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Pence Wealth Management Financial Markets Report

US FINANCIAL MARKET

  • U.S. stocks fluctuate at the open as small-cap shares gain amid deals.
    • The S&P 500 is trading at 17.3 times reported earnings, near the highest level since 2010.
    •  Of the 466 S&P 500-listed companies that have released results this season, 76 percent have beaten estimates for profit, while 53 percent have exceeded projections for revenue.
    • The central bank will release on May 21 minutes from its latest meeting.
  •  AT&T plans to pay $48.5 billion to buy DirecTV, in the latest sign that the wireless industry and the U.S. television market are set to converge as customers consume more video on their mobile devices.
    • AT&T is offering $95 per DirecTV share in a combination of stock and cash, a 10 percent premium over Friday’s closing price of $86.18.
    • The transaction has a total value of $67.1 billion, including the assumption of DirecTV’s net debt.
    • To help its case with regulators, AT&T will sell its roughly 8 percent stake in Carlos Slim’s America Movil, worth roughly $5 billion. DirecTV has some 18 million customers throughout Latin America.
    • DirecTV has agreed to pay a $1.4 billion breakup fee to AT&T in the event that it pursues another transaction with a higher bidder, the companies confirmed.
  • AstraZeneca rejects Pfizer’s take-it-or-leave-it offer. The rebuff came nine hours after Pfizer said on Sunday it had raised its takeover offer to 55 pounds a share, or around 70 billion pounds ($118 billion) in total, and would walk away if AstraZeneca did not accept it.
  • Campbell soup shares drop after company cuts sales forecast. Campbell says U.S. shoppers aren’t buying enough soup — especially the condensed varieties that have long been a staple of American pantries. The company now expects sales to grow about 3 percent.
  • Major investment banks’ revenue falls 9 percent in first quarter. Revenue at the world’s 10 largest investment banks fell nine percent to $42.8 billion in the first quarter.
    • Trading in fixed income, currencies and commodities (FICC) divisions fared the worst, with revenue down 16 percent to $22 billion, compared with $26.1 billion a year earlier.

US ECONOMY & POLITICS

  • U.S. charges five Chinese military officers with spying. The charges allege that the five Chinese officials conspired to steal information from U.S. entities that would be useful to competitors in China.
    • China-based hackers with links to the People’s Liberation Army have been conducting commercial espionage on Western companies despite the Chinese government’s denial of the accusation last year.

EUROPE & WORLD

  • Record Japan machinery orders suggest economy may jump tax hurdle. Japan’s core machinery orders jumped 19.1 percent in March from the previous month.
  • Deutsche Bank to raise $11 billion with help from Qatar. Qatar’s royal family will become a major investor in Germany’s largest bank under the plan.
  • BMW to announce its first Mexican car plant in July. With numerous free trade accords, a cheap and able labor force and proximity to the lucrative U.S. auto market, Mexico keeps attracting investment by foreign carmakers such as Audi and Honda.
    • BMW’s Mexican factory will either be built in the state of Hidalgo or in San Luis Potosi and will initially produce as many as 100,000 cars per year.
    • BMW said in March it will ramp up annual production capacity at its U.S. factory in Spartanburg, South Carolina to 450,000 vehicles by 2016.
  • Swiss voters rejected the world’s highest national minimum wage, striking down a proposal for an hourly rate of 22 francs ($25). The initiative was opposed by 76.3 percent of voters.

TODAY in HISTORY

  • The 130-ship-strong Spanish Armada set sail for England; it was defeated in August (1588)
  • Congress passed the Emergency Quota Act, establishing national quotas for immigrants (1921)
  • British author and soldier, T. E. Lawrence, also known as “Lawrence of Arabia,” died from injuries sustained in a motorcycle crash (1935)
  • Marilyn Monroe sang “Happy Birthday” to president John F. Kennedy (1962)
  • The 27th Amendment to the Constitution, which prohibited Congress from giving itself midterm pay raises, went into effect (1992)
  • Jacqueline Kennedy Onassis died in New York (1994)

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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