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Pence Wealth Management Financial Markets Report

US FINANCIAL MARKET

U.S. Stocks Fluctuate at the open as Iraq Violence Overshadows Intel

  • The S&P 500 yesterday fell for a third day, its longest streak in two months, as Iraq violence spread. 
  • Crude oil prices hit a nine-month high on supply concerns and equities sold off as violence threatened stability in Iraq.
  • Brent crude futures rose 3 percent to $113.35 a barrel while U.S. crude added 2.2 percent to $106.71, the highest reading for both since September. 

Intel raises outlook on stronger PC demand

  • Chipmaker raised its outlook for the second quarter and the full year, citing stronger-than-expected demand for personal computers used by businesses.
  • Intel said it now expects second-quarter revenue of $13.7 billion, plus or minus $300 million. Intel had previously forecast revenue of $13 billion, plus or minus $500 million.
  • With personal computer shipments falling for eight straight quarters through March, some analysts have suggested the industry’s decline is close to hitting bottom.
  • Demand from companies for PCs likely received a boost recently due to Microsoft’s winding down of support in April for its Windows XP operating system, analysts say.

Priceline agreed to buy OpenTable for $2.6 billion in cash

  • OpenTable rallied 47 percent. Priceline, the online travel agent, offered $103 a share, 46 percent above OpenTable’s closing price yesterday.
  • OpenTable seats over 15 million diners per month across more than 31,000 restaurants via online bookings.
  • The purchase gives Pricelinerestaurant bookings in addition to its online travel business already spanning flights, hotels and cars.
  • Last year, Priceline purchased Kayak for about $1.7 billion, which helped Priceline capture revenue in hotel search and the company is now making its largest purchase ever to branch out in restaurant bookings.

GM recalls 511,528 Chevy Camaros because key bump can cause power loss

  • GM earlier this year recalled 2.6 million small cars because of an ignition switch failure, linked to at least 13 deaths.

BMW and Tesla executives meet to discuss electric cars

  • BMW and Tesla are seeking ways to raise the popularity of battery-powered vehicles, the scarcity of charging stations and the time it takes to recharge them.
  • Fast-charging stations allow electric vehicle owners to recharge batteries up to 80 percent in less than 20 minutes.
  • Tesla also said on Thursday that it would allow others to make use of its intellectual property in the hope of speeding up development of electric cars by all manufacturers.
  • Musk said this included all of Tesla’s patents, including several hundred current ones and several thousand in the future.
  • German premium auto makers have been keen to collaborate with Tesla.

US ECONOMY & POLITICS

OECD sees U.S. growth accelerating through 2015

  • The OECD said U.S. gross domestic product would expand 2.5 percent this year, a touch below a forecast it released last month.
  • But it maintained its 3.5 percent growth projection for next year, which would be the strongest advance since 2004.
  • The OECD is more optimistic on U.S. growth than most private forecasters and some other international organizations, including the World Bank, which looks for growth in 2015 of only 3.0 percent.
  • On Wednesday, the World Bank cut its US growth forecast for 2014 to 2.1 percent from 2.8 percent.

U.S. consumer sentiment slips in June

  • The Thomson Reuters/University of Michigan’s preliminary June reading on the overall index on consumer sentiment came in at 81.2, down from 81.9 the month before.
  • It was below the median forecast of 83.0 among economists.
  • The survey’s barometer of current economic conditions rose to 95.4 from 94.5 and was below a forecast of 95.7.
  • The survey’s gauge of consumer expectations slipped to 72.2 from 73.7, and missed an expected 74.6.

U.S. Fed plans changes to annual bank stress tests

  • The U.S. Federal Reserve on Thursday proposed tougher conditions for banks to pay dividends or buy back shares.
  • Banks need to ask the Fed for approval for shareholder payouts each year.
  • Banks must submit capital plans that disclose whether they intend to pay dividends or buyback shares, as well as any planned increases in capital through raising new debt or shares.
  • The new rule would prevent banks from increasing dividends or buying back shares if they did not meet the capital increases that they had pledged to the Fed.
  • The biggest banks with more than $50 billion of total assets would need to submit their plans by April 5, three months later than under the current rule makings.
  • The industry has until Aug. 11 to comment on the proposed rule which would then come into force in the 2015-2016 stress test cycles, the Fed said.

Weak U.S. producer prices point to tame inflation pressures

  • Producer price index (PPI) slipped 0.2 percent, braking sharply from April’s 0.6 percent increase, which was the largest gain in 1-1/2 years.
  • Economists had forecast producer prices rising 0.1 percent.

EUROPE & WORLD

China Industrial Output Climbs 8.8%, Matching Forecasts

  • Factory production rose 8.8 percent in May from a year earlier.
  • Home sales in the first five months fell 9.2 percent.

U.K.’s AA+ Grade Is Affirmed at Fitch Amid Economic Growth

  • Fitch Ratings cited robust GDP growth and an improving labor market.
  • Britain’s improving economy is raising the prospect that Bank of England Governor Mark Carney will increase interest rates as soon as this year.

TODAY in HISTORY

  • The U.S. Supreme Court set forth in Miranda v. Arizona that the police must advise suspects of their rights upon taking them into custody (1966)
  • Thurgood Marshall was nominated to become the first African American on the U.S. Supreme Court (1967)
  • The U.S. space probe Pioneer 10, launched in 1972, became the first spacecraft to leave the solar system (1983)

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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