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The Weekly Market Snapshot from Frazier Allen for the week of August 19th, 2012

 

Weekly Market Snapshot

Market Commentary by Scott J. Brown, Ph.D., Chief Economist

Scott J. Brown Ph.D., Chief Economist Raymond James Investment ServicesThe economic data were mixed, but generally stronger than expected. Retail sales popped 0.8% (overall and ex-autos) in July, following weak reports in April, May, and June. The CPI was flat overall in July and up only mildly ex-food & energy. However, higher prices of food and energy are expected to show through more in the report for August. Industrial production advanced, fueled by strength in autos (seasonal adjustment issues?) and hot weather (higher output of utilities).

Residential construction figures were mixed. Housing starts slipped, but single-family building permits (which are reported more accurately) rose further.

Europe and the fiscal cliff remain significant risks to the U.S. economic growth outlook, but fear has subsided to some extent in the last few weeks. Lawmakers are discussing the fiscal cliff and are aware of the economic consequences. European leaders have continued to show a strong resolve about keeping the Eurozone together, although we need to see some action in September.

Next week, the economic calendar thins out a bit. Home sales (new and existing) are expected to rebound in July, following disappointing results in June. On Wednesday, the Congressional Budget Office will release revised budget projections. These projections are based on current law, which includes the full fiscal cliff. The FOMC policy meeting minutes may shed some light on the Fed’s current thinking and provide some insight into the likelihood of further policy action. However, following the recent string of better economic data, the odds of QE3 have decreased.

Indices

  Last Last Week YTD return %
DJIA 13250.11 13165.19 8.45%
NASDAQ 3062.39 3018.64 17.55%
S&P 500 1415.51 1402.8 12.56%
MSCI EAFE 1483.60 1477.82 5.03%
Russell 2000 813.08 802.90 9.74%

Consumer Money Rates

  Last 1-year ago
Prime Rate 3.25 3.25
Fed Funds 0.15 0.12
30-year mortgage 3.69 4.32

Currencies

  Last 1-year ago
Dollars per British Pound 1.574 1.644
Dollars per Euro 1.236 1.441
Japanese Yen per Dollar 79.270 76.750
Canadian Dollars per Dollar 0.987 0.984
Mexican Peso per Dollar 13.133 12.273

Commodities

  Last 1-year ago
Crude Oil 95.60 86.65
Gold 1615.60 1781.43

Bond Rates

  Last 1-month ago
2-year treasury 0.28 0.22
10-year treasury 1.80 1.47
10-year municipal (TEY) 3.09 2.98

Treasury Yield Curve – 8/17/2012

Treasury Yield Curve – 8/17/2012

 

S&P Sector Performance (YTD) – 8/17/2012

S&P Sector Performance (YTD) – 8/17/2012

Economic Calendar

August 22nd

 —

Existing Home Sales (July)
CBO Budget Outlook: An Update
FOMC Minutes (July – August 1st)
August 23rd

 —

Jobless Claims (week ending August 18th)
Market US Manufacturing Index (August)
New Home Sales (July)
August 24th

 —

Durable Goods Orders (July)
August 28th

 —

Consumer Confidence (August)
August 29th

 —

Real GDP (2Q12, 2nd estimate)
Fed Beige Book
August 30th

 —

Personal Income and Spending (July)
Romney Acceptance Speech
August 31st

 —

Bernanke Speaks (Jackson Hole)
September 1st

 —

ECB President Draghi speaks (Jackson Hole)
September 6th

 —

Obama Acceptance Speech
September 7th

 —

Employment Report (August)
September 13th

 —

Fed Policy Meeting
Bernanke Press Briefing

Important Disclosures

Past performance is not a guarantee of future results. There are special risks involved with global investing related to market and currency fluctuations, economic and political instability, and different financial accounting standards. The above material has been obtained from sources considered reliable, but we do not guarantee that it is accurate or complete. There is no assurance that any trends mentioned will continue in the future. While interest on municipal bonds is generally exempt from federal income tax, it may be subject to the federal alternative minimum tax, state or local taxes. In addition, certain municipal bonds (such as Build America Bonds) are issued without a federal tax exemption, which subjects the related interest income to federal income tax. Investing involves risk and investors may incur a profit or a loss.

US government bonds and treasury bills are guaranteed by the US government and, if held to maturity, offer a fixed rate of return and guaranteed principal value. US government bonds are issued and guaranteed as to the timely payment of principal and interest by the federal government. Treasury bills are certificates reflecting short-term (less than one year) obligations of the US government.

Commodities trading is generally considered speculative because of the significant potential for investment loss. Markets for commodities are likely to be volatile and there may be sharp price fluctuations even during periods when prices overall are rising. Specific sector investing can be subject to different and greater risks than more diversified investments.

Tax Equiv Muni yields (TEY) assume a 35% tax rate on triple-A rated, tax-exempt insured revenue bonds.

Material prepared by Raymond James for use by its financial advisors.

The information contained herein has been obtained from sources considered reliable, but we do not guarantee that the foregoing material is accurate or complete. Data source: Bloomberg, as of close of business August 9th, 2012.

©2012 Raymond James Financial Services, Inc. member FINRA / SIPC.


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