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Pence Wealth Management Financial Markets Report

US FINANCIAL MARKET

  • Wall St. edges up at the open; Dow, S&P 500 hit records. The S&P rose above 1,900 for the first time, extending its year-to-date rise to 2.7 %.

o    About 76 % of the 454 S&P 500 companies that have released results this earnings season have beaten estimates for profit, while 53 % have exceeded revenue projections.

  • AT&T in talks to buy DirecTV for nearly $50 billion. AT&T is discussing an offer in the low- to mid-$90s per share for DirecTV. A bid near $95 per share would value DirecTV at more than $48 billion.

o    The talks are the latest sign of a rising tide of potential megadeals in the telecoms, cable and satellite TV space, which is being roiled by Comcast’s proposed $45 billion takeover of Time Warner Cable as well as market forces such as the rise of Web-based TV and surging mobile Internet usage.

  • Facebook says it may open sales office in China. Facebook currently has a Hong Kong sales office with a staff of 30 to 40 people who deal with advertisers locally and in mainland China.
  • Boeing South Carolina catches up on 72 % of work. The details suggest the world’s biggest plane maker is getting past problems that snarled production earlier this year.

o    Workers at the plant in North Charleston who assemble the 787 and make fuselage sections have achieved a greater than 72 % reduction in so-called “jobs behind schedule” and have significantly increased the assembly of the fuselage sections and aircraft the factory produces.

  • Pfizer is planning to sweeten its bid for AstraZeneca for a second time. Pfizer and its advisers are crafting a new offer that would increase the value modestly above the current 50 pounds-a-share (about $84) level while bumping the cash portion.

US ECONOMY & POLITICS

  • Weak retail sales data puts a wrinkle on U.S. growth outlook. American consumers took a respite from going to malls and restaurants as retail sales climbed less than forecast in April after the strongest gain in four years.

o    Retail sales rose 0.1 % in April, less than expected, though March’s read was revised upward. Economists had forecast sales advancing 0.4 % last month after a previously reported 1.2 % surge in March.

o    Eight of 13 major retail categories showed gains last month, led by clothing stores and sporting-goods outlets.

o    Retail sales were restrained by a 2.3 % drop in receipts at electronics and appliance stores.

o    Sales at furniture stores fell 0.6 %, while receipts at food services and drinking places dropped 0.9 %.

o    Sales at non-store retailers, which include online sales, fell 0.9 %.

  • April import prices fell 0.4 % while export prices dropped 1 %. Analysts were expecting both to have risen 0.3 %.
  • Small business confidence back at pre-recession levels, to its highest level in 6-1/2 years in April. Seven of the index’s 10 components advanced, with gains in job creation plans and the share of businesses optimistic about earnings.
  • U.S. Senate Democrats are trying to pass more than $80 billion in tax reductions. Their obstacles include Republican plans to cut even more. The Senate will begin procedural votes on reviving dozens of tax breaks that lapsed Dec. 31 and extending them through 2015.
  • California heat pushes power to six-year seasonal high. Spot electricity in California jumped to the highest seasonal level in six years as surging temperatures boost air-conditioning demand.

o    Temperatures in the interior valleys of the state should rise to 100 degrees Fahrenheit (38 Celsius) with San Francisco reaching the mid-90s tomorrow, the weather service said in forecasts yesterday. The May 13 record high for San Francisco is 87, weather service data show.

EUROPE & WORLD

  • Airbus sparks relief rally as first-quarter profit beats forecasts. Revenue rose 5 % to 12.6 billion. Revenue at Airbus Helicopters rose 14 %. Airbus also reaffirmed plans to cut 5,800 jobs as part of a restructuring of the company’s defense and space division.
  • E-commerce edge helps British retailers expand abroad. Although the United States is the biggest e-commerce market by absolute turnover, internet orders make up a bigger portion of total retail sales in Britain – about 11 % in 2013 to 7.3 % in the United States.
  • German investor confidence fell for a fifth month in May in a sign of growing concern that threats from low inflation to a strong euro may undermine the recovery.
  • Former Israeli Prime Minister Ehud Olmert was sentenced to six years in prison after being convicted of accepting bribes, the first Israeli premier to face possible jail time.

TODAY in HISTORY

  • The United States formally declared war on Mexico after several days of fighting (1846)
  • Winston Churchill gave his first speech as prime minister: “I have nothing to offer but blood, toil, tears and sweat” (1940)
  • Pope John Paul II was shot and wounded by Mehmet Ali Agca as he drove through a crowd in St. Peter’s Square, Rome (1981)

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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