The Weekly Market Snapshot from Frazier Allen for the week of October 17th, 2012

By Frazier Allen | October 17, 2012 |

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

With a thin economic calendar, the stock market was left to fret about other things, including global growth and earnings. In its World Economic Outlook, the IMF lowered its projections of global output for this year and next cautioning that “downside risks are now judged to be more elevated.” U.S. corporate earnings from abroad are expected to soften further.

The Fed’s Beige Book, the anecdotal summary of economic conditions from the 12 Federal Reserve districts, noted “economic activity generally expanded modestly” since the previous report. Consumer spending was “generally reported to be flat to up slightly.” Conditions in manufacturing were mixed “but, on balance, somewhat improved.” Residential real estate conditions improved, with “most districts reporting a strengthening in existing home sales.” Home prices were described as “steady to increasing,” with declining inventories noted in the several districts. Employment conditions were “little changed” and “uncertainty related to the upcoming presidential election, U.S. fiscal policy, and European debt issues were cited by some as restraining hiring.”

The Consumer Price Index should be pressured by higher gasoline prices (amplified by the seasonal adjustment), but core inflation should remain mild. Industrial production should show a rebound from weather effects. Residential construction activity is likely to trend higher (focus on single-family permits). President Obama gets a chance to turn things around and Governor Romney will have a chance to add to his recent polling gains in the 2^nd presidential debate on Tuesday night.

Indices

Consumer Money Rates

Currencies

Commodities

Bond Rates

Treasury Yield Curve – 10/12/2012

S&P Sector Performance (YTD) – 10/12/2012

Economic Calendar

Important Disclosures

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 September 20th, 2012.

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

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