The Weekly Market Snapshot from Frazier Allen for the week of October 22nd, 2012

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

The economic data reports were mixed, but mostly on the strong side of expectations. Retail sales rose 1.1% in September, while figures for July and August were revised higher. Industrial production rose a little more than anticipated, but manufacturing activity was down in the quarter as a whole. Residential construction activity surged in September (single-family permits up 6.7%), although improvement may have been inflated by the seasonal adjustment (19 working days last month, vs. 23 in August and 21 a year ago). The Consumer Price Index was boosted by higher energy costs, but the underlying trend in core inflation remained low.

While the economic data were mostly favorable, the stock market was more concerned with earnings reports, which were generally disappointing. News reports noting that we’re at the 25th anniversary of Black Monday probably didn’t help either.

Next week, the economic data reports are among the most unreliable of the government’s data releases. Durable goods orders should reflect a rebound in aircraft orders, but for ex-transportation, the picture is unclear (the recent trend has been weak). New home sales are expected to have picked up, but these figures are choppy and subject to large revisions.

The advance GDP report for 3Q12 is likely to be the week’s highlight, but there’s a lot of uncertainty in the government’s initial growth estimate. Focus on the key components, consumer spending and business fixed investment. Personal consumption expenditures should have risen at a moderately strong pace. Business fixed investment is expected to have been weak. The Fed policy meeting should result in no change in interest rates or in the Fed’s asset purchase program, but we could get some minor changes in the wording of the Fed’s economic assessment.

Indices

	Last	Last Week	YTD return %
DJIA	13548.94	13326.39	10.90%
NASDAQ	3072.87	3049.42	17.95%
S&P 500	1457.34	1432.84	15.88%
MSCI EAFE	1563.65	1513.77	10.70%
Russell 2000	837.12	829.78	12.98%

Consumer Money Rates

	Last	1-year ago
Prime Rate	3.25	3.25
Fed Funds	0.17	0.08
30-year mortgage	3.49	4.17

Currencies

	Last	1-year ago
Dollars per British Pound	1.614	1.570
Dollars per Euro	1.310	1.374
Japanese Yen per Dollar	79.240	76.850
Canadian Dollars per Dollar	0.982	1.017
Mexican Peso per Dollar	12.831	13.424

Commodities

	Last	1-year ago
Crude Oil	92.10	88.34
Gold	1743.40	1654.25

Bond Rates

	Last	1-month ago
2-year treasury	0.29	0.26
10-year treasury	1.80	1.77
10-year municipal (TEY)	2.97	3.1

Treasury Yield Curve – 10/19/2012

S&P Sector Performance (YTD) – 10/19/2012

Economic Calendar

October 22nd	—	3rd presidential debate (foreign policy)
October 24th	—	FOMC Policy Meeting (no press briefing) New Home Sales (September) FOMC Policy Decision (no press briefing)
October 25th	—	Jobless Claims (week ending October 20th) Durable Goods Orders (September) Pending Home Sales Index (September)
October 26th	—	Real GDP (3Q12, advance estimate) Consumer Sentiment (October)
October 29th	—	Personal Income and Spending (September)
October 30th	—	Consumer Confidence (October)
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 October 18th, 2012.

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