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The Weekly Market Snapshot from Frazier Allen for the week of November 6th, 2012

Posted By Frazier Allen On Tuesday, November 6, 2012 @ 11:30 pm In Business | No Comments

Weekly Market Snapshot

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

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

Superstorm Sandy delivered a hard punch to the upper mid-Atlantic states, contributing to tragic loss of life and severe property damage. Flooding in lower Manhattan led to a two-day shutdown of the NYSE. It will take some time to assess the economic effect and the impact appears likely to be much larger than initially estimated. However, it is likely to be limited relative to a $16 trillion national economy. Severe weather typically shifts some spending around and rebuilding will add to GDP growth.

The economic data remained consistent with moderate economic growth. However, the October Employment Report was much stronger than anticipated. Nonfarm payrolls rose by 171,000 (vs. a median forecast of +125,000), while figures for August and September were revised a net 84,000 higher. The unemployment rate ticked up to 7.9%, but that appeared to reflect statistical noise in a general downtrend. For those aged 25-55 years, labor force participation has stabilized and begun to trend higher and the employment/population ratio is much higher than a year ago (76.0%, vs. 74.8%).The better job figures failed to ignite more than brief enthusiasm in the stock market. The muted response could be due to the implications for the election (a more-than-likely Obama victory) and Fed policy (tightening sooner rather than later). Bond yields did not move much in response.

Next week, there’s an election. Have you heard about it? Anything can happen and Governor Romney could very well win the popular vote. However, with just a few days to go, President Obama has a lead in enough states to likely clinch the Electoral College vote. Note that the president will have to deal with a new Congress. The House of Representatives, where a simple majority is everything, is likely to remain under Republican control. Democrats appear likely to hold a narrow edge in the Senate, but without a 60-seat supermajority, neither party will be able to dictate policy. The government has traditionally worked through compromise – and we’ll have to see that in the next few months as Washington deals with the “fiscal cliff” and the debt ceiling. Expect some second guessing in the markets on Wednesday.


  Last Last Week YTD return %
DJIA 13232.62 13103.68 8.31%
NASDAQ 3020.06 2986.12 15.93%
S&P 500 1427.59 1412.97 13.52%
MSCI EAFE 1531.52 1525.61 8.42%
Russell 2000 827.85 816.82 11.73%

Consumer Money Rates

  Last 1-year ago
Prime Rate 3.25 3.25
Fed Funds 0.17 0.08
30-year mortgage 3.45 4.04


  Last 1-year ago
Dollars per British Pound 1.612 1.598
Dollars per Euro 1.293 1.374
Japanese Yen per Dollar 80.140 78.290
Canadian Dollars per Dollar 0.997 1.019
Mexican Peso per Dollar 13.039 13.594


  Last 1-year ago
Crude Oil 87.09 92.19
Gold 1715.63 1714.25

Bond Rates

  Last 1-month ago
2-year treasury 0.29 0.25
10-year treasury 1.74 1.71
10-year municipal (TEY) 3.00 2.95

Treasury Yield Curve – 11/2/2012

Treasury Yield Curve – 11/2/2012

S&P Sector Performance (YTD) – 11/2/2012

S&P Sector Performance (YTD) – 11/2/2012

Economic Calendar

November 5th


ISM Non-manufacturing Index (October)
November 6th


Election Day
November 8th


Jobless Claims (week ending November 3rd)
Trade Deficit (September)
November 9th


Import Prices (October)
Consumer Sentiment (mid-November)
November 12th


Veterans Day (bond market closed)
November 14th


Retail Sales (October)
FOMC Minutes (October 23th-24th)
November 15th


Consumer Price Index (October)
November 22nd


Thanksgiving (markets closed)
December 12th


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 November 1st, 2012.

©2012 Raymond James Financial Services, Inc. member FINRA [2] / SIPC [3].

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