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Pence Wealth Management Financial Markets Report

US FINANCIAL MARKET

  • U.S. stocks rose at the open on Wednesday after China’s economic growth exceeded expectations and Yahoo shares rallied on the strength of revenue growth in Chinese e-commerce giant Alibaba, in which it has a stake.
  • Yahoo’s growth anemic as turnaround chugs along. Yahoo’s revenue, excluding fees paid to partner websites, came to $1.087 billion in the first quarter, up from $1.074 billion in the year-ago period. Analysts had expected adjusted revenue of $1.077 billion. It had net income of $311.6 million.
    • Alibaba’s surprise surge in revenue and its upcoming IPO present a great opportunity for investors to load up on Yahoo’s shares, analysts said. Yahoo owns 24 % of Alibaba. Japan’s SoftBank owns 37 %. Alibaba’s revenue jumped 66 % to $3.06 billion. It recorded a doubling in net income to $1.36 billion.
    • Alibaba is expected to file prospectus for the share sale as early as next Monday, according to sources, as it prepares for the largest U.S. IPO since Facebook’s 2012 market debut. Speculation about the valuation of Alibaba has reached a fever pitch, with some brokerages pegging it as high as $190 billion.
  • Intel’s quarterly net beats Street, CEO talks up tablets. First-quarter revenue was $12.76 billion, compared with $12.58 billion in the year-ago quarter. Analysts had expected $12.814 billion. First-quarter net earnings was $1.947 billion compared with $2.045 billion a year ago.
    • Last year, Intel shipped 10 million tablet chips and to reach its target for 2014. CFO Smith said: “We mean 40 million tablets with Intel chips in them by the end of this year, with the majority of those being Android-based tablets.”
    • The company also expects a full-year gross margin of 61 %, plus or minus a few percentage points. That is 1 percentage point higher than Intel’s previous forecast.
  • CSX stock falls despite positive earnings and dividend increase of 7 %. Railroad traffic picked up slightly in the first quarter and that resulted in better-than-expected earnings for railroad operator CSX Corporation.
    • Overall volume was up 3% in the first quarter and revenue grew 2% to $3.0 billion. But bad weather throughout the quarter resulted in a 16% decline in operating profit to $739 million, and net income fell 14% to $398 million, down from $462 million in the same quarter of 2013.
    • Coal volume declined 1%, intermodal shipments rose 5%, and merchandise volume added 2%, driven by growth in agricultural products and chemicals shipments.
    • Looking forward, CSX expects modest full-year earnings growth for 2014 on the strength of broad-based merchandise and intermodal gains and an improving domestic coal environment.  In addition, the company remains confident in its ability to sustain double-digit earnings growth and margin expansion for its shareholders in 2015 and beyond. The company expects to sustain a mid-60s operating ratio longer-term.
  • Twitter bought social data provider Gnip for an undisclosed amount, signaling that it would take on a new role of packaging and selling data, a service in demand by business and government. Twitter also announce that it hired Google executive Daniel Graf to be its new vice president of consumer products. The shares jumped 11 % to $45.52 yesterday.
  • Litigation expenses push Bank of America into loss. Bank of America set aside an extra $6 billion to cover litigation expenses. The bank reported net loss of $514 million for the first-quarter compared with a profit of $1.11 billion a year earlier. Revenue fell 3.8 % to $22.66 billion, excluding accounting adjustments, but beat the average analyst estimate of $22.33 billion.
  • Boeing’s 737 turns 8,000: the best-selling plane ever isn’t slowing. Boeing’s 737 aircraft just marked an aviation first: The 8,000th model has rolled off the assembly line, a round-number milestone for the best-selling airplane of all time. Boeing will deliver the aircraft, a 737-900ER, on Wednesday to United Airlines, the buyer of the first 737 sold in the U.S.
  • Why rich people feel poor. Spare a thought for the millionaires this week. The bill from last year’s tax increases has come due. An adjusted gross income of $389,000 puts you in the top 1 % of earners in 2011, according to the latest IRS data. See the chart below for top tax rates in select countries. What this chart doesn’t show is, first, how much Americans end up paying in state and local taxes.

April 16

US ECONOMY & POLITICS

  • U.S. industry shows some vigor, but housing soft. U.S. industrial production rose at a faster-than-expected clip in March. Industrial production to rise 0.5 %. Manufacturing output gained 0.5 %, while production at mines rose 1.5 % and utilities’ output increased 1.0 %.
  • Capacity utilization, a measure of how intensively firms use their resources, was up to 79.2 % from a revised 78.8 % in February. March’s capacity utilization rate was the highest since June 2008.
  • Groundbreaking for new homes also increased but remained well below the post-recession peak hit in November. Groundbreaking activity increased 2.8 % in March to a seasonally adjusted annual rate of 946,000. Economists, however, expected a rise to a 973,000-unit rate.
    • Groundbreaking for single-family homes, the largest segment of the market, surged 6.0 % to a 635,000-unit pace last month. Starts for the volatile multi-family homes segment fell 3.1 % to a 311,000-unit rate.
    • Starts jumped 30.7 % in the Northeast and 65.5 % in the Midwest, but fell in both the South and West.
    • The housing market is under strain from higher mortgage rates and elevated house prices that are sidelining potential buyers.
  • Permits to build homes fell 2.4 % in March to a 990,000-unit pace. Permits for single-family homes rose 0.5 % but fell 6.4 % for the multi-family sector.

 

EUROPE & WORLD

  • Global shares up on China relief, Ukraine strains remain. European stocks rose the most in three weeks as companies from Tesco to Syngenta reported financial results and as data showed American housing and industrial activity increased.
  • UK employment and earnings numbers sent sterling marching back towards its recent highs.
  • China’s economy expanded 7.4 % between January and March, its slowest pace in 18 months. GDP data was slightly stronger than the median forecast of 7.3 %, but still slower than 7.7 % in the final quarter of 2013.
    • Retail sales growth was slightly above forecasts with an annual increase of 12.2 %.
    • The services sector, which includes retail, made up 49 % of GDP in the first quarter, 4.1 percentage points more than the industrial sector.
  • BOJ’s Kuroda maintains positive view on economy. Analysts expect Japan’s economy to contract 0.9 % this quarter due to the tax hike but rebound 0.5 % in July-September.
  • Starbucks will move its European headquarters to London from the Netherlands and pay more tax in the UK as a result. Starbucks said it would open 100 new stores in the UK, creating 1,000 new jobs, after the relocation later this year.
  • South Korea’s government said 284 people are missing after a ferry carrying hundreds of high school students sank en route to the resort island of Jeju, in what may be the nation’s worst ferry accident in two decades. Of the 462 passengers and crew, 174 people have been rescued including 75 students and two teachers.

TODAY in HISTORY

  • Lenin returned to Russia after 10 years in exile in Switzerland (1917)
  • Financier Bernard Baruch coined the term “cold war” in a speech in South Carolina (1947)
  • China sent President Nixon two giant pandas as a gift (1972)

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. 

Pence Wealth Management Financial Markets Report

US FINANCIAL MARKET

  • Stocks opened slightly higher on Tuesday after earnings from Coca Cola and Johnson & Johnson overshadowed a mixed bag of economic data.
  • Coca-Cola sales beat estimates as China volumes soar. Global case volumes rose 2 % in the quarter, while those in China rose 12 % due to increased marketing around the Chinese New Year.
    • Coke does not break out China sales separately. The business falls under its Asia-Pacific region, the company’s second-biggest market by revenue. In 2013, the region accounted for 13 % of overall sales.
    • Sales in North America, the company’s biggest market, were stable despite an unusually cold winter and the general consumer shift away from fizzy drinks.
    • Sales declined 4 % in Europe, but rose 6 % in both India and Russia.
    • Net income fell to $1.62 billion in the first quarter from $1.75 billion a year earlier. Revenue fell 4 % to $10.58 billion. Analysts on average were expecting $10.55 billion.
  • J&J beats forecasts as new drugs shine. J&J earned $4.73 billion in the first quarter. That compared with $3.5 billion in the year-ago quarter, when the diversified healthcare company took a big litigation charge. Sales rose 3.5 % to $18.1 billion in the quarter, topping Wall Street forecasts of $18 billion.
  • Nestle reports slowest first-quarter sales growth since 2009. The world’s largest food company’s revenue declined 5.1 % to 20.8 billion francs ($23.6 billion), hurt by “substantial” currency fluctuations.
  • Whirlpool Corporation increases quarterly dividend 20% based on strong growth and margin expansion. $500 million share buyback authorization also announced.
  • Zebra Tech to buy Motorola Solutions’ enterprise business, which makes rugged mobile computers, tablets and barcode scanners, for $3.45 billion in cash.
    • The deal will allow Zebra, whose products help companies such as Amazon track inventory and supply chains, to tap the opportunity presented by the profusion of devices, ranging from cars to smoke alarms, connected to the Internet. Motorola Solutions’ enterprise clients include Wal-Mart Stores and TNT Express.
    • After the sale, Motorola Solutions will be left with its core government and public safety business.
  • GE CEO Immelt may step down before his 20-year tenure ends.
  • Citigroup and Mexico’s bank regulator said they uncovered a second fraud at Citi’s local unit Banamex, as part of a wider investigation following the discovery in February of fraudulent loans to oil services company Oceanografia.
  • Serious Internet hole. Heartbleed, the result of a simple programming error, is the kind of security hole that is discovered every few years, widespread and serious enough that it sends technology companies around the world scrambling to protect their networks. Millions of smartphones and tablets running Google’s Android software are vulnerable to the bug, as are networking products from Cisco Systems and Juniper Networks.
  • Prices for shrimp have jumped to a 14-year high in recent months, spurred by a disease that’s ravaging the crustacean’s population. Restaurant chains such as Noodles & Co. and the Cheesecake Factory are taking a profit hit as prices climb. Shrimp costs rose about 35 % last quarter for Orlando, Florida-based Darden Restaurants, the company that owns Red Lobster.
  • Gold prices fell more than 2 % to $1,300 on Tuesday as strength in the dollar following forecast-beating U.S. retail sales data pushed it through key chart levels while silver hit a 2-1/2 month low. On Monday it hit a three-week high at $1,330.90, but buyers were quick to cash in gains.
  • Google to buy solar-powered drone-maker Titan Aerospace as the Web search giant ramps up plans to deliver wireless Internet access to remote parts of the world.
    • Google’s acquisition of Titan comes several weeks after rival Facebook announced plans to build solar-powered drones and satellites capable of beaming Internet access to underdeveloped parts of the world.
    • Titan is developing a variety of solar-powered “atmospheric satellites,” according to the company’s website, with initial commercial operations slated for 2015.
    • The drones, which fly at an altitude of 65,000 feet and can remain aloft for up to five years and have a 165-foot (50-meter) wingspan, slightly shorter than that of a Boeing 777.

april 15

US ECONOMY & POLITICS

  • Manufacturing in the New York region grew at a slower pace in April, a report from the Federal Reserve Bank of New York showed.
  • U.S. home builder sentiment edges up in April, still gloomy. The NAHB/Wells Fargo Housing Market index rose to 47 in April from a downwardly revised 46 in March. Economists had predicted the index would rebound to 50 in April.
    • Readings below 50 mean more builders view market conditions as poor than favorable. The April reading was the index’s third in a row to come in below 50.
  • U.S. consumer inflation boosted by higher food, rental housing costs. Consumer Price Index (CPI) increased 0.2 % in March. Economists had expected a 0.1 % rise last month.
    • In the 12 months through March, consumer prices increased 1.5 %.
    • The so-called core CPI, which strips out the volatile energy and food components, also rose 0.2 % in March after edging up 0.1 % the prior month.
    • In the 12 months through March, the core CPI advanced 1.7 %.
  • Yellen says higher capital rules may be needed for big banks.

EUROPE & WORLD

  • European stocks fall amid Ukraine violence, German data. Ukraine moves against separatists as Medvedev evokes Civil War.
  • German investor confidence falls for fourth month in April. The ZEW Center for European Economic Research’s investor and analyst expectations, which aims to predict economic developments six months in advance, slid to 43.2 from 46.6 in March. Economists forecast a decline to 45.
  • Coal returns to German utilities replacing lost nuclear. Utilities all over Germany have ramped up coal use as the nation has watched the mix of coal-generated electricity rise to 45 % last year, the highest level since 2007.
  • Britain’s inflation rate fell to the lowest in 4 1/2 years in March as gasoline and clothing prices pushed it further below the Bank of England’s target. Consumer prices rose an annual 1.6 %, compared with 1.7 % in February.
  • Ford Europe sales up 12 % in March on Germany, U.K. demand. Deliveries rose by 15,900 cars to 147,100 models. The carmaker delivered 74,700 units in its top U.K. market, a 13 % gain on year-ago levels, and posted a 19 % increase in Germany, its No. 2 European market, to 21,800 autos.
  • BMW lifts i3 electric car production 43% on higher demand. The premium manufacturer in recent weeks has raised daily output to 100 vehicles from 70. BMW has already built more than 5,000 i3s since the start of the year. BMW i3 will cost $41,350 in the U.S., and the company aimed to sell more than 10,000 in 2014.
  • China’s money supply grew less than forecast and the broadest measure of credit fell 19 % from a year earlier in March. The country will report tomorrow gross domestic product data for the first quarter in the world’s second-largest economy.
    • China GDP gauge seen showing deeper slowdown. GDP grew a seasonally adjusted 1.5 % from the previous three months, according to the median estimate in a Bloomberg.
    • Gold demand in China, which overtook India as the largest user last year, will rise about 25 % in the next four years as an increasing population gets wealthier.
  • Japan’s Fuji Heavy plans factory to make Boeing 777X wing boxes. Fuji Heavy, which makes Subaru cars, will likely spend more than 10 billion yen ($98 million) to construct the factory at the same site in Aichi Prefecture, central Japan, where it assembles wing boxes for Boeing’s 777 jets and its carbon composite 787 Dreamliner. Fuji Heavy is the sole maker of the component for both those jetliners.
  • Canada’s climate warms to corn as grain belt shifts north. The snow is piled waist-deep outside the Southern Manitoba Convention Centre as more than 400 farmers gather to consider the once-unthinkable: growing corn on the Canadian prairie.

TODAY in HISTORY

  • Samuel Johnson published his Dictionary of the English Language (1755)
  • In response to the attack on Fort Sumter three days earlier, President Abraham Lincoln declared a state of insurrection and called out Union troops (1861)
  • Titanic sank off the coast of Newfoundland on its maiden voyage after it struck an iceberg (1912)
  • Ray Kroc acquired McDonald’s and opened his first restaurant in Des Plaines, Ill., today the official McDonald’s Corporate Museum (1955)
  • Two bombs exploded at the Boston Marathon in Boston, Massachusetts, killing 3 and injuring at least 170 others (2013)

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.

Pence Wealth Management Financial Markets Report

US FINANCIAL MARKET

  • Stocks rose at the open on Monday, following a sharp selloff last session, with earnings results from Citigroup and strong retail sales data lifting sentiment while traders kept tabs on the possible escalation of hostilities in Ukraine.
    • Edwards Lifesciences gained 15% at the open after a court ruled to limit U.S. sales of peer Medtronic’s CoreValve system.
    • Coca-Cola, Goldman Sachs, Yahoo!, Google and GE are among companies scheduled to report later this week. 
    • The S&P 500 is down 3.4% from a record on April 2 amid concern valuations may be too high as earnings season begins. The Nasdaq Composite trades at 35 times reported earnings of the companies in the index. That’s double the ratio for the S&P 500, which trades at about 17 times earnings.
  • Citigroup profit rises on smaller loss from troubled assets. First-quarter net income climbed 3.5% to $3.94 billion from $3.81 billion a year earlier. Revenue dropped 1% to $20.12 billion, but this beat the average estimate of $19.37 billion.
  • Twitter says co-founders, CEO have no plans to sell stock. Jack Dorsey and Evan Williams are hanging onto their stakes through the company’s May 5 expiration of its share lockup.
  • TIAA-CREF agreed to buy Nuveen Investments from Madison Dearborn Partners for $6.25 billion, propelling the manager of teachers’ retirement savings into the top 20 of U.S. mutual-fund firms.
    • Madison Dearborn purchased Nuveen almost seven years ago for $5.75 billion, in what was then the largest buyout of a U.S. asset manager. TIAA-CREF will add $221 billion in assets, bringing its funds under management to about $800 billion. 
  • Price of new hepatitis C drugs not so daunting after all. While the $84,000 price of Gilead Sciences’ Sovaldi has riled lawmakers and public health advocates, doctors say this new generation of hepatitis C drugs may actually help cut costs.
    • In studies presented at the International Liver Congress in London this weekend, drugmakers including GileadAbbVieMerck and Bristol-Myers showed that their latest medicines can achieve sustained cure rates approaching 100%, rendering obsolete an older generation of products with daunting side effects. That will mean shorter treatment, and fewer follow-up medicines and hospital visits, doctors said.

US ECONOMY & POLITICS

  • Bullish U.S. March retail sales brighten growth outlook. Retail sales increased in March as Americans bought more cars, clothing and garden supplies, helping the economy recover from a weather-depressed start to the year. 
    • Retail sales increased 1.1% last month, the biggest rise since September 2012, as receipts rose in nearly all categories. Economists had forecast retail sales advancing 0.8% last month. 
    • Retail sales, which account for a third of consumer spending, had risen by a revised 0.7% in February.
    • So-called core retail sales, which strip out automobiles, gasoline, building materials and food services, and correspond most closely with the consumer spending component of GDP, increased 0.8% in March. That followed a revised 0.4% rise in February. 
  • Obama’s shrinking budget deficits silence foreign fiscal critics. The Congressional Budget Office is projecting the 2014 deficit will be the lowest in six years and down more than 60% from the record $1.4 trillion in 2009. 
    • The deficit will shrink to $514 billion this year from $680 billion in 2013, according to the CBO, which is projecting a gap of $478 billion in 2015. After that, the deficit will start rising every year, reaching $1 trillion by 2022. The increase will be driven by “dramatically” rising Medicare and Social Security payments needed to care for an aging society.
    • The U.S. has received about $80 billion more in income taxes this fiscal year than it had 12 months earlier. Revenue increased 16% to $215.8 billion from $186 billion in March 2013. Spending totaled $252.7 billion, down 13.6%.
    • Corporate tax revenue may climb further as accelerating growth and declining unemployment boost sales and earnings. 
  • U.S. mortgage lending is contracting to levels not seen since 1997. Wells Fargo and JPMorgan, the two largest U.S. mortgage lenders, reported a first-quarter plunge in loan volumes that’s part of an industry-wide drop off.
    • Lenders made $226 billion of mortgages in the period, the smallest quarterly amount since 1997 and less than one-third of the 2006 average.
    • Lenders also are tightening credit standards, requiring higher FICO scores. More than 40% of borrowers in 2013 had scores above 760, compared with about 25% in 2001.
    • Private-equity firms, hedge funds, real estate investment trusts and other institutional landlords have spent more than $20 billion to buy as many as 200,000 rental homes in the last two years. They snapped up properties after prices fell as much as 35% from the 2006 peak and rental demand rose from the almost 5 million owners who went through foreclosure since 2008.

 EUROPE & WORLD

  • World’s highest minimum wage on ballot in Switzerland. The Swiss will vote in a national referendum May 18 on whether to create a minimum wage of 22 francs ($25) per hour, or 4,000 francs a month. While about 90% of workers in Switzerland already earn more than that. About 10% of Switzerland’s full-time workforce receive a pretax wage of less than 4,000 francs. When adjusted for purchasing power, the Swiss proposed wage would amount to $14.01 an hour
  • World trade picture improves but 2014 still below trend. The World Trade Organization (WTO) slightly raised its 2014 forecast for growth in global goods trade to 4.7%, saying it did not expect a return to the historical trend level of 5.3% until 2015. The dollar value of global services exports grew 6% to $4.6 trillion in 2013, against two% growth in 2012.
  • German finance minister sees no sign of deflation spiral in Europe.
  • Draghi says a stronger euro would trigger looser ECB policy. The issue of weak euro zone inflation took center stage at meetings of top finance ministers and central bankers on Saturday. “The IMF is recommending more monetary easing to the ECB, and rightly so,” said Brazil’s finance minister. Over the past 12 months, the euro has strengthened by nearly 5.5% against the dollar and by nearly 10% against the yen.
  • EU weighs tougher Russian sanctions amid Ukraine unrest. EU foreign ministers, meeting today in Luxembourg, said the bloc should be prepared to impose a third round of sanctions, including economic measures.
  • Ukraine suspends gas payments to Russia until talks conclude. Russian gas giant Gazprom earlier this month increased gas price for Ukrainian consumers to $485 per 1,000 cubic meters from $268 for the first quarter, saying Kiev was no longer eligible for previous discounts. Kiev gets about half of its gas from Moscow and a large proportion of Europe’s gas is pumped from Russia via Ukraine.
  • Australian pensions with a $1.8 trillion assets seek Google and Disney. The pension either bought or increased its stakes in Google, Walt Disney, Visa, UPS and Honeywell International in the 12 months to June.

TODAY in HISTORY

  • Noah Webster copyrighted the first edition of his dictionary (1828)
  • The first pony express rider reached his destination of San Francisco. He left St. Joseph, Mo., on April 3 (1860)
  • Abraham Lincoln was assassinated by John Wilkes Booth (1865)
  • Titanic hit the iceberg that would sink her the next morning (1912)

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.

Pence Wealth Management Financial Markets Report

US FINANCIAL MARKET

  • U.S. stocks opened lower on Friday after JPMorgan Chase, the first of the major Wall Street banks to report results, posted earnings that were below expectations.
    • For the week, the Dow is down 2%, the S&P is down 2.2% and the Nasdaq is down 2.6%.
    • Concern earnings growth is slowing, valuations are stretched and that speculators got too bullish has erased $700 billion from the value of American equities in the past week. 
    • The Nasdaq suffered its biggest drop in two-and-a-half years on Thursday since Europe’s debt crisis. 
  • JPMorgan profit weaker than expected as trading revenue drops. Net income fell 19% to $5.27 billion from $6.53 billion in the same quarter of 2013. Total net revenue fell 8.5% to $22.99 billion, falling well short of the average estimate of $24.53 billion.
  • Wells Fargo profit beats estimates, sets aside less for bad loans. Net income rose 14% to $5.89 billion from $5.17 billion a year earlier. Total net revenue fell 3.3% to $20.6 billion from $21.3 billion in the quarter last year.
    • Wells Fargo’s mortgage business, which provides nearly one in five U.S. home loans, continued to suffer from a drop in refinancing activity. Income from mortgage banking fell to $1.5 billion from $2.8 billion in the first quarter of 2013.
    • Wells Fargo’s new home loans fell to $36 billion in the quarter from $109 billion a year earlier and $50 billion in the fourth quarter.
    • Wells Fargo had $27 billion of mortgage applications in the pipeline at the end of the quarter, up from $25 billion at the end of the fourth quarter.
  • U.S. regulators close Ford F-150 probe without request for recall. Last May, the National Highway Traffic Safety Administration opened an investigation into F-150 pickups from model years 2011 to 2013, after receiving 525 complaints. NHTSA was satisfied that the problem was solved without Ford conducting a recall.
  • Google to sell Glass to public next week. Google will take online orders for its Glass wearable gadget on April 15, in its biggest push to get the $1,500 wraparound Web-ready glasses out to the U.S. public. Google did not say how many pairs it would sell, but said that the quantity would be limited.
  • More than two months after PIMCO’s former CEO Mohamed El-Erian announced his resignation from the world’s biggest bond manager, Bill Gross is still looking for a reason. “He simply said he was not the man to take the company forward,” Gross said. “I would say, ‘Come on, Mohamed, tell us why’.” When he does retire, one of the six deputy CIOs named after El-Erian’s exit could be a potential heir, Gross said.

US ECONOMY & POLITICS

  • The Thomson Reuters/University of Michigan’s consumer sentiment index rose to 82.6 from 80 a month earlier. The median estimate in a Bloomberg survey of 66 economists called for the measure to increase to 81. 
  • Producer prices hint at some inflation building up. U.S. producer prices recorded their largest increase in nine months in March as the cost of food and services surged.
    • Producer price index (PPI) for final demand increased 0.5% last month after slipping 0.1% in February. The so-called core PPI for final demand had declined 0.2% in February.
    • In the 12 months through March, producer prices advanced 1.4%.
    • In the 12 months through March, core PPI for final demand rose 1.4%.
    • Last month, food prices jumped 1.1%. Food prices were pushed up by a surge in the cost of pork, which saw its largest rise since August 2008. Sausage, deli meat and boxed meat prices rose by the most since August 1980, in part reflecting a drought in the West.
  • U.S. Global Growth Engine Putt-Putts Instead of Purring. As the IMF declares the strengthening U.S. economy is providing a “major impulse” to the world, economists are questioning just how powerful it will prove to be. The U.S. contribution to global expansion from 2014 to 2019 will likely average about two-thirds that of the quarter-century before the recession started in 2007. The IMF estimates imply the U.S. will contribute about 0.52 percentage point to global growth averaging 3.9% annually from 2014 to 2019.

EUROPE & WORLD

  • U.K. House Prices Record Biggest Annual Increase since 2010. Prices in England and Wales rose 7.2% from a year earlier to 262,291 pounds ($440,000).
  • Volkswagen, Europe’s biggest carmaker, sold 5.8% more autos in the first quarter, marking a delivery record for the period as the Audi luxury brand attracted buyers. Sales rose to 2.4 million vehicles from 2.27 million a year ago. Audi deliveries rose 12% to 412,800 vehicles in the quarter.
  • Alibaba to buy AutoNavi for $1.5 billion. AutoNavi is a Chinese digital mapping and navigation firm.

TODAY in HISTORY

  • Napoleon was exiled to the island of Elba (1814)
  • The treaty ending the Spanish-American War took effect (1899)
  • Iowa imposed the first state cigarette tax (1921)
  • President Harry Truman fired General Douglas McArthur (1951)
  • President Lyndon B. Johnson signed the 1968 Civil Rights Act (1968)

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.

Pence Wealth Management Financial Markets Report

US FINANCIAL MARKET

  • U.S. stocks fell at the open, after the Standard & Poor’s 500 Index yesterday posted its biggest gain in five weeks, as technology stocks resumed declines following a two-day rebound and investors awaited corporate earnings.
  • Global PC shipments fall for eighth straight quarter.
    • PC shipments in the March quarter were down 4.4 % compared with the same quarter in 2013, IDC said. Gartner, a rival market research company, said in a news release that PC shipments in the March quarter fell 1.7 %.
    • Gartner said total PC shipments in the first quarter were 76.6 million, while IDC said 73.4 million PC were shipped.
    • Intel, central to the PC industry, is due to post its first-quarter results on Tuesday.
  • Apple’s chief designer Jony Ive, who Steve Jobs called his “spiritual partner,” is gaining more authority over the look of the company’s products. Ive is taking full control of the team that designs Apple’s iOS software that powers iPhones and iPads.
  • EBay and Carl Icahn ended their proxy fight. The activist investor dropped his proposal that the e-commerce company split off its PayPal payments unit and withdrew his two nominees for the eBay board.
    • Icahn in January called for the company to hive off its fast-growing PayPal business, arguing the unit is undervalued as part of eBay.
  • Amex, Citigroup, and Discover win dismissal of card arbitration case. The lawsuit accused them of colluding to adopt arbitration clauses that prevent credit card holders from pursuing class action lawsuits in court. Judge said the plaintiffs had failed to show that the defendants violated the Sherman Act, a federal antitrust law.
  • Ally Financial shares fall in debut. The IPO raised $2.38 billion after the U.S. Treasury sold 95 million shares at $25 per share.
    • The Treasury, which had bailed out Ally for $17.2 billion during the 2008 financial crisis, said that with the IPO it had so far made a profit of $500 million on its investment, including dividends and interest payments.
    • The Treasury now has a stake of 17.1 % in Ally.
  • Facebook will no longer let users send and receive private messages within its main smartphone app, and will require that users install a separate messaging app.
    • Facebook faces increasing competition from a new crop of fast-growing mobile messaging apps, such as Snapchat and Line. It stunned observers by announcing plans in February to buy the popular WhatsApp messaging app for $19 billion.
  • Wal-Mart partners with Wild Oats to roll back prices on organic food. The move could help revive Walmart’s flagging grocery sales and boost the profile of the resurrected Wild Oats brand.
    • Organic foods accounted for roughly 4 % of total U.S. food sales in 2012. Organic food sales were up 10.2 % to $29.0 billion in 2012.
  • The Pimco Total Return Fund, the world’s largest bond fund, cut its holdings of U.S. government-related securities and mortgages for the second straight month in March on continued bets that the Federal Reserve will conclude bond purchases this year. On March 7, Gross tweeted that investors should “Sell what the Fed has been buying because they won’t be buying them when Taper ends in October.”

US ECONOMY & POLITICS

  • Jobless claims near seven-year low. Initial claims for state unemployment benefits dropped 32,000 to a seasonally adjusted 300,000. That was the lowest level since May 2007, before the start of the 2007-09 recession. Economists had forecast first-time applications for jobless benefits falling to 320,000.

blog 4-10-14

  • The four-week moving average for new claims fell to 316,250, down 4,750 from the previous week.
  • The claims report showed the number of people still receiving benefits after an initial week of aid fell 62,000 to 2.78 million in the week ended March 29. That was the lowest level since January 2008.
  • Layoffs are trending lower and hiring is regaining some momentum after being held back by unusually cold weather, snow and ice storms in December and January.
  • Import prices increased 0.6 % last month after rising 0.9 % in February. The increase exceeded economists’ expectations of a 0.2 % rise and was driven by food prices.
    • Last month, import food prices jumped 3.7 %, the biggest rise since March 2011. Imported fuel prices rose 1.2 % last month after advancing 5.3 % in February.
    • In the 12 months through March, import prices fell 0.6 %, pointing to continued weak imported inflation that is helping to keep a lid on domestic price pressures.
    • The lack of inflation pressures in the economy suggest the Federal Reserve could keep monetary policy very accommodative for a while.
  • Export prices increased 0.8 % in March. That followed a 0.7 % rise in February. In the 12 months through March, export prices gained 0.2 %.
  • At least six months between end of QE and rate rise, Chicago Fed President Charles Evans told.
  • Fed to hold rates until at least July 2015, says slim majority. Results of the survey of 69 economists based in the United States, Europe and Canada were similar to those in a poll of 18 primary dealers.
    • While 33 of the 69 economists expect the bank to hike the Fed funds rate from the current 0-0.25 % by the end of June 2015, 31 expect it to happen in the second half of that year and five said it would be early 2016.

EUROPE & WORLD

  • Bonds buoyed by Greek return as equity gains fizzle out. Just two years after being at the epicenter of the euro zone’s sovereign debt crisis, Greece drew solid demand at a five-year bond sale that aimed to raise 3 billion euros and offered a yield of 4.95 %, beating Athens’ 5 % target. In Europe, investors looked optimistically to Greece’s successful bond market return for further evidence that the euro zone’s economic recovery is gathering pace.

TODAY in HISTORY

  • The U.S. patent system was formed (1790)
  • Titanic set sail on its fateful voyage (1912)
  • Paul McCartney announced the official split of the Beatles (1970)
  • The U.S. House passed the “Amber Alert” bill. It provided a system for alerting the public about missing or abducted children (2003)

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. 

Pence Wealth Management Financial Markets Report

US FINANCIAL MARKET

  • U.S. stocks opened higher on Wednesday, putting the S&P 500 on track for a second straight advance, after Alcoa reported adjusted profits that beat expectations.
    • Alcoa is forecasting that global demand for aluminum will exceed production this year.
    • Investors were also looking ahead to minutes from the most recent Federal Reserve meeting. The Fed releases the minutes of its March 18-19 meeting at 2 p.m. ET today.
  • Executives from Comcast and Time Warner Cable are expected to defend their plan to merge as they go before the Senate Judiciary Committee today.
  • Mars to buy most of P&G’s pet food business for $2.9 billion. P&G said it expected core earnings to be reduced by 3 cents per share in fiscal 2013 and by 4 cents per share in fiscal 2014 after it accounts for the business as a discontinued operation.
    • Mars, controlled by the Mars family, had annual sales of more than $33 billion in 2013 and was ranked 5th in Forbes’ list of America’s largest private companies. P&G had sales of $84.16 billion in 2013.
  • Toyota to recall nearly 6.5 million vehicles for steering, other faults. It was its second-largest recall announcement. In total, about 2.34 million of the vehicles to be recalled were sold in North America. Another 810,000 were sold in Europe.
  • In smartphone mass-market, Samsung and Apple have margins on their minds. The iPhone remains the most expensive smartphone, with an estimated average selling price this year of $649, more than double the average price of $247 for Android phones, Samsung’s mainstay products.
    • Average selling prices of iPhones will drop only 6 % to $610 by 2018, while Android prices will decline 18 % to $202.
  • Intel closes Costa Rica operation, cuts 1,500 jobs. Chipmaker Intel, struggling with a shrinking personal computer market, is shutting its assembly and test operation in Costa Rica. The cuts in Costa Rica are consistent with Intel’s announcement in January that it would reduce its global workforce of 107,000 employees by about 5 % this year.
  • BMW is planning a second North American factory to cater to the rising demand for its vehicles, Bloomberg reported on Tuesday. BMW is planning to build its bestselling 3-Series at the new plant and has been short-listing locations, with at least two sites in Mexico still being considered.
    • In an effort to fend off competition in the region from Audi and Mercedes-Benz, BMW announced a $1 billion plan on March 28 to expand production capacity by 50 % making its South Carolina plant the largest facility worldwide.
      • BMW reported a 17 % surge in March. Last month’s gain pushed first-quarter deliveries up 12 % to 428,259 vehicles.
      • BMW outsold second-ranked Audi by 15,409 vehicles in the first three months. March sales at Audi climbed 15 %, while deliveries at third-place Mercedes-Benz rose 13 % to 374,276. BMW’s gains were led by demand for its portfolio of SUV, which are built at a South Carolina plant.
  • JPMorgan’s Dimon says U.S. banks healthy, Europe lagging. “Profits may still vary for different kinds of reasons. But if you look at the equity, outstanding loans, debt capacity, you would see the (U.S.) banking system is sound.”
  • Big U.S. banks must boost capital by $68 billion under new rules, U.S. regulators said on Tuesday. The rules would limit banks’ reliance on debt, part of efforts to prevent another financial crisis.
    • By 2018, banks must rely more on funding sources such as shareholder equity, rather than borrowing money. The Financial Services Roundtable, a trade group for large banks, issued a statement blasting the limits, which are more stringent than the international Basel III agreement.
    • The rules require the eight biggest bank holding companies to maintain top-tier capital equal to 5 % of total assets.
    • Insured bank subsidiaries must meet a 6 % ratio. That’s higher than the 3 % ratio included in the Basel agreement.
    • Smaller U.S. banks would be held to the 3 % ratio.
  • Untaxed U.S. corporate profits held overseas top $2.1 trillion. Foreign profits held overseas by U.S. corporations to avoid taxes at home nearly doubled from 2008 to 2013 to top $2.1 trillion.
    • Under U.S. law, corporations do not have to pay income tax on most of their overseas profits until they are brought into the US.
    • GE had the biggest pile of earnings stored abroad, at $110 billion. Next were Microsoft, with $76.4 billion; Pfizer, with $69 billion, and Merck, with $57.1 billion; and Apple, with $54.4 billion.

US ECONOMY & POLITICS

  • U.S. wholesale inventories rose at a slower pace in February.  Inventories increased 0.5 % after a revised 0.8 % gain in January. February’s increase was in line with economists’ expectations.
    • Inventories are a key component of GDP changes. The component that goes into the calculation of GDP – wholesale stocks excluding autos – rose 0.5 % in February. Farm inventories jumped 2.7 % after falling 0.9 % the prior month.
    • Businesses accumulated too much stock in the second half of last year and are placing fewer orders with manufacturers while they work through the pile of unsold goods.
  • Mortgage applications fell last week as refinance down. The Mortgage Bankers Association’s (MBA) index of mortgage application activity, which includes both refinancing and home purchase demand, fell 1.6 % in the week ended April 4. Fixed 30-year mortgage rates averaged 4.56 % in the week, unchanged from the week before.
  • Medicare Millionaires Totaling Almost 4,000 Seen in Data. Medicare paid almost 4,000 doctors and medical professionals more than $1 million apiece in 2012, including seven who received more than $10 million.
    • Eye doctors were among the highest compensated, including one Florida ophthalmologist paid $21 million in 2012. The disclosures were gleaned from $77 billion in payment data released by the government this morning.

EUROPE & WORLD

  • Greece to end its bond market exile on Thursday. Greece will issue its first sovereign bond in almost four years. Greece is sounding out an indicative yield of 5.25 % to 5.5 %.
    • “We aim to raise up to 2.5 billion euros on Thursday,” one government official said. “It will be a great success if the coupon is below 5.3 %.”
    • Greece has been since kept afloat by 218 billion euros of EU/IMF bailout money and about 15 billion euros of treasury bills.
    • Greece’s debt currently stands at about 320 billion euros, or 175 % of GDP.
    • About 80 % of Greece’s debt is in the hands of the EU/IMF.
    • It is rated nine notches below investment grade at Caa3 by Moody’s. Standard and Poor’s and Fitch rank Greece six notches below investment grade at B-.
  • Spain Rejects Catalonia’s Call for Power to Vote on Independence. The Catalan parliament’s request for the authority to call the referendum was rejected by 299 lawmakers of the national assembly’s 350.

TODAY in HISTORY

  • The first full-color film, The World, The Flesh and the Devil, was shown in London (1914)
  • NASA announced the selection of America’s first astronauts, including Alan Shepard and John Glenn (1959)
  • Winston Churchill became the first honorary U.S. citizen (1963)

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.

Pence Wealth Management Financial Markets Report

US FINANCIAL MARKET

  • U.S. stocks fell at the open, after the biggest drop for the Nasdaq 100 Index in two years, as technology shares fluctuated while financial and consumer companies slumped.
    • “The question today is will investors see this as an opportunity to buy the dip, or do they stay on the sidelines and wait to see earnings strength in the first quarter?” Edward Jones strategist said by phone.
    • Technology shares were hit as traders dumped the biggest winners of the bull market amid concern valuations have advanced too far. 
    • More than 1 million put options on an ETF tracking the Nasdaq index changed hands on April 4 as investors sought protection during a 2.7 percent drop in the gauge. 
    • Alcoa, the largest U.S. aluminum producer, unofficially kicks off the U.S. quarterly earnings season when it releases financial results after the close of trading tomorrow. JPMorgan and Wells Fargo are also among the S&P 500-listed companies reporting this week.
  • Pfizer Breast Cancer Drug Helps Revive Discarded Strategy. In findings reported yesterday, Pfizer’s drug, called palbociclib, stopped tumor growth for 20.2 months in advanced forms of hormone-related breast cancer, twice the time seen with an older therapy alone. The treatment, projected to add $3.1 billion in sales by 2020,
  • Airline quality report shows improvement on customer complaints. U.S. airlines received fewer complaints from passengers last year but did a worse job handling baggage. Among the 15 airlines included in the study, the rate of complaints filed against carriers fell to 1.13 per 100,000 passengers last year from 1.43 in 2012.
  • Retailers push into crowded mobile payment market. Big retailers are muscling in on the likes of Visa and MasterCard in a fiercely competitive and growing mobile payment market that promises to cut transaction costs and increase customer loyalty.
    • The global market for mobile payments is forecast to grow about threefold by 2017 to some $721 billion worth of transactions. The service is currently dominated by banks and card firms Visa and MasterCard.
    • Starbucks launched its mobile payment and rewards app in 2011. It already has 10 million users and the firm said this month it is looking for ways to expand the program beyond its own network.
    • An alternative path is also being explored in the US, where dozens of top retailers including Wal-Mart, Target and Best Buy have announced plans to set up a joint digital wallet service – the Merchant Customer Exchange, or MCX – though no launch date has been set.
  • Amazon launches Amazon Dash for delivery of groceries, household items. A black-and-white hand-held wand-shaped remote-control features a microphone, speaker as well as a bar-code reader and links directly to the user’s AmazonFresh account. The device is available only for users of the AmazonFresh which currently operates exclusively in Southern California, San Francisco and Seattle. Signing up for Amazon Dash is by invitation only.
  • Credit Suisse faces the threat of a new investigation into its role in helping wealthy Americans avoid paying taxes after New York state’s top financial regulator requested documents from the Swiss bank.

US ECONOMY & POLITICS

  • Capital Spending in U.S. Seen from Macy’s to Berkshire. The long-awaited pickup in U.S. business investment will take place this year.
    • The oldest capital stock in decades, more clarity on fiscal policy, improving growth prospects and companies awash in cash mean the stars have aligned to boost spending on commercial structures and equipment, according to economists.

capex

  • America’s Fiscal Health Affirmed as Treasuries Demand Rises. Investors submitted bids for $1.73 trillion of government notes and bonds at auctions held in the first quarter, or 3.07 times the $564 billion that was sold. The bid-to-cover ratio rebounded from last year’s 2.87, which was the lowest annual level in four years. The last time the ratio was higher on a quarterly basis was in 2012, when demand peaked at a record 3.12 times. 
  • Boeing and GE get U.S. license to export certain spare parts for commercial aircraft to Iran under a temporary sanctions relief deal that began in January.
    • GE said the Treasury had approved the company’s application to service 18 engines sold to Iran in the late 1970s. GE officials will meet with officials from Iran flag carrier Iranair and MTU in Istanbul next week to discuss Iran’s needs.
    • A Boeing spokesman said his company received the license this week and would now contact officials in Iran to determine which parts were needed.
    • The sales would be the first acknowledged dealings between U.S. aerospace companies and Iran since the 1979 U.S. hostage crisis led to U.S. sanctions.

EUROPE & WORLD

  • World Bank trims China, East Asia 2014 growth forecasts. It expects the developing East Asia and Pacific (EAP) region to grow 7.1 percent in 2014 and 2015, down from the 7.2 percent rate it had previously forecast for both years.
    • The World Bank trimmed its 2014 growth forecast for China to 7.6 percent, from 7.7 percent previously. It kept the 2015 growth forecast for China steady at 7.5 percent, down slightly from 7.7 percent actual growth in 2013.
    • It cut its forecast for Thailand’s economic growth to 3.0 percent in 2014 and 4.5 percent in 2015, from its previous forecasts of 4.5 percent and 5.0 percent, respectively.
  • India Starts World’s Biggest-Ever Election with Modi in Lead. About 815 million voters, roughly the populations of the U.S. and European Union combined, are eligible to cast ballots in nine rounds of voting over the next five weeks to pick 543 lawmakers.
    • Results will be known on May 16 in the nation of 1.2 billion people, where some two-thirds live on about $2 per day. The election will be the most expensive in Indian history, with the government, political parties and candidates spending 300 billion rupees ($5 billion). Voting began today in the northeastern states of Assam and Tripura.
  • New French finance minister promises ‘tough, brave’ decisions on deficit. Paris wants the European Commission to extend its deadline for cutting the public deficit, which stood at 4.3 percent of output in 2013.
  • Airbus keeps tight rein on cabin design as A350 launch nears. Airbus unveiled on Monday the first cabin for its new twin-engined airliner, the A350 XWB. Airbus delivered the first A380 two years late, hit by delays stemming from a surge in demand for customized interiors and problems installing electrical wiring harnesses.
  • Opel to launch small electric car by 2017.
  • Nigerian Economy Overtakes South Africa’s on Rebased GDP. On paper, the size of the economy expanded by more than three-quarters to an estimated 80 trillion naira ($488 billion) for 2013. That compares with the World Bank’s 2012 GDP figures of $262.6 billion for Nigeria and $384.3 billion for South Africa.
  • Malaysia Jet Team Hears Pings Consistent With Black Box.
  • World’s Most-Polluting Country Leads in Clean-Energy Investment. China is.

Invt by country

TODAY in HISTORY

  • Gen. Ulysses S. Grant defeated the Confederates at the battle of Shiloh (1862)
  • The World Health Organization (WHO), a UN agency, was founded (1948)

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.

Pence Wealth Management Financial Markets Report

US FINANCIAL MARKET

  • U.S. stocks advanced slightly at the open on Friday, pulling back after the S&P 500 earlier scaled a fresh high, as the March payrolls report suggested the economy may be gaining momentum.
  • Anadarko Petroleum will pay more than $5 billion to clean up areas across the United States polluted by nuclear fuel, wood creosote and rocket fuel waste, resolving a long-running lawsuit.
    • The agreement resolves a long-running lawsuit against the Kerr-McGee energy and chemical company, which Anadarko bought in 2006. Despite the size of the settlement, investors cheered, boosting Anadarko’s share price 14.5% to $99.02 per share.
  • Boeing is considering buying Mercury Systems, a supplier of digital signal and image processing systems to the aerospace and defense industry.
    • Mercury, which has a market value of roughly $440 million, offers big data processing systems, software and services to companies including Boeing, Lockheed Martin, Northrop Grumman and Raytheon.
  • Airbus drops behind Boeing in first-quarter jet orders. Airbus ended the quarter with 158 new orders or 103 net orders after adjusting for cancellations. Boeing said on Thursday it had won 275 gross orders or 234 net orders in the first quarter. 
    • Delta Air Lines is looking at buying as many as 50 wide-body jets, the airline said on Thursday, opening a contest between Airbus and Boeing for business worth well over $10 billion at list prices.
  • Wal-Mart Stores chose MasterCard to handle transactions for the merchant’s store-branded credit cards, ending a nine-year relationship with Discover Financial Services. MasterCard is the second-biggest U.S. payments network, behind Visa, which was sued by Wal-Mart last week for allegedly conspiring with banks to fix transaction fees. 
  • Google’s Nest halts home alarm system sales over possible defect. Nest Labs, the maker of smart thermostats that Google acquired for $3.2 billion, called a halt to all sales of its smoke alarms on Thursday.
  • Bank of America near credit card deal with U.S. regulator over the sale of services sold as add-ons to credit cards.
  • CarMax shares fell at the open after the largest retailer of used cars reported fourth-quarter results.
    • CarMax, the biggest U.S. auto dealer by market valuation, plans to buy back $1 billion in stock after reporting its biggest annual jump in comparable-store sales in more than a decade. It reported a 7% rise in comparable sales at 117 stores.
    • Net income for the fourth quarter fell 7.5% to $99.2 million from $107.2 million a year earlier. Revenue advanced 8.8% $3.08 billion. That compared to a $3.2 billion projection from analysts.
  • Micron posts second-quarter profit, says outlook favorable. Memory chip maker reported a net profit of $731 million in the quarter, compared with a loss of $286 million a year earlier. Revenue rose 98% to $4.11 billion. Analysts on average expected revenue of $3.985 billion.
  • DuPont Biochemical Unit Looks beyond Shale Boom at New Plant. DuPont and Tate & Lyle, allied in a venture to produce chemicals from corn glucose rather than oil, are considering a second biochemical plant, unperturbed by the shale and petrochemical boom in the U.S. Production of bio-based propanediol uses about 40% less energy than its petroleum-based counterpart.
  • U.S. probing high-speed trading, attorney general says. Regulators have been examining whether ordinary investors are at an unfair disadvantage to high-speed traders.

US ECONOMY & POLITICS

  • The U.S. has recovered all but 437,000 of the 8.7 million jobs, including those at government agencies, lost as a result of the last recession.
    • U.S. reports solid job growth as winter’s grip loosens. Nonfarm payrolls rose by 192,000 in March, just shy of the 200,000 forecast, after rising 197,000 in February.
    • The unemployment rate was unchanged at 6.7%
    • Employment in January and February was revised higher. Revisions to prior reports added a total of 37,000 jobs to payrolls in the previous two months. 
    • Last year, the U.S. added 194,000 jobs each month on average after 186,000 in 2012.
    • The labor force participation rate rose to a six-month high of 63.2% from 63% in February.
    • The percentage of working-age Americans with a job, a broad gauge of labor market health, increased to 58.9% last month, the highest level since the summer of 2009.
    • The workweek increased to 34.5 hours from an average of 34.2 hours in February.

EUROPE & WORLD

  • German industry orders rise in February, point to strong first quarter. Domestic demand drove a stronger-than-expected 0.6% rise in German industrial orders in February. Domestic orders were up 1.2%, driven by demand for intermediate and capital goods, while contracts from abroad inched up 0.2%.
  • Top investors press Allianz to step up oversight of Pimco. Specifically, they said they wanted the Munich-based firm to rethink the management structure that was put in place at Pimco after El-Erian’s departure. The new configuration has six deputy chief investment officers (CIOs) under Gross. They also want assurances on Gross’s pay and a detailed long-term plan on how Pimco plans to broaden its focus beyond fixed income.
  • Pilots’ strike to cost Lufthansa 35-75 million euros.
  • McDonald’s quits Crimea as fears of trade clash grow. The Crimean outlets are not franchises, but owned and operated by McDonald’s itself. McDonald’s said it hoped to resume work as soon as possible but said it would help relocate staff to work in mainland Ukraine.
  • Lenovo must convince government officials that buying a server unit from IBM won’t give China back-door access to U.S. secrets and infrastructure.
  • Mercedes Has Best Monthly Sales Ever With 13% March Gain. Deliveries rose 13% in March to 158,523 as the European auto market recovers from a six-year slump. Sales growth at Mercedes has exceeded 10% for nine consecutive months.

TODAY in HISTORY

  • Congress adopted a U.S. flag with one star for each state (1818)
  • The treaty establishing the North Atlantic Treaty Organization (NATO) was signed (1949)
  • Martin Luther King, Jr., was assassinated (1968)
  • The ribbon was cut to open the World Trade Center in New York City (1973)
  • Sally Ride became the first U.S. woman in space aboard the space shuttle Challenger (1983)

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. Securities offered though LPL financial Member FINRA / SIPC.

Pence Wealth Management Financial Markets Report

US FINANCIAL MARKET

  • U.S. stocks fluctuated at the open, with benchmark indexes trading near records, as data on jobless claims and services missed estimates while the ECB indicated it would take action to head off deflation.
  • Google splits into GOOG and GOOGL today. You’re about to get twice as many shares after 2-for-1 stock split: Two shares for every one you owned.
    • One set of shares, called Class A, will trade under a new ticker symbol, “GOOGL.”
    • The other, Class C, will be listed under the company’s historic ticker, “GOOG.”
      • A new “C” class of Google shares gives its owners zero votes.
      • Google’s “A” class shares get one vote apiece.
    • Google’s “A” and “C” shares are expected to trade at roughly the same value.
    • Google agreed to an unusual arrangement as part of a settlement with disgruntled investors in October in which it will reimburse holders of the Class C shares should they fail to keep up with the existing A stock.
    • Google’s “B” shares get 10 votes each. Most of those are owned by Google’s founders, Sergey Brin and Larry Page. The founders control 56 % of the vote through their B shares, which don’t trade publicly.
  • Amazon leaps into home entertainment fray with $99 Fire TV. The square device, which just about fits in the palm of one hand, streams content from Netflix, Hulu and other video services – much like Apple TV or Google’s Chromecast.
    • Amazon promised that Fire TV would be faster and easier to use than Apple TV, Google’s Chromecast or Roku’s streaming video device.
    • Analysts were split on Amazon’s prospects. Some said its strategy to pitch the Fire TV as an option for casual gamers would set the box apart.
    • Others were disappointed Amazon did not undercut its rivals’ prices in keeping with its pricing strategy on the original Kindle Fire tablet.
    • If Fire TV takes off, it could help shape the way consumers shop online. Fire TV viewers may eventually be able to use their remote to buy a product directly off a commercial.
  • Microsoft to offer Windows for free on all phones and tablets. Up to now, Microsoft has charged phone and tablet makers between $5 and $15 per device to use its Windows system.
    • The move comes a week after new Microsoft CEO unveiled new versions of Word, PowerPoint and Excel applications for Apple’s iPad.
    • Microsoft’s move to make Windows free for some consumer devices bucks a central tenet of Bill Gates’ original philosophy, that software should be paid for, which led to Microsoft’s massive financial success over the last four decades. But analysts said it is a realistic reaction to the runaway success of free Android.
    • Microsoft formally announced it has developed a voice activated phone assistant feature called Cortana, a direct rival to Apple’s Siri.
  • Options traders are betting new Apple products will propel the world’s largest company after it rebounded from the worst monthly loss in a year. Apple may release the latest version of its iPhone in August or September.
    • Sales will increase 6 % to $181 billion this year and another 6 % to $192 billion in 2015, analysts’ estimates compiled by Bloomberg show.
    • Apple has $159 billion in cash and is in the midst of a buyback and dividend plan that will return $100 billion to shareholders.
  • Citigroup faces criminal inquiry for fraud at Mexico unit. Federal authorities have opened an investigation into a $400 million fraud. Amazon will also sell a separate controller for gaming that costs $39.99.

US ECONOMY & POLITICS

  • Jobless claims edge unexpectedly higher. Initial claims for state unemployment benefits increased 16,000 to a seasonally adjusted 326,000. Economists had forecast first-time filings for jobless aid rising to 317,000.
    • The government’s closely watched employment report on Friday is expected to show nonfarm payrolls increased by 200,000 jobs last month after rising 175,000 in February, according to economists. The unemployment rate is seen falling one-tenth of a percentage point to 6.6 %.
  • The trade gap increased 7.7 % to $42.3 billion in February, the largest since September last year, as exports fell to their lowest level in five months. Economists had forecast the trade deficit falling to $38.5 billion.
    • Exports slipped 1.1 % to $190.4 billion in February. That was the lowest level since September. Imports edged up 0.4 % to $232.7 billion.
      • Exports to China fell 4.6 % in February. Imports from that country tumbled 19.5 %.
    • Declining petroleum imports as a domestic energy production boom reduces the nation’s dependency on foreign oil have helped to shrink the trade deficit. That saw the current account deficit hitting a 14-year low in the fourth quarter of 2013.
  • The Institute for Supply Management’s (ISM) services index advanced to 53.1 last month from 51.6 in February. Economists predicted an increase to 53.5. Readings above 50 mean that activity expanded.
  • Services sector growth accelerates in March. Markit’s service sector purchasing managers’ index (PMI) rose to 55.3 in March from 53.3 in February, though the figure was slightly below the preliminary read of 55.5 released last week.
    • Employers in the service sector, which accounts for about three-quarters of the U.S. labor market, continued to add employees, but at the slowest rate since March 2013. Employment index came in at 51.8 in March, compared with 51.9 in February.
    • Markit’s final composite PMI, a weighted average of manufacturing and services indexes, rose to 55.7 in March from 54.1 in February. The preliminary reading was 55.8.
    • The employment component of the composite index was 52.2, compared with 52.3 in February, and was also the lowest since March 2013.
  • Fed should hike rates in second half of 2015, San Francisco Fed President Williams.

EUROPE & WORLD

  • Brazil may end tightening after raising rates to two-year high. Brazil raised interest rates by 25 basis point to 11 %. All of the 62 analysts surveyed by Reuters had predicted the increase.
  • ECB says ready to act if ‘lowflation’ lingers too long. The ECB held its main interest rate at a record low of 0.25 % and the rate for bank deposits at central banks at zero.
    • Euro zone inflation fell to 0.5 % in March, levels last seen when the economy was deep in recession in 2009.
    • Euro zone businesses started 2014 with their best quarter in three years. The Markit’s Composite Purchasing Managers’ Index (PMI) pointed to first-quarter growth of 0.5 %.
    • The German, French and Spanish service industry PMIs were all solid last month although Italy’s unexpectedly fell back into contraction territory. Britain’s dominant services sector also expanded steadily in March.
    • Spain services sector grows for fifth straight month in March. France’s services sector returned to growth in March. France’s Markit PMI came at 51.5, up from 47.2 in February.
  • Global food prices rose to their highest in almost a year in March, led by unfavorable weather for crops and political tensions over Ukraine.
    • The Food and Agriculture Organization’s (FAO) price index, which measures monthly price changes for a basket of cereals, oilseeds, dairy, meat and sugar, averaged 212.8 points in March, up 2.3 % from February.

TODAY in HISTORY

  • First pony express service began (1860)
  • Outlaw Jesse James was shot in the back by Bob Ford, one of his own gang members, reportedly for a 10,000 reward (1882)
  • President Truman signed the Marshall Plan, which would foster the recovery of war-torn Europe (1948)
  • U.S. commerce secretary Ronald Brown died in plane crash in Croatia (1996)

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. 

Pence Wealth Management Financial Markets Report

US FINANCIAL MARKET

  • Stocks opened little changed on Wednesday, with the S&P 500 near its record high reached in the prior session, after data on the labor market was slightly below expectations.
    • The equities benchmark trades at 17.4 times reported earnings, the highest level since 2010 and 11 % above its five-year average, according to data compiled by Bloomberg.
    • Investors have removed $3.7 billion from U.S. equity ETFs in the past five days and added $1.3 billion to bond ETFs.
  • Apple is in talks to buy Japan chip venture, seeks to secure iPhone supply chain.
  • Amazon is set to unveil a television-viewing device for streaming movies, television shows and other video from the Web at an event today in New York.
    • The device will put Amazon in closer competition with Apple and Google. The move will also escalate the company’s rivalry with Netflix. With its own box, Amazon can feature its library of video instead of depending on other TV manufacturers.
    • All of the companies are striving to reach into consumers’ living rooms and to tie customers to a particular ecosystem of services.
  • Monsanto reported higher-than-expected quarterly earnings as its corn and soybean businesses expanded globally.  Monsanto earned $1.67 billion in the second quarter, up 13 % from $1.48 billion a year earlier. Net sales rose to $5.8 billion from $5.5 billion, in line with analysts’ expectations.
    • Corn remains king in terms of growth.
    • Sales of soybean seeds and traits rose 21 %.
    • Sales of vegetable seeds rose 10 %.
  • Chrysler is recalling nearly 870,000 vehicles to fix a defect in the brake systems following complaints about excessive brake-pedal firmness. Jeep Grand Cherokee and Dodge Durango SUVs, model years 2011-2014, are under inspection.
  • CEO Barra calls GM’s actions on deadly defect ‘unacceptable’. General Motors CEO Mary Barra on Tuesday called her company’s slow response to faulty ignition switches linked to at least 13 deaths “unacceptable,” but could not give U.S. lawmakers many answers as to what went wrong.
  • Pressure rises on Gross as investors pull $3.1 billion from Pimco’s flagship fund. Gross, co-founder of Newport Beach, California-based Pimco and dubbed as the market’s “Bond King,” has been dealing with a public falling-out with former heir-apparent Mohamed El-Erian, who shared the co-chief investment officer title.
  • Five years after Lehman Brothers’ seismic bust and just two years after euro member Greece defaulted, the concept of being too big or too strategic to fail is alive and well. The IMF study detailed this week, there’s still a running assumption that governments would again rescue the biggest banks in the event of another panic.
  • Cash in the S&P 500 (ex-Financials) boosted by strong cash flows, stagnant CapEx.

SP500_CashInv_ExFinancials -Mar 26 14

US ECONOMY & POLITICS

  • U.S. private job growth accelerates in March. Domestic private employers added 191,000 workers in March, the ADP National Employment Report showed. Economists had forecast the ADP jobs report likely showed a gain of 195,000 jobs. Private payrolls for February were adjusted higher to a gain of 178,000 from the previously reported 139,000.
  • U.S. factory orders surge in February. New orders for manufactured goods jumped 1.6 %, the biggest rise since last September. Economists had forecast new orders received by factories rebounding 1.2 % in February.
    • Shipments of new orders increased 0.9 % in February, the largest rise since last July.
    • Orders excluding the volatile transportation category advanced 0.7 % in February, also the biggest gain since last July.
  • U.S. mortgage applications fell last week. The MBA’s mortgage application activity index declined 1.2 % in the week ended March 28. The MBA’s seasonally adjusted index of refinancing applications fell 2.9 %. Fixed 30-year mortgage rates averaged 4.56 % in the week, unchanged from the week before.

EUROPE & WORLD

  • China takes first step to steady economic growth. The Chinese cabinet will accelerate the construction of rail projects that have been approved, and increase the total length of lines being laid this year by 18 % compared to 2013. The government also said it would lower tax rates for smaller companies.
  • German cabinet signs off on minimum wage from 2015. Germany’s cabinet gave the green light on Wednesday to a national minimum wage of 8.50 euros ($11.72) per hour starting next year. The minimum wage is due to apply from 2015 but will not cover minors, trainees and some interns. The ministry expects that 3.7 million employees will get higher wages on Jan. 1, 2015.
  • Lufthansa grounded by three-day pilot strike. A three-day strike by pilots at Lufthansa over early retirement shows no sign of ending. Lufthansa has cancelled 3,800 flights during the strike. Pilots at the airline used to be forced to retire at 60, leaving them with a five-year gap before legal retirement provisions kicked in at 65.
  • Nearly 70 % of Japan households to cut spending post-tax hike. Many policymakers already expect household spending to cool following the tax hike, but how soon it rebounds will be key to whether the economy can make a sustained exit from years of deflation.
  • Philip Morris plans to stop manufacturing cigarettes in Australia by the end of the year, citing government production regulations that restrict its export opportunities. Philip Morris’ sales and production volumes were stable in 2013, despite the introduction of Australia’s plain packaging laws in December 2012.

TODAY in HISTORY

  • Spanish explorer Juan Ponce de Leon landed in Florida (1513)
  • Congress authorized the first U.S. mint, in Philadelphia (1792)
  • President Woodrow Wilson asked Congress to declare war against Germany (1917)
  • Pope John Paul II died (2005)

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. 

All Financial Consultants at Pence Wealth Management are Registered Representatives with, and securities and Advisory services offered through LPL Financial, a Registered Investment Advisor. Member FINRA & SIPC. Financial Planning offered through Pence Wealth Management, a Registered Investment Advisor and separate entity from LPL Financial. The LPL Financial representative associated with this website may only discuss and/or transact securities business with residents of the following states: Alaska (AK), Alabama (AL), Arkansas (AR), Arizona (AZ), California (CA), Colorado (CO), Delaware (DE), Florida (FL), Georgia (GA), Hawaii (HI), Idaho (ID), Illinois (IL), Kansas (KS), Louisiana (LA), Massachusetts (MA), Michigan (MI), Minnesota (MN), Missouri (MO), North Carolina (NC), New Hampshire (NH), New Jersey (NJ), New Mexico (NM),

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