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Pence Wealth Management Financial Markets Report

US FINANCIAL MARKET

  • U.S. stocks rose at the open on Tuesday boosted by deals in the healthcare sector and upbeat results, while Facebook and Netflix lifted the Nasdaq.
  • Valeant and Ackman offer to buy Botox maker Allergan for $47 billion. Valeant offered to pay $48.30 a share in cash and 0.83 of its common share for each Allergan share, valuing Allergan at $152.88 a share, a premium of over 7 % to the company’s closing price on Monday.
  • Comcast’s profit rises. Comcast posted higher first-quarter revenue and net income on Tuesday showing it could add video subscribers for two quarters in a row, a rare sight in the cable industry.
    • Comcast reported net income of $1.87 billion compared with $1.44 billion a year earlier. Revenue rose 14 % to $17.41 billion from $15.31 billion. Analysts on average expecting $17.04 billion.
    • Comcast added 24,000 net video subscribers in the first quarter, which surprised Wall Street analysts who expected a loss of 26,000 net subscribers.
    • Comcast’s high speed Internet growth slowed in the quarter. It added 383,000 net subscribers, fewer than a year ago and missing estimates. Revenue from cable subscriptions, including high-speed Internet and phone, rose 5.3 % to $10.8 billion.
    • The Sochi Olympics generated more than $1.1 billion in revenue in the quarter, Comcast said. This helped boost revenue at the NBC broadcast network by 73 % to $2.6 billion. NBC Universal’s total revenue rose 8.1 % to $6.88 billion.
  • Lockheed boosts profit 23 %, lifts 2014 outlook. The company reported net earnings of $933 million for the quarter, up from $761 million in the first quarter of 2013. Revenues declined 3.8 % in the quarter to $10.7 billion.
    • Lockheed, maker of the F-35 fighter jet, satellites and coastal warships, said U.S. government budget cuts continued to depress revenues in 2014, with sales to the U.S. military likely to drop by 6.0 % in 2014 after a 4.0 % drop in 2013. But earnings and cash flow from operations remained strong, and foreign sales had offset the drop in U.S. orders.
    • F-35 will account for about 16 % of Lockheed’s revenues in 2014, and that percentage is expected to continue increasing in coming years. By 2018 or 2019, when the program reaches full rate production, the F-35 will account for about 25 % of Lockheed’s overall revenues.
  • United Tech broad revenue growth helps profit beat Street. The diversified manufacturer of elevators, jet engines and climate control systems, also lifted the low end of its 2014 earnings forecast. Revenue rose 2.4 % to $14.75 billion, just ahead of analyst estimates. First-quarter net income fell 4 % to $1.21 billion.
  • Canadian Pacific tops profit estimates with labor savings. Net income rose 17 % to C$254 million ($231 million). Revenue increased 0.9 % to C$1.51 billion, topping the C$1.5 billion average projection.
    • Unseasonably cold weather in the first three months of 2014, with temperatures falling to as low as minus 37 degrees Celsius (minus 35 Fahrenheit) in central Canada, forced Canadian Pacific to run slower trains. Average train speed dropped 12 % to 15.9 miles per hour, while average dwell time jumped 56 % to 10.3 hours.
    • Revenue from industrial and consumer products, which includes crude oil, jumped 11 %.
    • Grain sales advanced 4.1 %.
  • Netflix plans to raise prices as U.S. streaming subscribers grow. The company, which now has 48.4 million streaming subscribers worldwide, announced the new prices, along with quarterly results.
    • Netflix said it intends to raise the monthly subscription price for new customers by $1 or $2 a month to help the company buy more movies and TV shows and improve service for its 48 million global subscribers. Investors welcomed the announcement by Netflix.
    • The company said in its earnings report it added 2.25 million customers to its U.S. streaming business during the quarter. In international markets, its customer base reached 12.7 million, a gain of 1.8 million during the quarter.
    • Netflix predicts it will sign up 1.46 million new subscribers this quarter, including about 520,000 in the U.S.
    • Net income for the quarter reached $53 million, an increase from $3 million a year earlier.
    • Sales advanced 24 % to $1.27 billion, matching projections.
  • McDonald’s profit falls, U.S. diners not “lovin’ it”. McDonald’s posted a lower quarterly profit as high beef costs bit into margins and fewer customer visits resulted in a bigger-than-expected decline in sales at the fast-food chain’s established U.S. restaurants. Net income fell to $1.2 billion. That compares with a profit of $1.27 billion a year earlier.
  • Harley-Davidson posts higher-than-expected profit. The Milwaukee-based company reported first-quarter net income of $265.9 million, up from $224.1 million a year earlier. Sales rose 10.2 % to $1.73 billion. Harley-Davidson said it had shipped 80,682 motorcycles to its independent dealers and distributors worldwide during the quarter.
  • Tesla expects big investment on charging stations in China.

US ECONOMY & POLITICS

  • U.S. house prices rose 6.9 % in the 12 months through February, the smallest gain in a year, in a sign that the housing market’s recovery is cooling. Prices climbed 0.6 % on a seasonally adjusted basis from January.
  • U.S. existing home sales hit 1-1/2 year low in March. Home sales slipped 0.2 % to an annual rate of 4.59 million units, the lowest level since July 2012. The decline was, however, less than economists’ expectations for a fall to a 4.55-million pace.

EUROPE & WORLD

  • Novartis and GSK trade assets as pharma industry reshapes. Novartis and GlaxoSmithKline traded over $20 billion worth of assets on Tuesday, aiming to bolster their best businesses and exit weaker ones as the drugs industry reshapes to cope with healthcare spending cuts and generic competition.
    • Novartis is buying GSK’s oncology products (cancer drugs) for $14.5 billion and GSK acquiring Novartis’ vaccines business for $7.1 billion plus royalties.
    • In addition, Novartis is selling its animal health arm to Eli Lilly for approximately $5.4 billion.

TODAY in HISTORY

  • Pedro Alvares Cabral discovered Brazil and claimed it for Portugal (1500)
  • Henry VIII became king of England (1509)
  • The Spanish poet Cervantes died in Madrid (1616)
  • Congress authorized the inscription “In God We Trust” on coins minted as U.S. currency (1864)
  • The land rush in Oklahoma began when it was opened to settlers ((1889)
  • The first Earth Day was observed (1970)
  • Richard M. Nixon died of a stroke at the age of 81 (1994)

Sources: Reuters, Bloomberg.

This information has been prepared from sources believed to be reliable, but no representation is being made as to its accuracy or completeness. The information provided should be used only as general information and is not intended to provide specific advice or recommendations for any individual. The economic forecasts set forth in the material may not develop as predicted. All indices, such as the S & P 500, are unmanaged and may not be invested into directly.

Pence Wealth Management Financial Markets Report

US FINANCIAL MARKET

  • U.S. stocks opened flat on Monday as investors found few reasons to keep buying following a strong rally last week and ahead of a heavy week of corporate earnings.
    • Hedge funds lowered bullish bets on gold for a fourth week, the longest streak this year. Prices fell 7.6% since reaching a six-month high in March after tension in Ukraine eased and U.S. equities rallied to a record. 
  • U.S. gasoline prices rise to 13-month high in Lundberg Survey. The average price for regular gasoline at U.S. pumps jumped 8.5 cents in the past two weeks to a 13-month high of $3.6918 a gallon. Prices are the highest since March 22, 2013. 
    • The highest price for gasoline was in Los Angeles, at $4.26 a gallon. The lowest price was in Salt Lake City, where customers paid an average $3.29
    • Inventories of the motor fuel fell 154,000 barrels in the week ended April 11 to 210.3 million, the lowest since Nov. 15, according to EIA data. Supplies were down 9.9% in eight weeks of contractions as refiners performed seasonal maintenance and sold off stocks of winter-grade gasoline.
  • Halliburton forecast a 25% jump in earnings in the current quarter, helped by a recovery in margins in North America and growth in overseas markets. Net income was $622 million in the first quarter compared with a loss of $18 million a year earlier. Revenue rose about 5% to $7.35 billion, beating analysts’ average estimate of $7.24 billion.
  • Kimberly-Clark reaffirms 2014 outlook. It posted revenues of $5.34 billion compared to $5.32 billion in the same period a year ago.
  • Pfizer considers $100 billion bid for AstraZeneca. AstraZeneca, Britain’s second-biggest pharmaceuticals group, has been frequently touted as a potential takeover target as it wrestles with patents expiring on a number of best-selling drugs, leaving future growth uncertain.
  • Comcast is in talks with Charter Communications over selling or spinning off roughly 3 million subscribers worth approximately $18 billion to $20 billion as part of the divestitures related to its $45.3 billion takeover of Time Warner Cable.
  • Kraft recalls 96,000 pounds of Oscar Mayer Classic Wieners hot dogs due to undeclared allergen. The product labels are incorrect as they do not reflect the ingredients associated with the pasteurized cheese in the cheese dogs, FSIS said in a statement on Sunday.

US ECONOMY & POLITICS

  • The Conference Board’s gauge of the outlook for the next three to six months climbed 0.8% after rising 0.5% in February.
  • Tightest job market since 2008 in U.S. cities prompts higher pay. Companies across the U.S. from Texas to Virginia and Nebraska are struggling to fill positions with metropolitan jobless rates below the 5.2% to 5.6% level the Federal Reserve regards as full employment nationally. Compensation has risen about 2% nationally so far this year and probably will increase by 2.2% next year, 2.5% in two years and 3% by late 2016.
  • Obama says 8 million signed up for health-law’s insurance. About 35% of enrollees in the federal insurance exchanges are younger than 35. Obama’s announcement at the White House came two days after enrollment closed for the year.
  • Property-tax collections rising at fastest pace since U.S. crash. Local governments are using the money to hire police, increase salaries and pave roads. Property-tax collections nationally rose 3% to $182.8 billion during the last three months of 2013.
  • Pipeline delay gives boost to Obama’s political base. Keystone pipeline fate now in hands of Nebraskan jurists. The State Department’s announcement on Friday that it would give government agencies more time to study the project was seen by strategists from both parties as a move to prevent that and boost Obama in the eyes of his supporters. 

 EUROPE & WORLD

  • Japan’s trade deficit widens as export growth weakens. The deficit quadrupled from a year earlier to 1.45 trillion yen ($14.1 billion), larger than a 1.08 trillion yen projection by economists. An 18.1% jump in imports helped widen the deficit to the biggest ever for the month. Exports rose 1.8%.
  • U.S. car giant General Motors plans to invest $12 billion in China from 2014 to 2017 and build more plants next year as it competes with aggressive rivals in the world’s largest auto market.
    • China’s auto market rose 13.9% to 21.98 million vehicles last year, compared with a 7.6% gain in the United States to 15.6 million. China’s auto market is set to expand 8-10% this year.
  • Audi expects to sell half million cars in China this year. In 2013, Audi sold 488,000 vehicles in China and a total of 492,000 including Hong Kong. 
  • Musk says Tesla will make cars in China in next 3-4 years. The Model S, when equipped with an 85 kilowatt-hour battery, will be priced from 734,000 yuan ($118,000) in China — compared with about $71,000 in the U.S. before federal tax credits.
  • The amount of money Amazon.com reports through a tax-exempt vehicle in Europe has dropped sharply in the past two years, even as European sales jumped, after the U.S. tax authority tightened rules it felt were being abused to shift profits. Tesla has been taking orders since August and opened an 800-square-meter (8,600 square feet) store in a Beijing shopping mall late last year.

TODAY in HISTORY

  • Texan army under Sam Houston defeated Mexicans in the Battle of San Jacinto (1836)
  • Brazil inaugurated its new capital, Brasilia (1960)

 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

  • Wall Street opens flat on mixed earnings as underwhelming results from tech giants Google and IBM were offset by upbeat quarterly numbers from the likes of Morgan Stanley, Goldman Sachs and GE.
    • Twenty-five companies in the S&P 500 report earnings today.
  • GE industrial profits rise 12 % that beat analysts’ estimates. First-quarter net earnings fell to $3 billion from $3.53 billion a year ago, when the company’s results were boosted by its sale of NBCUniversal. Revenue fell 2 % $34.18 billion. Analysts were looking for $34.36 billion.
    • Revenue in its two largest industrial segments, aviation and power and water, each rose 14 %, while its oil and gas division posted a 27 % increase to $4.3 billion. The aviation unit posted a revenue of $5.78 billion. GE Capital’s revenue was down 8 % to $10.5 billion.
    • Infrastructure orders were unchanged at $23.7 billion, while the order backlog grew to $245 billion on increases in every business line.
    • GE’s profit margins for its industrials businesses, a closely watched measure, improved to 13.4 % from 12.9 % a year earlier.
  • Google first-quarter revenue misses Wall Street targets as the price of its ads continued to decline. Google’s revenue climbed 19 % to $15.42 billion in the first quarter from $12.95 billion in the year-ago period. Analysts had estimated $15.54 billion. It posted $3.45 billion in net income compared to $3.35 billion in the year-ago period.
    • The number of “paid clicks” by consumers on Google’s ads increased by 26 % in the first quarter, disappointing some analysts that had hoped for stronger volume growth.
    • The average “cost per click” declined 9 %, extending a downward trend as mobile advertising, typically cheaper than traditional online ads, make up a bigger slice of its business.
    • Google still top pick for Wall Street, despite mobile ad challenges. Most analysts kept their “buy” rating on the stock. Of the 46 analysts covering Google, 35 have a “buy” or equivalent rating on the stock. Nobody has a “sell”.
  • IBM’s quarterly revenue sinks to 5-year low as hardware sales fall. IBM’s sales declined for the eighth straight quarter, making it harder to meet CEO’s profit goal for the year. Total revenue fell 4 % to $22.5 billion in the first quarter, below analysts’ average estimate of $22.91 billion.
    • Hardware revenue plunged 23 % to $2.4 billion, while systems storage revenue also fell 23 %. Only software business showed some growth, with revenue rising 1.6 % to $5.66 billion.
    • Revenue in the Americas fell 4 %, while revenue from Asia Pacific countries dropped 12 % and declined 11 % in emerging markets such as Brazil, Russia, India and China.
    • Net profit fell to $2.38 billion from $3.03 billion a year earlier.
  • Severe winter weather dampens DuPont’s farm sales. Sales in the agriculture business, DuPont’s biggest, fell 6 %, the first decline in ten quarters, due to lower demand for seeds and herbicides in North America.
    • Operating earnings fell 5 % to $1.44 billion in the agriculture business. DuPont, however, backed its full-year 2014 operating earnings. Revenue fell nearly 3 % to $10.13 billion, missing market estimates of $10.45 billion.
  • PPG Industries’ quarterly revenue rose 17 % to $3.6 billion. Net income rose 40 % to $277 million from the same quarter last year. Sales volume grew 5 %, more than double recent quarters.
    • PPG board of directors also authorizes $2 billion share repurchase program today.
  • Kansas City Southern revenue rises on higher grain shipments. Railroad operator Kansas City Southern reported a 10 % rise in first-quarter revenue, helped by higher shipments in its agriculture business.
    • Revenue rose to $607.4 million from $552.8 million, while revenue at the company’s agriculture business jumped 40 %. Net income fell to $94 million for the quarter from $104.2 million a year earlier.
  • Agricultural product shipments boost Union Pacific profit. Union Pacific, the largest publicly traded U.S. railroad, reported a 14 % rise in quarterly profit as it increased prices and shipped more agricultural products.
    • Revenue at the company’s agricultural business, which ships a range of products such as frozen food, beer, oils and whole grains, rose 16 %. Total revenue rose 6.6 % to $5.64 billion. Analysts had expected revenue of $5.70 billion.
    • Net income rose to $1.09 billion from $957 million a year earlier.
  • Kinder Morgan Energy Partners reported a strong first quarter and increased the distribution for the 51st time since current management took over in February of 1997. It raised its dividend 6 % to $1.38.
    • First quarter net income before certain items was $788 million compared to $655 million for the same period in 2013.
  • American Express profit rises 12 % as its credit-card customers spent more in a recovering U.S. economy. Leash on expenses helps AmEx counter muted user spending.
    • The world’s biggest credit card issuer’s net income rose to $1.43 billion for the first quarter from $1.28 billion a year earlier. Total revenue, net of interest expense, rose 4 % to $8.20 billion.
    • American Express, which issues its own cards unlike rivals such as Visa and MasterCard, benefits from its largely affluent customers’ consistent spending and low default rates.
  • Morgan Stanley profit soars on wealth management and trading. Net income rose 49 % to $1.45 billion compared with $936 million a year earlier. Revenue climbed 4 % to $8.8 billion, making Morgan Stanley the only U.S. bank among the six biggest to post a first-quarter increase from a year earlier.
  • Goldman Sachs profit falls 11 % but beats estimates. Net income fell to $1.95 billion in the first three months from $2.19 billion in the same period of 2013. Total net revenue fell 8 % to $9.33 billion, but beat the average estimate of $8.70 billion.
  • Philip Morris profit tops estimates on higher prices. Net income fell 12 % to $1.88 billion from $2.13 billion a year earlier. Revenue excluding excise taxes fell 8.8 % to $6.92 billion, trailing analysts’ $7 billion average estimate. Cigarette shipment volume fell 4.4 % to 196.0 billion units in the quarter.
  • UnitedHealth says first-quarter profit fell on reform costs. UnitedHealth Group, the largest U.S. health insurer, said net profit was $1.1 billion compared with $1.2 billion a year earlier. That beat estimates. It had 44.67 million medical members at the end of the quarter, down from 45.45 million at the end of 2013, due to declines in the commercial business. UnitedHealth stuck by its previous forecast for 2014 earnings and said it sees revenue growth of about 5 % to $128 billion to $129 billion.
  • Snack sales help PepsiCo beat profit estimates. Overall revenue was $12.62 billion, above the $12.43 billion Wall Street was expecting. Net income was $1.22 billion, up from $1.08 billion a year earlier.
  • Wal-Mart Stores is launching a new domestic money transfer service called “Walmart-2-Walmart” in partnership with Euronet Worldwide subsidiary Ria Money Transfer, competing directly with Western Union. Western Union shares were down 7.1 %.
  • Home Depot puts a lid on new-store openings and focusing its expansion efforts on e-commerce.

US ECONOMY & POLITICS

  • U.S. jobless claims hover near pre-recession levels. Initial claims for state unemployment benefits ticked up 2,000 to a seasonally adjusted 304,000 for the week ended April 12. They stayed close to a 6-1/2 year low touched the prior week. Economists had forecast first-time applications for jobless benefits rising to 315,000.
    • The claims report showed the number of people still receiving benefits after an initial week of aid dropped 11,000 to 2.74 million in the week ended April 5. That was the lowest level since December 2007.
  • Fed’s Yellen says rates will need to rise as recovery takes hold. Yellen said on Wednesday the U.S. economy was making “very meaningful progress” toward full employment but had some way to go yet.

EUROPE & WORLD

  • Europe’s car sales upturn fails to halt price war. Registrations rose 10.4 % in March.
  • Mexican mobile phone operator sues IBM for $2.5 billion, accusing the U.S. technology giant of making fraudulent representations that caused it to lose $2.5 billion in profits. The lawsuit was filed in federal district court in New York.

TODAY in HISTORY

  • Benjamin Franklin, U.S. patriot, diplomat, and a signer of the Declaration of Independence, died in Philadelphia (1790)
  • Geraldine Mock became the first woman to fly solo around the world (1964)
  • The Apollo 13 astronauts safely splashed down after their near-disastrous flight (1970)

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 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.

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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