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

Next week, the economic calendar picks up again, although the stock market will also have to deal with earnings reports. Retail sales are expected to have been mixed in September, with some strength in vehicle sales and some boost from higher gasoline prices, but lackluster to moderate otherwise.

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

	Last	Last Week	YTD return %
DJIA	13326.39	13575.36	9.08%
NASDAQ	3049.42	3149.458	17.05%%
S&P 500	1432.84	1461.4	13.93%
MSCI EAFE	1513.77	1529.15	7.17%
Russell 2000	829.78	844.65	11.99%

Consumer Money Rates

	Last	1-year ago
Prime Rate	3.25	3.25
Fed Funds	0.17	0.06
30-year mortgage	3.41	4.18

Currencies

	Last	1-year ago
Dollars per British Pound	1.604	1.560
Dollars per Euro	1.294	1.364
Japanese Yen per Dollar	78.380	76.720
Canadian Dollars per Dollar	0.978	1.030
Mexican Peso per Dollar	12.883	13.356

Commodities

	Last	1-year ago
Crude Oil	92.07	85.81
Gold	1769.60	1663.23

Bond Rates

	Last	1-month ago
2-year treasury	0.25	0.23
10-year treasury	1.84	1.54
10-year municipal (TEY)	3.05	2.89

Treasury Yield Curve – 10/12/2012

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

Economic Calendar

October 15th	—	Retail Sales (September) Empire State Manufacturing Index (October)
October 16th	—	Consumer Price Index (September) Industrial Production (September) Homebuilder Sentiment (October) 2nd Presidential Debate (town hall format)
October 17th	—	Building Permits, Housing Starts (September)
October 18th	—	Jobless Claims (week ending October 13) Philadelphia Fed Index (October) Leading Economic Indicators (September)
October 19th	—	Existing Home Sales (September)
October 24th	—	FOMC Policy Meeting (no press briefing)
October 26th	—	Real GDP (3Q12, advance estimate)
November 1st	—	ISM Manufacturing Index (October)
November 2nd	—	Employment Report (October)
November 6th	—	Election Day

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 September 20th, 2012.

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