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Pence Wealth Management Financial Markets Report

US FINANCIAL MARKET

  • U.S. stocks rose at the open on Monday, with the Dow hitting another all-time high and the S&P 500 moving within 1 percent of its own record.
    • The advance game despite ongoing geopolitical concerns in the Ukraine after pro-Russian rebels voted in favor of self-rule in eastern regions of the country in a referendum dismissed by Kiev and Western governments as illegal.
    • 21st Century Foxjumped 3.2 percent after reports that Rupert Murdoch’s British Sky Broadcasting Group Plc is in talks to buy European pay TV assets from Fox. 
    • Pinnacle Foods surged 15 percent after Hillshire Brands agreed to buy it for about $6.6 billion including debt. Hillshire Brands is the maker of Jimmy Dean sausages and Sara Lee frozen bakery goods.
    • About 76 percent of the 453 S&P 500 companies that have released results this earnings season have beaten estimates for profit, while 53 percent have exceeded revenue projections, data compiled by Bloomberg show.
    • Profit at the companies will probably rise 7.2 percent this year, as sales will climb 4 percent, according to analysts’ estimates compiled by Bloomberg.
  • Allergan rejects Valeant’s unsolicited takeover proposal. Allergan, the maker of the Botox wrinkle treatment said Valeant’s offer “substantially undervalues” the company. The bid, which valued Allergan at $45.7 billion in cash and stock when it was announced, creates “significant risks and uncertainties” and isn’t in the best interest of shareholders, the Irvine, California-based company said in a statement today.
    • Valeant CEO Pearson took the helm in 2008 and has spent at least $19 billion buying more than 35 companies as part of a goal to join the ranks of the world’s five biggest drugmakers by the end of 2016.
  • Apple tries to lift online sales by cutting refund times in half. Customers who buy a product from Apple’s online store can get a refund in under a week, versus 10 days previously.
    • The move is a big upfront expense on Apple’s part, but could pay off in the long run if the company can lure online customers away from retailers such as Amazon.com and Best Buy, industry experts say.
    • Apple experienced a 24 percent increase in online sales to $18.3 billion in 2013, Internet Retailer estimated.
  • Comcast partners with Asian carriers, eyes mobile market. The deals with Japan’s KDDI and Taiwan Mobile allow their subscribers to use Comcast’s WiFi hot spots when they travel to the United States, reducing the international roaming charges.
    • Comcast has been steadily building out its WiFi network and said last week that it aims to have 8 million hot spots by the end of the year, covering 19 of the 30 largest U.S. cities.
  • Chrysler reports loss on merger items, maintains 2014 forecast. Chrysler reported a first-quarter net loss of $690 million because of charges related to the merger of the two companies. Excluding those items, earnings were $486 million, compared with $166 million a year earlier.
    • Chrysler also maintained 2014 forecast that calls for net revenue of about $80 billion and earnings of between $2.3 billion and $2.5 billion, excluding special items.
  • Oracle wins copyright ruling against Google over Android. A high-profile 2012 trial featured testimony from Oracle’s chief executive, Larry Ellison, and Google CEO Larry Page, and the legal issues go to the heart of how tech companies protect their most valuable intellectual property.
  • U.S. Postal Service loss hits $1.9 billion; package volume up. Liabilities totaling $64 billion exceeded current assets by $42 billion, adding to the agency’s dire financial situation. Congress has remained gridlocked on postal reforms, partly by pressure from trade groups and unions to maintain the status quo. The U.S. Postal Service, which does not receive taxpayer funds, has said it could require a massive bailout from the taxpayers in excess of $50 billion by 2017 if Congress fails to act.

US ECONOMY & POLITICS

  • U.S. economic strength may not be clear for months: Fed’s Lockhart. The U.S. economy should accelerate in the second quarter to an annual growth rate of 3 percent or more.
    • Inflation has been running just above 1 percent in the world’s biggest economy while unemployment, albeit falling, is still at 6.3 percent.

EUROPE & WORLD

  • Europe deflation risk seen by 74% in global investor poll. Financial professionals are optimistic about the global economy, just not as fervent about it as they were at the start of the year.
    • 40 percent of respondents in the survey of Bloomberg customers say the global economy is improving, another 43 percent say it is stable, and only 12 percent say it’s deteriorating. 
    • Investors view the U.S. as the world’s bright spot, with close to two-thirds describing the largest economy as improving.
    • On the question of which one or two markets offer the best investment opportunities over the next 12 months, the U.S. comes out on top, with 44 percent
    • Poll respondents, however, are overwhelmingly concerned about deflation in the euro zone. About three-quarters of them say it’s a greater threat to the region than inflation.
    • Investors are also nervous about Asia’s two largest economies, China and Japan. Only 13 percent say the country is among the best places to invest during the coming year, which is a decline from 23 percent in January and 33 percent in May 2013.
Source Bloomberg

Source Bloomberg

  • Weak Japan exports, not tax hike, could shake BOJ into action. The Bank of Japan is increasingly confident that the economy is weathering a recent tax increase and is on its way out of deflation, but another threat to that optimistic scenario is lurking – weak exports.
    • Annual export growth peaked at 18.6 percent in October and skidded to 1.8 percent in March, the latest data available and the weakest in a year. Shipments to the rest of Asia, half of the total, were up just 1.4 percent for the month. Moreover, export volume fell 2.5 percent in March.
  • Siemens starts 4 billion euro ($5.5 billion) share buyback program. The share buyback was announced in November last year.
  • BSkyB in talks to unite Murdoch’s pay-TV businesses in Europe. Murdoch, whose 21st Century Fox is BSkyB’s biggest shareholder, has looked at various options over the years to consolidate his TV holdings in Europe. Media reports have put the size of the deal at about 10 billion euros ($13.8 billion).

TODAY in HISTORY

  • Manitoba became a province of Canada (1870)
  • Britain’s King George VI was crowned at Westminster Abbey in London (1937)
  • Former president Jimmy Carter became the first U.S. president (in or out of office) to visit Fidel Castro’s Cuba (2002)

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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