Weekly Market Snapshot from Frazier Allen for the week of March 3rd, 2013

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

Italian election results (a government in deadlock) dampened the party mood in equities. Bernanke monetary policy helped sooth fears that the Fed might end its asset purchase program earlier rather than later. Bernanke said that Fed officials “do not see the potential costs of the increased risk-taking in some financial markets as outweighing the benefits of promoting a stronger economic recovery and more-rapid job creation.”

Leaders in Washington failed to reach an agreement to avoid the sequester, but a deal could be reached as part of an agreement to authorize government spending after March 27th (which is when the current Continuing Resolution ends).

The economic data were mixed. Real GDP rose at a 0.1% annual rate in 4Q12, vs. the -0.1% pace reported in the advance estimate. The story didn’t change much. Growth was held down by slower inventory growth and a drop in defense spending – one should really look at the final two quarters of 2012 together (a 1.6% annual rate). Personal income fell sharply in January, reflecting a pulling-forward of income ahead of expected tax increases.

Disposable income fell 4.0, partly reflecting the increase in payroll taxes. Consumer spending rose 0.2% in January, up 0.1% adjusting for inflation. Consumer Confidence improved in February. The ISM Manufacturing Index was stronger than expected, with relatively broad-based strength across industries.

Next week, the focus is likely to be on the employment figures. However, there is still a fair amount of seasonal adjustment in February (prior to adjustment, we normally lose a lot of retail jobs and regain a lot of education jobs that were lost in January). Trade figures do not usually get much attention from the markets. However, recent figures showed a weakening trend in both imports and exports in 2012. Europe’s crisis and U.S. fiscal policy negotiations are likely to remain on the radar screen for U.S. investors for the next several weeks.

Indices

	Last	Last Week	YTD return %
DJIA	14054.49	13880.62	7.25%
NASDAQ	3160.19	3131.49	4.66%
S&P 500	1514.68	1502.42	6.20%
MSCI EAFE	1514.68	1650.26	3.98%
Russell 2000	911.11	905.40	7.27%

Consumer Money Rates

	Last	1-year ago
Prime Rate	3.25	3.25
Fed Funds	0.16	0.12
30-year mortgage	3.51	3.90

Currencies

	Last	1-year ago
Dollars per British Pound	1.518	1.588
Dollars per Euro	1.308	1.345
Japanese Yen per Dollar	92.370	80.510
Canadian Dollars per Dollar	1.029	0.996
Mexican Peso per Dollar	12.775	12.872

Commodities

	Last	1-year ago
Crude Oil	92.05	106.55
Gold	1581.46	1786.83

Bond Rates

	Last	1-month ago
2-year treasury	0.24	0.27
10-year treasury	1.86	1.96
10-year municipal (TEY)	3.12	2.94

Treasury Yield Curve – 03/01/2013

S&P Sector Performance (YTD) – 03/01/2013

Economic Calendar

March 5th	—	ISM Non-Manufacturing Index (February)
March 6th	—	ADP Payroll Estimate (February) Fed Beige Book
March 7th	—	Jobless Claims (week ending March 2nd) Productivity (4Q12, revised) Trade Balance (January)
March 8th	—	Employment Report (February)
March 13th	—	Retail Sales (February)
March 20th	—	FOMC Policy Decision, 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 February 28th, 2013.

©2013 Raymond James Financial Services, Inc. member FINRA / SIPC.