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Pence Wealth Management Financial Markets Report

US FINANCIAL MARKET

  • U.S. stocks fell at open on Friday after the Dow and S&P 500 ended lower a day earlier, with investors wary of weakness in small-cap names.
    • Reports this week showed an unexpected decline in U.S. industrial production and slowing retail sales.
    • Some economists have blamed unusually harsh winter weather for a slowdown in U.S. growth this year.
  • Buffett’s Berkshire Hathaway buys stake in Verizon, adds to Wal-Mart. Berkshire Hathaway bought a new stake of 11 million shares in Verizon. The investment is valued at about $530 million.
    • Berkshire also said in the filing that its stake in GM declined by 25 percent to 30 million shares.
  • Abbott to buy Latin American drugmaker CFR in $2.9 billion deal. CFR Pharmaceuticals sells about 1,000 products across Latin America, including generic drugs that have brand names. 
    • Abbott, which spun off AbbVie that included the blockbuster drug Humira last year, said the purchase would add $900 million in sales in 2015.
  • Darden to sell Red Lobster seafood chain to private equity firm Golden Gate Capital for $2.1 billion.
    • Darden, the biggest U.S. operator of full-service restaurants, has been battling competition from so-called “fast-casual” restaurants such as Chipotle Mexican Grill and Panera Bread.
    • Red Lobster, whose same-restaurant sales have fallen in five of the last six quarters, contributed about 31 percent of Darden’s total revenue in 2013.
  • Nordstrom tops estimates as outlet, online sales gain. First quarter net earnings were $140 million compared with $145 million for the same period last year. This decrease reflected planned technology investments.
    • Revenue rose to $2.93 billion from $2.75 billion a year earlier, compared with the average analyst estimate of $2.87 billion.
    • Nordstrom said its e-commerce and catalog net sales jumped 33 percent last quarter after advancing 25 percent a year earlier.
  • DOT (Department of Transportation) said GM will pay up to 35 million fine for ignition switch recall.
  • Uber said to be in funding talks for more than $10B value. Uber Technologies is in talks to raise new financing in a round that may value it at more than $10 billion. That would almost triple the company’s value from $3.5 billion last year when it garnered $258 million. Uber is discussing raising less than $1 billion with new private equity investors.
  • Tesla edges out Toyota as California’s top auto employer. Tesla now employs more than 6,000 people in the state, well ahead of Toyota, which has 5,300 direct employees in California.
    • The state’s biggest employers are government entities, including some University of California branches that employ tens of thousands of people each, while Nestle USA is among the top private job providers with 20,000 in-state workers.
    • When Tesla bought the idled NUMMI plant in 2010, some analysts were skeptical that the startup could ever use a facility with a 500,000-vehicle-a-year capacity.
    • When Tesla started production there in 2012, it said it was using about one-fifth of the site. Now it says it’s using 40 percent to make electric motors and battery packs as well as cars.
  • Musk sees need for hundreds of battery ‘Gigafactories’ like the one the carmaker is planning to build.
    • Tesla anticipates the battery factory will reduce the cost of lithium-ion cells by more than its initial guidance of 30 percent.
    • Tesla is getting close to deciding where it will build the first such proposed facility, which Musk has said will cost as much as $5 billion and involve partner companies such as Panasonic

US ECONOMY & POLITICS

  • U.S. consumer sentiment slips in May, focus on wages. The Thomson Reuters/University of Michigan’s preliminary May reading on the overall index on consumer sentiment came in at 81.8, down from 84.1 the month before. It was also below the expectation of 84.5 among economists.
    • Some 58 percent of consumers reported that the economy had improved, up from 49 percent in April. 
    • The survey’s barometer of current economic conditions fell to 95.1 from 98.7 and below a forecast of 99.0.
    • The gauge of consumer expectations slipped to 73.2 from 74.7 and fell short of an expected 75.0.
  • Housing starts up sharply; permits highest since 2008. Groundbreaking increased 13.2 percent to a seasonally adjusted annual pace of 1.07 million units, the highest level since November 2013. All four regions of the country reported increases.
    • Economists had forecast starts rising to a 980,000-unit rate last month. 
    • The housing market recovery stalled as a combination of higher mortgage rates and rising property prices, which made housing less affordable for many Americans. A cold winter also weighed on activity.
    • Groundbreaking for single-family homes, the largest segment of the market, rose 0.8 percent to a 649,000-unit pace.
    • Starts for the volatile multi-family homes segment surged 39.6 percent to a 423,000-unit rate.
  • Permits to build homes jumped 8.0 percent to a 1.08-million unit pace in April, the highest since June 2008. Economists had expected permits to rise to a 1.01-million unit pace. 
    • Permits for single-family homes rose 0.3 percent to a 602,000-unit pace.
    • Permits for multi-family homes soared 19.5 percent to a 478,000-unit rate in April.
    • Permits for buildings with five or more units jumped 21.8 percent to their highest level since June 2008.

EUROPE & WORLD

  • The Swedish government launched a fightback on Friday against U.S. drugmaker Pfizer’s proposed takeover of AstraZeneca, which has half its roots and more than 5,000 staff in Sweden, highlighting the risks to jobs and science.

TODAY in HISTORY

  • Marie Antoinette married the future King Louis XVI of France (1770)
  • The first ballot on one of 11 articles of impeachment in the U.S. Senate failed to convict President Andrew Johnson (1868)
  • The first Academy Awards were given on this night. The term, Oscars, was not used to describe the statuettes given to actors and actresses until 1931 (1929)
  • Japanese climber Junko Tabei became the first woman to summit Mount Everest (1975)
  • Queen Elizabeth II became the first British monarch to address the United States Congress (1991)

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. Sources: Reuters, Bloomberg.

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