 % have exceeded projections for revenue.

o    Profit for members of the S&P 500 probably climbed 4.6 % in the first three months of the year from the year-earlier period, while sales rose 2.8 %.

  • The WSJ reported that four bidders have emerged as finalists to buy a health-care real-estate investment trust in a deal that could value the company at nearly $3.7 billion, according to people involved in the negotiations.

o    Griffin-American Healthcare owns senior housing and skilled nursing facilities, hospitals, medical office buildings, lab space and other properties related to medicine in 30 states and the U.K.

o    The investors, mostly retirees and other individuals, paid between $10 and $10.22 a share from 2009 to 2013.

o    Current offers from the four finalists have topped $12.50 a share, according to people briefed on the price, which would put the company’s value at $3.66 billion. A deal is expected to be finalized in the next two weeks.

  • Alibaba files for what may be biggest tech IPO. The Chinese e-commerce juggernaut, which powers 80 % of all online commerce in China, is expected to raise more than $15 billion, and could top the $16 billion pulled in by Facebook when it listed in 2012.

o    The bulk of the proceeds will go to Yahoo – which bought a 40 % stake in Alibaba in 2005 for $1 billion and which must sell more than a third of its current 22.6 % stake through the IPO.

o    Alibaba will become the largest Chinese corporation to list in the U.S. – on either the New York Stock Exchange or the Nasdaq.

o    Alibaba handled more than $248 billion of transactions for 231 million active users in 2013, more than Amazon and eBay combined.

  • DirecTV reported a higher-than-expected quarterly profit and said Los Angeles customers were not canceling their subscriptions even though they are shut out from watching LA Dodgers’ baseball.

o    The No. 1 U.S. satellite TV provider added 361,000 Latin American customers and 12,000 U.S. subscribers.

o    Net income fell to $561 million from $690 million a year earlier. Net income was reduced by a $281 million charge in the quarter because of currency devaluation in Venezuela.

o    Revenue increased 4 % to $7.86 billion, but missed the average analyst estimate of $7.91 billion.

  • Chesapeake first-quarter profit surges on pricing.  The second largest U.S. producer of natural gas, reported a profit of $374 million compared with $15 million in the year-ago period.

o    The company said the average price it received for its gas was $3.27 per thousand cubic feet, up from $2.13 per mcf a year ago.

  • HP to invest over $1 billion in open-source cloud computing. Amazon.com and Google recently slashed prices of most of their cloud computing services as other companies join the fray. Cisco Systems laid out plans in March to offer cloud computing services, pledging to spend $1 billion over the next two years, while Microsoft said it will increase its cloud storage offering for business users 40-fold.

US ECONOMY & POLITICS

  • Yellen says ‘high degree’ of accommodation still needed and cited geo-political turmoil and weak housing data as risks to the U.S. economy.

o    Yellen said “sufficient underlying strength” made the measured reductions in bond purchases “appropriate.” At the same time, the Fed has said its key interest rate is likely to remain close to zero for a “considerable time” after the asset buying ends.

o    Last month the Fed reduced its monthly bond purchases to $45 billion from $55 billion.

  • Bad weather sinks U.S. first-quarter productivity. Productivity declined at a 1.7 % annual rate after advancing at a 2.3 % pace in the fourth quarter.

o    Economists had forecast productivity falling at a 1.0 % rate.

o    Manufacturing sector hours fell at a 1.4 % rate. They had increased at a 3.4 % pace in the fourth quarter.

  • Unit labor costs, the price of labor per single unit of output, surged at a 4.2 % rate after falling at a 0.4 % rate in the fourth quarter. It was the biggest rise in unit labor costs since the fourth quarter of 2012.

o    Economists had expected unit labor costs to increase at a 2.6 % rate.

EUROPE & WORLD

  • Japan’s Abe sees free-trade deal with EU agreed next year.
  • Rolls Royce sells energy gas turbine business to Siemens for 785 million pounds ($1.33 billion). The energy gas turbine and compressor business supplies aero-derivative gas turbines, compressor systems and related services to customers in the oil and gas, and power generation sectors.

TODAY in HISTORY

  • Beethoven’s 9th Symphony premiered in Vienna (1824)
  • Germany unconditionally surrendered to the allies in Rheims, France (1945)
  • The 27th Amendment to the Constitution, prohibiting mid-term Congressional pay raises, was ratified (1992)
  • Vladimir Putin was inaugurated as Russia’s president (2000)

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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