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Pence Wealth Management Financial Markets Report

US FINANCIAL MARKET

  • U.S. stocks advance as tech shares rebound from selloff.

o    The global economy is rebooting for “Great Moderation 2.0.” Barely five years after the worst financial turmoil and recession since the Great Depression, the U.S. and fellow advanced nations are showing a stability in output growth and hiring last witnessed in the two decades prior to the crisis.

  • Fox profit beats estimates on Super Bowl and cable growth. Revenue rose to $8.22 billion from $7.35 billion.

o    Advertising revenue in Fox’s television business rose 30 % in the quarter, helped by advertising during Super Bowl and the NFL playoffs.

o    Fox reported a 27 % rise in TV revenue to $1.59 billion, while Disney on Tuesday blamed a decrease in primetime advertising for flat broadcast revenue of $1.50 billion.

o    Revenue at Fox’s cable networks, its largest business, grew 11.5 % to $3.15 billion, driven mainly by a 12 % rise in domestic affiliate revenue.

o    Fox’s stable of cable networks includes the Fox News Channel, Fox Sports, FX Networks, National Geographic channels and a new channel FXX aimed at young adults.

o    Disney reported net income of $1.9 billion from $1.5 billion a year earlier on Tuesday.

  • ‘The Walking Dead’ lifts AMC Networks’ 4th-qtr revenue. However, the cable-channel owner missed first-quarter profit estimates as costs rose to create and market its original programs.

o    The company’s net income rose 37 % to $71.4 million. Total revenue rose to $524.6 million from $382.0 million. Analysts had expected revenue of $507.5 million.

o    Operating expenses climbed 48 % to $376.9 million.

o    Revenue from AMC’s international networks category, which includes Chellomedia, rose seven-fold to $76.6 million in the first quarter ended March 31. Revenue from national networks rose 20.7 % to $448.7 million.

o    “The Walking Dead,” the No. 1 program among viewers age 18 to 49, is among AMC’s new projects, along with a “Breaking Bad” spinoff.

  • Allergan profit, sales top estimates; says weighing Valeant offer. The company also raised its full year profit forecast. Allergan earned $257 million. Global company sales rose 13 % to $1.62 billion, topping Wall Street expectations of $1.60 billion.
  • Tesla outlook disappoints some on Wall St. Tesla posted a higher-than-expected first-quarter operating profit. Net revenue rose 10 % from last year to almost $621 million.

o    Quarterly deliveries rose to 6,457 cars from about 4,900 a year earlier, slightly above the 6,400 it had forecast in February.

o    It also reiterated its full-year delivery target of more than 35,000 cars, including a forecast of about 7,500 cars in the second quarter.

o    Tesla’s gross margin was 25 %.

  • Fannie Mae, Freddie Mac post profits driven by legal settlements. Fannie Mae posted net income of $5.3 billion, which included $4.1 billion from settlements of litigation over MBS. Freddie Mac earned a net income of $4.0 billion in the same period, reflecting $4.9 billion from litigation over MBS.

o    Fannie Mae and Freddie Mac will send the U.S. Treasury dividends totaling $10.2 billion.

o    Fannie Mae and Freddie Mac will have returned $213.1 billion to taxpayers by the end of June in return for the $187.5 billion in aid they received.

o    The companies own or guarantee 60 % of all U.S. home loans.

  • AT&T is in talks to buy satellite-television company DirecTV, people with knowledge of the situation said. DirecTV is working with Goldman Sachs as it explores a sale. AT&T has a market value of around $185 billion, compared to DirecTV’s $45 billion.
  • Ford announces $1.8 billion share buyback program.
  • McDonald’s April global comparable sales rise 1.2 %; U.S. flat. That was in line with analysts’ average estimate.

o    Europe is the chain’s top region, accounting for 40 % of sales, but business there fell short of the mark. Comparable sales rose 0.3 %, well below the 1.9 % rise analysts expected.

o    McDonald’s has not reported a comparable sales gain since October in the United States, which generates 31 % of revenue.

o    Asia comparable sales were up 2.9 %, better than the 1 % increase analysts expected.

US ECONOMY & POLITICS

  • U.S. jobless claims fall, snap three-week upward trend. Initial claims for state unemployment benefits declined 26,000 to a seasonally adjusted 319,000 for the week ended May 3. Economists had forecast first-time applications for jobless benefits falling to 325,000.
  • U.S. consumer credit posts largest gain in a year. Total consumer credit increased by $17.53 billion to $3.14 trillion, the Federal Reserve said. Economists had expected consumer credit to rise by $15.75 billion in March.

o    Revolving credit, which mostly measures credit-card use, rebounded by $1.13 billion after falling by a revised $2.73 billion in February.

o    Non-revolving credit, which includes auto loans as well as student loans made by the government, rose $16.40 billion in March.

EUROPE & WORLD

  • Draghi says ECB poised to shore up economy as soon as June. He also flagged his concerns about the strength of the euro, which hit a 2-1/2 year high against the dollar as he was speaking.

o    The euro, trading at 1.38 to the dollar, has gained more than 14 % over the U.S. dollar since a July 2012 low.

o    Draghi repeated the ECB’s commitment to keeping monetary policy loose for an extended period of time.

  • China can grow economy by about 7.5 % in 2014, Premier Li Keqiang said.
  • Two more Chinese banks to close bitcoin trading accounts.
  • Mexico prices fall more than expected as fruit costs plummet. Annual inflation slowed to 3.50 % from 3.76 % in March.
  • AstraZeneca shares gain on talk of sweetened Pfizer bid. Pfizer is said to return with a higher bid worth more than 53 pounds ($89.9) a share, a bid of around $113 billion.

TODAY in HISTORY

  • Antoine Laurent Lavoisier, the father of modern chemistry, was guillotined during the Reign of Terror (1794)
  • V-E Day marks the European victory of the Allies in World War II (1945)

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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