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Pence Wealth Management Financial Markets Report

US FINANCIAL MARKET

U.S. Stocks Are Little Changed at the open Before Fed Policy Decision

  • Fed officialswill release a new set of quarterly predictions for unemployment, inflation, economic growth and the benchmarkfederal funds ratetoday.
  • FedEx advanced 4.6 % as fiscal fourth-quarter earnings topped forecasts.
  • Adobe Systems jumped 9.7 % after posting revenue and profit that beat analysts’ estimates.
  • ConAgra Foods dropped 6 % as the company cut its fourth-quarter forecast.
  • TheS&P 500is up as much as 188 % from its bear-market low in March 2009.
  • U.S. interest rates will climb faster than money-market investors expect, economists surveyed by Bloomberg News June 12-16 predicted.

$120 Oil Flagged as Danger Point for Global Economy on Iraq Crisis

  • Economists are worrying anew after Brent touched its highest price in nine months above $113 a barrel amid fresh violence in Iraq. Brent started the year about $6 cheaper.
  • The rule of thumb favored by many economists is that every $10 increase in the price of a barrel of oil ends up cutting global growth by about 0.2 percentage point.
  • July 14 contracts for crude WTI oil trade at $106.68. August 14 contracts for crude Brent oil trade at $113.65.

FedEx 2015 Profit Forecast Tops Estimates on Growth View

  • U.S. online retail sales are expected to double to $508 billion by 2020 from about $260 billion in 2013, according to FTI Consulting.
  • FedEx predicts U.S. economic growth of 3.1 % in 2015, up from 2.2 % this year. Global expansion will accelerate to 3.1 % next year after 2.7 % in 2014, FedEx said.
  • The company reported a fiscal fourth-quarter revenue of $11.8 billion which topped analysts’ expectations.

Boeing in Talks with China’s ICBC on Order for 747-8

  • ICBC Leasing would be the first Chinese lessor to order the 747-8 as planemakers brace for a wave of purchases from Airbus.
  • Boeing also is in talks with Emirates as the company seeks to keep the jet’s assembly line humming. Boeing has 51 unfilled orders for the 747-8, about three years of production.

GM hit with $10 billion lawsuit saying recalls damaged brand

  • The lawsuit painted a “disturbing picture” of GM’s approach to safety, including how “in truly Orwellian fashion” the largest U.S. automaker would encourage employees to avoid words such as “bad” and “failed,” and use euphemisms such as “issue” or “condition” rather than “problem” when discussing defects.

GE to submit improved Alstom offer on Thursday

  • Alstom’s board is due by Monday to announce its choice between GE’s 12.4-billion-euro ($16.8 billion) cash offer and a competing proposal by the Siemens-Mitsubishi offer of 14.2 billion euros ($19.3 billion).

Harvard Money Managers Exit after Years of Subpar Returns

  • After years of subpar results at Harvard Management, three high-level managers have exited the $32.7 billion endowment and the university is searching for new leadership.
  • Harvard’s endowment posted annual average gains of 1.7 % in the five years ended June 30.
  • That compares with annual returns of 6.8 % at Columbia University, 5.4 % at University of Pennsylvania and 3.3 % at Yale University.

ConAgra estimates fourth-quarter profit below forecast

  • ConAgra’s consumer foods business sells meals, snacks and desserts such as Act II popcorn and Blue Bonnet spread as branded, private brand and customized food. Sales in the business dropped 7 % in the quarter.

Adobe results beat estimates on strong subscription growth

  • Adobe said it added 464,000 paid Creative Cloud subscribers in the second quarter ended May 30, ending the quarter with 2.3 million paid subscribers.
  • The company’s net income rose to $88.5 million in the second quarter, from $76.5 million a year earlier.
  • Revenue rose about 6 % to $1.07 billion. Analysts on average had expected $1.03 billion.

Daimler says to significantly hike U.S. car production

  • The plant in Alabama currently makes sports utility models including the M-Class and the GL-Class. In 2015, Tuscaloosa will also start making the Concept SUV Coupe, Daimler said.

 

US ECONOMY & POLITICS

Fed Decision Day Guide from Dot Plots To Exit Strategy

  • Yellen will probably emphasize that the Fed will keep its main interest rate close to zero for at least a year even with inflation rising toward the Fed’s 2 % goal and the job market improving faster than officials expected.

Current Account Deficit Wider than Expected in the first quarter

  • A drop in U.S. exports and lower income from overseas investments drove the U.S. current account deficit to its highest level in 18 months.
  • The current account deficit widened to -$111.2bn from -$87.3bn in Q4.
  • The fourth quarter’s total was the smallest in 14 years.
  • Overall exports dropped to $399.7 billion from $407.1 billion in the previous quarter.
  • Americans received $196.5 billion in income from overseas investments, down from $198.8 billion in the previous quarter.
  • The current account gap is still relatively low by historical standards. It regularly topped $150 billion in the four years before the recession.
  • The current account is the country’s broadest measure of trade, covering not only goods and services but also investment flows. A wider deficit can act as a drag on growth because it means U.S. companies are earning less from their overseas markets.

U.S. mortgage applications drop in latest week

  • The MBA’s seasonally adjusted index of refinancing applications dropped 12.7 %, while the gauge of loan requests for home purchases, a leading indicator of home sales, fell 4.7 %.
  • Fixed 30-year mortgage rates averaged 4.36 % in the week, up 2 basis points from 4.34 % the week before.
  • The survey covers over 75 % of U.S. retail residential mortgage applications, according to MBA.

 

EUROPE & WORLD

Argentina debt falls on newest restructuring proposal

  • Argentina’s battle with investors who rejected its proposals to restructure debt risks pushing the nation into a new default that would wreck its attempts to return to credit markets but not have the same economic effect as its catastrophic 2001-02 default.
  • The U.S. Supreme Court declined on Monday to hear Argentina’s appeal against lower court rulings that ordered it to pay in full the hedge funds which refused 2005 and 2010 debt swaps on $100 billion in debt.
  • Economy Minister Axel Kicillof said on Tuesday that the country is taking steps to swap bonds governed by U.S. law for those governed by Argentine law so they would not be subject to U.S. courts that have made paying existing bondholders more difficult.

Coca-Cola invests in Egypt and Pakistan, sees big sales growth

  • As part of a $500 million investment plan announced for Egypt in March, Coca-Cola will start constructing a new juice plant in 6th of October city near Cairo next year in a joint $100 million dollar project with Saudi Arabia’s Aujan Coca-Cola Beverages Company.

Premier Li says China’s economy won’t suffer hard landing

  • Li said he expected China’s economy, the world’s second-largest behind the United States, to grow at a minimum clip of 7.5 %.

 

TODAY in HISTORY

  • The War of 1812 between US and Great Britain began (1812)
  • Napoleon was defeated at the Battle of Waterloo by British, German, and Dutch forces (1815)
  • The United Nations Commission on Human Rights adopted its International Declaration of Human Rights. The General Assembly would give it final approval on Dec. 10, 1948
  • Sally Ride became the first American woman in space (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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