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Pence Wealth Management Financial Markets Report

US FINANCIAL MARKET

U.S. Stocks Fluctuate at the open before Fed Meeting

  • The Fed begins its two-day policy meeting today in Washington. The central bank will reduce the pace of monthly asset purchases by $10 billion to $35 billion, economists project.
  • The benchmark index has advanced 5 % this year, reaching a record on June 9, as equities were boosted by better-than-forecast economic data and monthly asset purchases by the Fed.
  • The S&P 500 is trading at 16.4 times the projected (forward) earnings of its members, up from 15.5 times at the beginning of the year.
  • Equities fell earlier today as data showed the cost of living in the U.S. rose more than forecast.

Retail gasoline prices in the U.S. climbed for the third time in four weeks, boosted by the crisis in Iraq that sent oil futures surging

  • The pump price averaged $3.686 a gallon today, up 1.2 cents from a week earlier.
  • Oil, which accounts for two-thirds of the retail price of gasoline, gained $2.49 a barrel on the New York Mercantile Exchange in the same period and $4.88 in the past month.
  • July 14 contracts for crude WTI oil trade at $106.75, flat from yesterday. August 14 contracts for crude Brent oil trade at $113.12, also flat from yesterday.

Alibaba Sales Growth Slowdown Spooks Yahoo Shareholders

  • Sales in the quarter increased 39 %. That compares with a growth rate of 71 % for the same quarter a year earlier.
  • Operating margins narrowed to 45 % from 51 % in the prior year.
  • Transactions on mobile accounted for 27.4 % of Alibaba’s total retail trades, compared with 10.7 % in the same period last year.
  • Active buyers on Alibaba reached 255 million in the 12 months ended March, from 172 million a year earlier.
  • Alibaba has a value of $168 billion, according to analysts’ average estimate.

Apple Settles E-Books Pricing Case With States and Consumers

  • Apple reached a settlement with U.S. states and consumers seeking damages over the company’s fixing of electronic book prices, avoiding a trial in which it faced as much as $840 million in claims.

Sony Beats Microsoft in Console Sales for Fifth Month

  • Overall consumer spending on video-game hardware and software jumped 52 % to $586 million last month.
  • Sony has led Microsoft in U.S. console sales every month since the new devices were released in November.

Amazon Handset to Help Bezos Make Direct Appeal to User

  • More than seven years after Apple introduced the iPhone, Amazon will unveil its first foray into the market today at an event in Seattle hosted by Bezos.

Nissan, BMW Keen on Charger Collaboration with Tesla,

  • Nissan and BMW are interested in talks with Tesla on cooperating on charging networks, the Financial Times reports.

New Jersey Assembly Approves Bill to Allow Tesla Sales

  • The New Jersey Assembly approved a bill to allow consumers to buy electric cars directly from a manufacturer. The bill now heads to the state Senate.

 

US ECONOMY & POLITICS

Rising consumer prices point to uptick in inflation pressures

  • The consumer price index increased 0.4 %, the biggest advance since February 2013, after climbing 0.3 % the prior month.

Fed Will Raise Rates Faster Than Investors Bet, Survey Shows

  • Some 62% of 58 economists in a Bloomberg survey predict the Fed will halt bond buying at its October meeting.
  • 54% of 56 economists in the survey said clarifying the exit strategy would be the most important communication or policy action by the Fed this year.
  • In March, officials predicted their target rate, now close to zero, would be 1 % at the end of 2015 and 2.25 % a year later.

U.S. housing starts, permits fall more than expected in May

  • Groundbreaking for homes fell 6.5 % to a seasonally adjusted annual pace of 1 million units.
  • March’s starts were revised down to show a 12.7 % increase instead of the previously reported 13.2 % rise.
  • Groundbreaking for single-family homes, the largest part of the market, fell 5.9 % in May to a 625,000-unit pace, while starts for the volatile multi-family homes segment decreased 7.6 % to a 376,000-unit rate.

Permits to build homes declined 6.4 % to a 991,000-unit pace in May, pulling back from the 1.06 million units touched in April.

  • Economists had expected permits to dip to a 1.05-million unit pace.
  • Permits for single-family homes rose 3.7 % to a 619,000 unit-pace.
  • Permits for multi-family housing tumbled 19.5 % to a 372,000-unit pace.

 

EUROPE & WORLD

Russian $8.2 Trillion Oil Trove Locked Without U.S. Tech

  • Even as the decision to stop gas supplies to Ukraine aggravates tensions with the U.S. and Europe, Russia faces a dilemma: it still needs Exxon, Halliburton and BP to maintain output from Soviet-era oil fields and develop Arctic and shale reserves.
  • Russia will require Western companies to provide the modern drilling and production gear — and techniques such as hydraulic fracturing — that are essential to unlocking its $8.2 trillion worth of barrels still underground.

Iraq Oil Exports Surge in South While Violence Spreads in North

  • Iraq’s oil exports from its southern terminals in the Persian Gulf are poised to surge at a time when fighting has plunged the country’s north into chaos and Islamist militias are advancing toward Baghdad.
  • Exports of Basrah Light crude, the country’s main grade, may reach about 2.8 million barrels a day next month.
  • That’s 11 % more than this year’s average and would be close to a three-decade high of 2.799 million barrels.
  • Iraq is targeting production of 8.4 million barrels a day after 2018. Most analysts expect capacity to reach only about 6 million barrels a day this decade.

Siemens Challenges GE With 14.2 Billion-Euro Alstom Bid

  • The Siemens-Mitsubishi offer values Alstom’s energy assets at 14.2 billion euros ($19.3 billion), compared with GE’s 12.35 billion-euro valuation for those operations.

London House Prices Rise Most Since Before Northern Rock Run

  • Prices in the capital rose 18.7 % in April from a year earlier, the most since a record 18.8 % gain in July 2007.
  • London house prices rose by 26,000 pounds in April from March to a record 485,000 pounds ($824,000), more than double the 222,000-pound average in other regions.

U.K. Inflation Rate Hits Lowest Since 2009 on Food, Transport

  • U.K. inflation fell to its lowest rate in 4 1/2 years in May as food and transport costs declined.
  • Consumer prices rose 1.5 % in May.

German Investor Mood Drops Even as ECB Boosts Stimulus

  • The ZEW’s index of investor and analyst expectations, which aims to predict economic developments six months in advance, slid to 29.8 from 33.1 in May. Economists forecast an increase to 35.

Argentina vows to service debt despite new legal blow

  • The U.S. Supreme Court refused to hear an Argentine appeal aimed at staving off a default.
  • President Cristina Fernandez said Argentina was the victim of “extortion” by holdouts who refused to join debt restructuring deals since the catastrophic 2001-02 default on $100 billion of sovereign debt.

 

TODAY in HISTORY

  • The Statue of Liberty arrived in New York City aboard the French ship Isere (1885)
  • Amelia Earhart embarked on the first trans-Atlantic flight by a woman (1928)
  • The Republic of Iceland was established (1944)
  • U.S. Supreme Court ruled that no locality may require recitation of Lord’s Prayer or Bible verses in public schools (1963)
  • Burglary of Democratic Party headquarters in Washington, DC, started the Watergate political scandal (1972)
  • O. J. Simpson’s slow-speed chase by the police, watched by millions on TV, ended in his arrest (1994)

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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