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Pence Wealth Management Financial Markets Report


  • Wall Street opened lower after Wal-Mart results. Economic data today showed industrial production in the U.S. unexpectedly declined in April.
  • Wal-Mart sales growth weakest in five years, outlook cautious as a severe winter kept shoppers from its stores. Net income fell to $3.59 billion in the first quarter from $3.78 billion a year earlier.

o    Total revenue rose 0.8 % to $114.96 billion, missing the average analyst estimate of $116.27 billion.

  • Cisco’s forecast tops estimate. Cisco’s revenue falls less-than-expected, shares up. Cisco had a net profit of $2.2 billion in the third quarter, down from $2.5 billion in the year-ago quarter.

o    Cisco reported revenue of $11.5 billion, down from $12.2 billion a year earlier. Wall Street on average had expected $11.36 billion.

o    The company posted gross margins of 62.7 %, up from 53.3 % in the previous quarter and above guidance of 61 to 62 %.

  • GM is recalling an additional 2.7 million vehicles globally, and is expected to take a charge of up to $200 million. In the first quarter, GM took a charge of $1.3 billion mostly related to the ignition switch recall.
  • Toyota’s relocation of its U.S. headquarters to Plano, Texas, may bring $7.2 billion of economic activity over 10 years, according to an analysis for the city. The figure includes $4.2 billion from payroll. Toyota said last month that it would consolidate U.S. sales, engineering and finance operations to Texas, moving jobs from California, New York and Kentucky.
  • Truck orders at 8-year high signal U.S. economy rebound. Trucking companies are increasing their bets on the U.S. economy picking up speed.

o    Eaton raised its 2014 forecast for North American truck output by 5.7 % to 280,000 units.

o    Suppliers are benefiting as well. Cummins, which produces engines for Class 8 trucks, forecast 2014 sales growth of as much as 10 %.

o    Analysts surveyed by Bloomberg project a revenue gain of 12 % for Paccar the maker of Kenworth and Peterbilt trucks.


  • Industrial production posted an unexpected decline in April. Industrial production fell 0.6% in April (vs. consensus Flat).

o    Manufacturing production declined 0.4% (vs. consensus +0.3%). Within manufacturing, auto production was roughly flat, in line with published production schedules.

o    However, manufacturing production ex-motor vehicles and parts fell 0.4%. Declines occurred across a number of categories, including primary metals (-1.6%), machinery (-1.6%), and furniture (-1.2%).

o    Apart from manufacturing production, utilities output fell 5.3%, as both electric and natural gas consumption retreated on more seasonable weather. Mining production increased 1.4%, again boosted by oil and gas-related categories.

  • Jobless claims hit seven-year low. Initial claims for state unemployment benefits declined 24,000 to a seasonally adjusted 297,000 last week. It was the lowest reading since May 2007.

o    The four-week moving average for new claims, which irons out week-to-week volatility, fell 2,000 to 323,250.

  • Inflation ticks up. Consumer Price Index (CPI) increased 0.3 % last month as food prices rose for a fourth consecutive month and the cost of gasoline surged.

o    In the 12 months through April, consumer prices rose 2.0 % after gaining 1.5 % in March.

o    Stripping out food and energy prices, the so-called core CPI rose 0.2 %.

o    In the 12 months through April, the core CPI increased 1.8 %.


  • Euro zone first-quarter growth disappoints, puts pressure on ECB to act. The 9.5 trillion euro economy expanded only 0.2 % quarter-on-quarter in the first three months of 2014, while economists had expected 0.4 % growth.

o    The first quarter figure stayed positive mainly thanks to strong growth in the biggest economy Germany, which compensated for stagnation in France and shrinking output in Italy, the Netherlands, Portugal and Finland.

o    German quarterly growth of 0.8 % marginally exceeded forecasts and was double the pace at the end of 2013.

  • Japan first-quarter growth hits over two-year high. Japan’s GDP rose at an annualized rate of 5.9 % as consumers rushed to buy before the sales tax increase to 8 % from 5 %. The result handily beat expectations of 4.2 % growth.

o    Capital spending rose 4.9 % on the quarter, more than double the median estimate for 2.1 % growth as companies used increased profits to invest in factories and equipment.

o    Private consumption, which makes up about 60 % of the economy, rose 2.1 % from the previous quarter.

  • Russian GDP growth slows as investment sags on sanctions. GDP advanced 0.9 % in the first quarter, down from a year earlier 2 % gain. That was above the 0.7 % median estimate of 19 economists.
  • Russia’s holdings of U.S. government securities fell by 20 % in March. Russian holdings declined for a fifth straight month, to $100.4 billion from $126.2 billion in February.


  • The U.S. Department of Agriculture was created by an act of Congress (1862)
  • The Standard Oil Company, headed by John D. Rockefeller, was ordered dissolved by the Supreme Court, under the Sherman Antitrust Act (1911)
  • The first air mail route in the U.S. was established between New York and Washington, DC, with a stop at Philadelphia (1918)
  • On a Boeing Air Transport flight between Oakland and Chicago, Ellen Church became the first airline stewardess (1930)
  • After 10 years of research E. I. du Pont de Nemours & Company introduced nylon in 1938 as monofilaments for bristles and in 1940 as multifilament yarn for hosiery (1940)
  • The Soviet Union began to withdraw its estimated 115,000 troops from Afghanistan (1988)

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. Sources: Reuters, Bloomberg.

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