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The Weekly Market Snapshot from Frazier Allen for the week of January 3rd, 2012

Weekly Market Snapshot

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

Scott J. Brown Ph.D., Chief Economist Raymond James Investment Services
Scott J. Brown Ph.D., Chief Economist Raymond James Investment Services

Good news on the home front was offset somewhat by concerns about developments overseas as the broad market finished a volatile year essentially unchanged from where it began.

Consumers were generally upbeat, with the Conference Board’s monthly consumer confidence index for December rising to 64.5, up from a 55.2 reading in November and reaching levels last seen in the spring. That confidence, aided by deep discounting and extended hours from retailers, translated into better than expected holiday sales. A shopping center trade group said revenues rose about 3.8% in November and December from a year ago.

Other domestic indicators also were positive. The Labor Department’s four-week average of unemployment claims fell to its lowest level since June 2008, manufacturing activity in the Midwest remained steady in December after rising sharply in November, and a national index of pending home sales index rose to its highest level in more than 18 months.

News from abroad was less encouraging. Demand for Italian government debt at Thursday’s auction was weaker than expected, sending the euro to its lowest level against the yen in 10 years and an 11-month low against the dollar. The European currency has dropped about 3.8% in December, with investors worrying that one or more of the major economies in the 17-nation currency bloc may have their credit ratings cut. Meanwhile, Chinese manufacturing activity declined for the second consecutive month in December. With Europe struggling and the U.S. recovery proceeding very slowly, China’s economy has become increasingly important to the global outlook.

Going into the New Year, the U.S. economy is showing signs of momentum. The first week brings reports on manufacturing, construction spending, factory orders, jobless claims, and, on Friday, the unemployment rate.

Indices

  Last Last Week YTD return %
DJIA 12287.04 12169.65 6.13%
NASDAQ 2613.74 2599.45 -1.48%
S&P 500 1263.02 1254 0.43%
MSCI EAFE 1393.45 1393.43 -15.97%
Russell 2000 744.98 745.51 -4.93%

Consumer Money Rates

  Last 1-year ago
Prime Rate 3.25 3.25
Fed Funds 0.04 0.21
30-year mortgage 3.95 5.01

Currencies

  Last 1-year ago
Dollars per British Pound 1.540 1.549
Dollars per Euro 1.294 1.319
Japanese Yen per Dollar 77.710 81.820
Canadian Dollars per Dollar 1.022 1.000
Mexican Peso per Dollar 13.994 12.366

Commodities

  Last 1-year ago
Crude Oil 99.65 91.12
Gold 1534.93 1411.98

Bond Rates

  Last 1-month ago
2-year treasury 0.26 0.27
10-year treasury 1.89 2.11
10-year municipal (TEY) 2.79 3.36

Treasury Yield Curve – 12/30/2011

Treasury Yield Curve – 12/30/2011

S&P Sector Performance (YTD) – 12/30/2011

S&P Sector Performance (YTD) – 12/30/2011

Economic Calendar

January 3rd

 — 

ISM Manufacturing Index (December)
FOMC Minutes (December 13th)
January 5th

 — 

ISM Non-Manufacturing Index (December)
January 6th

 — 

Employment Report (December)
January 16th

 — 

Dr. Martin Luther King, Jr. Holiday (markets closed)
January 24th-25th

 — 

FOMC Policy Meeting

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 December 22nd, 2011.

©2011 Raymond James Financial Services, Inc. member FINRA / SIPC.

Frazier Allen
Frazier Allenhttp://www.raymondjames.com/frazierallen
Frazier Allen, WMS, CRPS, Financial Advisor with F&M Bank 50 Franklin Street | Clarksville, TN 37040 | 931-553-2048
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