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Pence Wealth Management Financial Markets Report


  • U.S. stocks swung between gains and losses at the open as the Standard & Poor’s 500 Index closed near a record, tensions increased in Ukraine and Federal Reserve Chair Janet Yellen said the central bank will likely continue gradually trimming asset purchases.
  • LINN Energy delivered strong quarterly results.
    • LINN Energy increased its average daily production by 11% to 889 MMcfe/d for the fourth quarter, while production included 44 MMcfe/d from Berry Petroleum. After adjusting for Berry Petroleum, the company still exceeded the low end of its guidance range despite significant winter weather impacts on production.
    • LINN Energy was able to produce $202 million in distributable cash flow on the quarter. Of that amount, the company distributed $170.5 million, leaving it with cash flow in excess of its distribution totaling $31.5 million.
    • Looking ahead to 2014 LINN Energy expects its production to be in a range of 1,070-1,140 MMcfe/d.
    • Linn said that Berry integration is progressing “smoothly”.
  • Best Buy reported a better-than-expected quarterly profit. Best Buy had slashed prices throughout the holidays to thwart competition from Wal-Mart,, and other chains.
    • The world’s largest consumer electronics chain said it would more aggressively cut annualized costs, by about $1 billion. It originally planned to cut costs by $725 million in North America, a target it has exceeded by $40 million.
    • The company earned a net $310 million. That follows a net loss of $461 million a year earlier. Sales fell 3 % to $14.47 billion, missing analysts’ average estimate of $14.66 billion.
    • The company, which recently started shipping directly from its 1,400 stores to compete with rivals Amazon and Wal-Mart, said comparable online sales grew 25.8 % at its domestic unit.
  • Hilton Worldwide Holdings, the world’s largest hotel operator, reported a 13 % rise in quarterly revenue as increasing business and leisure travel pushed up occupancy and room rates.
    • Net income fell to $26 million from $61 million a year earlier. Hilton’s revenue rose to $2.64 billion from $2.34 billion. Expenses soared 23 % to $2.55 billion.
    • The company, whose brands include such high-end names as Conrad and Waldorf Astoria, operates in 90 countries and has more than 4,000 hotels and 670,000 rooms under its umbrella.
  • Sears’ fourth-quarter loss narrowed to $358 million as it sold assets and trimmed costs. Revenue fell 14 % to $10.6 billion.
  • Boeing unveiled a smartphone that appears to come straight from a James Bond spy movie. In addition to encrypting calls, any attempt to open the casing of the Boeing Black Smartphone deletes all data and renders the device inoperable. Boeing’s tamper-proof phone is aimed at government agencies and contractors who need to keep communication and data secure.
  • Tesla Motors plans to raise $1.6 billion from investors to finance a new battery factory that will help the upstart U.S. automaker reach its goal of producing a lower-priced, mass-market electric car by 2017.
    • The “Gigafactory,” would be built in one of four states: Nevada, Arizona, New Mexico or Texas. Analysts believe the factory may ultimately cost $5 billion to $6 billion to build and creates 6,500 jobs.
    • The plant is key to Tesla becoming a mass-market automaker capable of producing 500,000 or more electric vehicles a year from a projected 35,000 this year, Musk has said. Its cheapest vehicle, the Model S, starts at $71,000.
  • U.S. safety regulators have opened an investigation into whether General Motors reacted fast enough in its recall of more than 1.6 million cars over an ignition-switch defect linked to 13 deaths in crashes. GM could face a maximum fine of $35 million if it failed to notify NHTSA within five days of a recall after learning of a vehicle safety defect.
  • Bank of America disputes $2.1 billion claim in U.S. fraud suit. Bank of America said it does not owe the U.S. government the $2.1 billion it is seeking in penalties after a jury found the bank liable for fraud over defective mortgages sold by its Countrywide unit.
  • The CEO of Calpers (California Public Employees’ Retirement System), the largest pension fund with its $282 billion in the United States, has died after a battle with cancer.


  • Durable goods orders excluding transportation rose 1.1 %, the largest increase since May, after falling 1.9 % in December. Economists polled by Reuters had expected this category to fall 0.3 %.
    • Data such as industrial production and regional factory surveys have suggested that manufacturing hit a soft patch in recent months.
    • Boeing reported on its website it received orders for only 38 aircraft last month, sharply down from 319 planes in December.
    • Non-defense capital goods orders excluding aircraft, a closely watched proxy for business spending plans, rose 1.7 % after dropping by a revised 1.8 % in December.
  • Initial claims for state unemployment benefits increased 14,000 to a seasonally adjusted 348,000. Economists had forecast for jobless benefits slipping to 335,000. The four-week moving average for new claims was unchanged at 338,250.
    • The claims report showed the number of people still receiving benefits after an initial week of aid rose 8,000 to 2.96 million in the week ended February 15.
  • As part of the Navy’s 2014 fiscal budget, the Defense Department approved an order of 16 more Boeing’s P-8A Poseidon long-range maritime spy planes for the Navy valued at $2.4 billion. This will bring the number of aircraft ordered by the Navy to 53. Earlier this week, Australia ordered eight P-8A spy planes for $3.6 billion. The P-8A spy plane will replace the U.S. Navy’s P-3 spy planes, which have enjoyed more than 40 years of service.
  • The path toward U.S. energy independence, made possible by a boom in shale oil, will be much harder than it seems. Just a few of the roadblocks:
    • Independent producers will spend $1.50 drilling this year for every dollar they get back.
    • Shale output drops faster than production from conventional methods. It will take 2,500 new wells a year just to sustain output of 1 million barrels a day in North Dakota’s Bakken shale.


  • Stocks in Europe declined as Russia said it has begun military exercises near the Crimean border.
    • Gunmen occupied Ukraine’s Crimea regional parliament and raised the Russian flag as lawmakers in the capital meet to approve a new cabinet after last week’s ouster of Viktor Yanukovych as leader.
  • Allianz, Europe’s biggest insurer, fourth-quarter earnings missed analysts’ estimates. The shares fell the most in seven months.
    • At Allianz’s asset-management unit, which includes Newport Beach, California-based Pimco, operating profit fell 23 % to 703 million euros in the fourth quarter. Assets under management declined 4.4 % to 1.77 trillion euros at the end of December from a year earlier amid foreign currency exchange effects of a weak dollar, Allianz said.
  • Italian fashion house Versace is selling a 20 % stake to U.S. private equity firm Blackstone for 210 million euros ($287 million).
  • Telefonica, Spain’s biggest phone company, fourth-quarter earnings topped analysts’ estimates. Net income jumped to 1.45 billion euros from 473 million euros. Sales fell about 9 % to 14.4 billion euros.
  • Spain’s economy grew in the fourth quarter as domestic demand and investments improved. GDP expanded by 0.2 %, its second quarterly expansion in a row.
  • German unemployment dropped in February to its lowest level in nearly 1-1/2 years. The number of people out of work in Europe’s largest economy decreased by 14,000 to 2.914 million. The jobless rate held steady at 6.8 %, its lowest level since German reunification more than two decades ago.


  • Dominican Republic gained independence from Haiti (1844)
  • The 22nd Amendment to the Constitution was ratified, limiting the President to two terms (1951)
  • Kuwait was liberated in the Gulf War (1991)

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.

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