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Pence Wealth Management Financial Markets Report


  • U.S. stocks opened modestly higher on Tuesday, after housing data bolstered confidence in the economy and as Vladimir Putin said Russia isn’t seeking to split Ukraine.
    • The Ukrainian crisis is putting a strain on Russia’s $2 trillion economy, which grew 1.3 % in 2013 after expanding 3.4 % the previous year.
    • Russia will probably dip into a recession in the second and third quarters of this year as “domestic demand is set to halt on the uncertainty shock and tighter financial conditions,” economists at Moscow-based VTB Capital, said in a research note yesterday. They cut their 2014 estimate to zero growth from 1.3 %.
    • Capital outflow from Russia may reach $70 billion in the first quarter and there is “a real risk that this could push Russia into recession,” London-based Capital Economics said in a report published yesterday.
    • The ruble has weakened about 11 % against the dollar this year.
  • Exports of high-tech products will grow more quickly than exports of other goods over the next 15 years as emerging Asia moves away from being a low-cost production hub for foreign brands and toward developing value-added local products, according to research from HSBC.
    • High-tech goods would make up more than 25 % of goods traded by 2030 compared to 22 % in 2013.
    • China accounted for 36.5 % of high-tech goods exports in 2013, followed by Hong Kong at 13 %. The United States was in third place at 9.6 %.
    • In 2000, the United States was the world’s biggest tech exporter with a market share of 29.2 %.
  • Lockheed Martin acquired BEONTRA, a small German company that provides forecasting services for big commercial airports around the world. Lockheed did not disclose the terms of the deal.
    • BEONTRA provides integrated traffic, capacity and revenue planning software for some of the world’s biggest airports, Dubai, London Heathrow, Sydney, Copenhagen, Frankfurt, Schiphol and Munich.
  • Apple will offer an upgraded iPad 4 tablet in place of the mid-range iPad 2 at the same price. The fourth-generation iPad was launched in 2012, while the iPad 2 was launched in 2011.
    • Apple discontinued the iPad 4 last year when it launched its current flagship tablet, the iPad Air.
  • Microsoft CEO may unveil an iPad version of the company’s Office software suite on March 27, a source familiar with the event told Reuters.
    • Investors for years have urged Microsoft to adapt Office for mobile devices from Apple and Google, rather than shackling it to Windows as PC sales decline. Microsoft gives up some $2.5 billion a year in revenue by keeping Office off the iPad, which has now sold almost 200 million units.
  • Wal-Mart will allow shoppers to trade in used videogames for anything from groceries to gadgets across its 3,100 stores from March 26.
    • The trade-in service will accept games for popular consoles like the Sony PlayStation3 and Microsoft Xbox 360, and customers can in return buy anything at Walmart and Sam’s Club, both in stores and online, Wal-Mart said.
  • Alibaba will hold the kickoff meeting for its planned U.S. IPO on March 25. The company, whose platforms handle more goods than EBay and combined, will meet with the six main banks arranging the deal.
    • Alibaba’s IPO Could Put $15.4 Billion Into Yahoo’s Pocket. As of today Yahoo owns about a 24 % stake of Alibaba, a portion that could be worth as much as $37 billion, according to an average of analyst’s estimates.
    • Because of agreements between the two companies, Yahoo has to get rid of a significant portion of its holdings the minute Alibaba goes public, selling those shares at the initial price and missing out on the first-day market bump.
    • Kenneth Goldman, Yahoo’s chief financial officer, recently told investors that Yahoo would likely sell 10 % of Alibaba and hold on to 14 %.
  • Hertz will separate into two publicly traded companies. Hertz will spin off its equipment-leasing division to focus on renting cars.
  • 3M forecasts China sales will grow three times faster than the company’s total revenue because of demand for health and consumer products such as face masks and water filters, CEO said.
    • The company is targeting annual Chinese sales growth of about 15 % over the next five years.
    • China generated about 10 % of its global revenue of $30.9 billion last year, he said.
  • Federal regulators are conducting two investigations into GE’s credit card business for potential violations of consumer finance laws. The consumer bureau was created by the 2010 Dodd-Frank law and charged with cracking down on financial scams that harm borrowers.
  • GM named a new vehicle safety chief who will be responsible for heading off issues like the faulty ignition switches linked to 12 deaths and the recall of more than 1.6 million vehicles.
  • New York’s top law enforcer, Attorney General, is investigating whether U.S. stock exchanges and alternative trading venues provide improper advantages to high-frequency traders. High-frequency traders use computer algorithms to generate numerous, lightning-speed automatic trades that make money from tiny price differences in the market.


  • Consumer Price Index (CPI) nudged up 0.1 % in February as a decline in gasoline prices offset an increase in the cost of food. In the 12 months through February, consumer prices increased 1.1 %.
    • The so-called core CPI also rose 0.1 % for a third straight month. In the 12 months through February, core CPI rose 1.6 %.
    • Last month, food prices rose 0.4 %, the largest increase since September 2011. That accounted for more than half of the increase in the CPI last month.
    • Consumer inflation is running below the Fed’s 2 % target. The low level of inflation gives the U.S. central bank scope to keep interest rates near zero for some time.
  • Housing starts slipped 0.2 % to a seasonally adjusted annual rate of 907,000 units. Economists had expected starts to rise to a 910,000-unit rate last month. Starts fell 5.5 % in the West, which was unaffected by bad weather.
    • Groundbreaking for single-family homes, the largest segment of the market, rose 0.3 % to a 583,000-unit pace last month.
    • Starts for the volatile multi-family homes segment fell 1.2 % to a 324,000-unit rate.
    • Groundbreaking plunged 37.5 % in the Northeast last month, indicating unusually cold temperatures continued to dampen housing activity.
  • Permits to build homes increased 7.7 % in February to a 1.02 million-unit pace. Permits for single-family homes fell 1.8 %. Multifamily sector permits surged 24.3 %.


  • European car sales rose 7.6 % in February, the sixth consecutive monthly gain. Registrations increased to 894,730 vehicles from 831,371 a year earlier. Two-month demand jumped 6.3 % to 1.86 million cars.
  • Volkswagen is to spend nearly 3.4 billion zlotys ($1.1 billion) on setting up a new plant in Wrzesnia, Poland, which will produce its Crafter large delivery van. The plant will employ more than 2300 people.
  • Greece and its international lenders have struck an agreement in principle to unlock the next tranche of rescue loans after six months of negotiations.
  • China drew $19.3 billion in foreign direct investment (FDI) in the first two months of 2014, up 10.4 % from a year earlier.
  • German investor confidence fell to the lowest since August as political uncertainty in Ukraine threatens to weigh on a recovery in German economy. The ZEW index slid to 46.6 from 55.7 in February. That’s the third monthly decline. Economists forecast a decline to 52.


  • Russian czar Ivan IV, or IvanThe Terrible,” died at age 53 (1584)
  • After months of American protests, Britain repealed the Stamp Act (1766)
  • The Supreme Court held in Gideon v. Wainwright that public defenders must be provided for indigent defendants in felony cases (1963)
  • Soviet cosmonaut Aleksei Leonov made the first spacewalk (1963)
  • The biggest art theft in U.S. history occurs at the Isabella Stewart Gardner Museum in Boston. The works, including pieces by Vermeer and Rembrandt, were never recovered (1990)
  • A small asteroid made the closest approach to Earth ever recorded, only about 26,500 miles away (2004)

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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