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Pence Wealth Management Financial Markets Report


  • U.S. stocks rose at the open, sending the Standard & Poor’s 500 Index to an all-time high, as data showed jobless claims fell to the lowest level in three months and investors watched developments in Ukraine.
    • Asian stocks advanced, with the regional benchmark gauge ending at a six-week high, as telecommunications companies led gains. Japanese shares rose after the yen weakened and an advisory committee said the world’s largest pension fund doesn’t need a domestic-bond focus.
  • Staples is closing up to 225 stores in North America by 2015 and it will cut as much as $500 million in costs as online competition continues to hurt sales. The company operates 1,515 stores in the United States and 331 stores in Canada.
    • Staples’ revenue fell 10.6 % to $5.87 billion in the fourth quarter.
    • Rival Office Depot said last week that it expected sales to continue falling in 2014.
  • Costco Wholesale reported profit that missed analysts’ estimates.
    • Net income in the quarter fell 15 % to $463 million from $547 million a year earlier. Revenue rose about 5.8 % to $26.3 billion. Analysts estimated $26.7 billion, on average.
    • Revenue from membership fees advanced 4.2 % to $550 million.
  • Kroger reported profit and sales that topped estimates.
  • A California businessman was convicted of stealing DuPont trade secrets to help a state-owned Chinese company develop a white pigment used in a wide range of products.
  • EBay CEO says top shareholders agree PayPal should stay put. They have assured the CEO that they support his efforts to resist demands by activist investor Carl Icahn for a spin-off of the PayPal unit. The top 20 shareholders hold a combined 42 % of eBay shares. Icahn owns just over 2 % of the eBay.
  • Exxon Mobil expects oil and natural gas production to be flat this year as overall spending falls 6 % to about $39.8 billion. For 2014, oil and gas production is expected to be 4 million barrels oil equivalent per day (boed), little changed from last year. Growth is expected to pick up from 2015 to 2017, when production is expected to grow 2 % to 3 % as major projects add an additional 1 million boed.
  • Warren Buffett cut the allocation to bonds at Berkshire Hathaway’s insurance units to the lowest in more than a decade as the company warns that low yields will hurt results.
    • Fixed-income assets made up 14 % of investments at the insurers. The year-end figure has typically been 20 % to 25 % since 2002.
    • The $186.8 billion portfolio included $114.8 billion of stocks.
    • The cash pile was $48.2 billion as of Dec. 31, compared with $47 billion a year earlier and $30.6 billion at the end of 2009. Any amount higher than $20 billion is too much, Buffett told Bloomberg last year.
  • Facebook is cracking down on illegal gun sales planned through its website, seeking to prevent criminal activity and setting a precedent other social-media sites could follow.
  • Elon Musk said U.S. military-satellite launches may be at risk because a joint venture of the government’s two biggest contractors relies on Russian engines. The billionaire was in Washington yesterday to back his space company’s push into the Pentagon launch market. Space Exploration Technologies is trying to break the Lockheed Martin-Boeing team’s monopoly on the work, which has an estimated value of $70 billion through 2030.


  • Initial claims dropped 26,000 to a seasonally adjusted 323,000, below estimates of 338,000. The four-week moving average for new claims slipped 2,000 to 336,500.
  • New orders for U.S. factory goods fell more than expected in January.
    • New orders for manufactured goods declined 0.7 %. Economists had forecast new orders received by factories slipping 0.4 %. December’s orders were revised to show a 2.0 % drop instead of the previously reported 1.5 % fall.
  • The U.S. government sharply revised down nonfarm productivity for the fourth quarter.
    • Productivity rose at a 1.8 % annual rate instead of the previously reported 3.2 % pace, the Labor Department said. Economists had expected fourth-quarter productivity would be revised down to a 2.5 % rate.
    • For all of 2013, productivity increased 0.5 % rather than 0.6 %. That was the smallest gain since 1993 and compared to a 1.5 % rise in 2012.
    • Unit labor costs – a gauge of the labor-related cost for any given unit of output – fell at a revised 0.1 % rate in the fourth quarter, still showing weak wage-related inflation pressures in the economy.
    • The government last week cut its estimate of fourth-quarter GDP growth to an annual pace of 2.4 % from the previously estimated 3.2 % rate.
  • The Federal Reserve said yesterday in its Beige Book business survey that the economy in most regions grew last month even as harsh winter weather impeded hiring.
    • The U.S. economic outlook would have to change substantially for the Federal Reserve to alter the pace at which it is winding down asset purchases, New York Fed President William Dudley said.
  • Israeli Prime Minister Benjamin Netanyahu offered to help California weather its drought with water conservation and desalination techniques pioneered by his country’s scientists. Netanyahu signed a memorandum of understanding for joint technology development yesterday with California Governor Jerry Brown in a tour through Silicon Valley that also took him to Apple and other computer-related companies.
  • The College Board will make the essay portion of its SAT admissions test optional starting in 2016 and eliminate esoteric vocabulary words, a move likely to be embraced by high school students and their parents. Scoring will return to a maximum of 1,600 points for math and evidence-based reading and writing, and the optional essay will be scored separately.


  • The ECB decided not to take any action at its meeting on Thursday because economic and monetary conditions had not changed enough to warrant it, ECB President Mario Draghi said. The bank left interest rates unchanged. The ECB left its main interest rate at 0.25 %.
    • The ECB revised down their projections for 2014 inflation to a midpoint of 1.0 % from a previous 1.1 %. They saw 2015 inflation at 1.3 %, unchanged from an earlier estimate. The ECB forecast euro zone inflation to reach 1.5 % in 2016, still below the central bank’s target of just under 2 %.
    • The forecasts saw the euro zone economy growing by 1.8 % in 2016 after 1.5 % in 2015 and 1.2 % this year, a slight upwards revision from its previous 2014 forecast.
  • U.S. and European leaders intensified diplomatic efforts to defuse the crisis in Ukraine, after Russia’s foreign minister evaded a U.S. attempt to get him to talk to his counterpart in Kiev.
  • German factory orders rebounded in January. Orders rose 1.2 %.
  • Tesla Motors will open more than 30 sales outlets and service centers this year in Europe and will expand its network of battery-charging stations there.
    • The moves support Tesla’s aggressive plan to boost overseas sales in 2014. By the end of the year, Tesla said it expects combined sales of the Model S sedan in Europe and Asia will be nearly twice the number of sales in North America. Last year, Tesla sold 22,477 cars, most of them in the United States.
  • More than 1,000 workers at an IBM factory in southern China have gone on strike against the terms of their transfer to Chinese PC maker Lenovo.


  • The Alamo fell to Mexican forces (1836)
  • The Supreme Court ruled in Dred Scott v. Sandford that slaves were not citizens (1857)
  • Walter Cronkite, “the most trusted man in America,” retired from the CBS Evening News (1981)
  • Queen Elizabeth II launched the first royal website (1997)

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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