The Weekly Market Snapshot from Frazier Allen for the week of December 2nd, 2012

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

The economic data reports were mixed. The estimate of 3Q12 GDP growth was revised higher (to 2.7%, from 2.0%), but the details were worse. Most of the revision was due to higher inventory accumulation. Consumer spending growth was revised to a 1.4% annual rate, from +2.0%.

Business fixed investment was also revised down. The report showed a downward revision to income growth over the last two quarters. The October income and spending report showed a clear negative impact from Hurricane Sandy.

However, excluding the storm’s effects, income and spending would have been lackluster (positive, but not particularly strong). The Fed’s Beige Book noted that “economic activity expanded at a measured pace” in October and early November.

Investors remained focused on negotiation on the fiscal cliff and reacted to any piece of news suggesting progress or the lack thereof. The two parties remain far apart. Republicans would be willing to accept higher tax revenues (but not higher tax rates), but only if accompanied by reforms to entitlement programs. Democrats don’t want to touch entitlements, but do want to raise tax rates on upper income households.

Both sides agree on retaining the tax cuts for middle income households, so there is some scope for an agreement, but the Democrats hold the upper hand on negotiations (that is, if there is no agreement, tax rates will go up on upper income households and Social Security and Medicare would remain untouched, but the middle class would be thrown under the bus).

Next week, there are plenty of fresh economic data releases, but the market focus will remain on the fiscal cliff negotiations. The ISM manufacturing data may set the tone for the week. In the employment report, nonfarm payrolls are expected to be restrained by the effects of Hurricane Sandy. Looking ahead, the Fed is widely expected to add purchases of Treasuries to QE3 when Operation Twist ends later this year.

Indices

	Last	Last Week	YTD return %
DJIA	13021.82/td>	12542.38	6.58%
NASDAQ	3012.03	2836.94	15.62%
S&P 500	1415.95	1353.33	12.59%
MSCI EAFE	1554.47	1479.42	10.05%
Russell 2000	823.20	769.48	11.11%

Consumer Money Rates

	Last	1-year ago
Prime Rate	3.25	3.25
Fed Funds	0.18	0.08
30-year mortgage	3.95	4.16

Currencies

	Last	1-year ago
Dollars per British Pound	1.604	1.561
Dollars per Euro	1.297	1.333
Japanese Yen per Dollar	82.080	77.850
Canadian Dollars per Dollar	0.993	1.030
Mexican Peso per Dollar	12.957	13.933

Commodities

	Last	1-year ago
Crude Oil	88.07	99.79
Gold	1726.60	1714.47

Bond Rates

	Last	1-month ago
2-year treasury	0.25	0.29
10-year treasury	1.62	1.74
10-year municipal (TEY)	2.67	3.00

Treasury Yield Curve – 11/30/2012

S&P Sector Performance (YTD) – 11/30/2012

Economic Calendar

December 3rd	—	ISM Non-Manufacturing Index (November)
December 4th	—	Motor Vehicle Sales (November)
December 5th	—	ADP Payroll Estimate (November) ISM Non-Manufacturing Index (November)
December 6th	—	Jobless Claims (week ending December 1st)
December 7th	—	Employment Report (November) Consumer Sentiment (mid-December)
December 12th	—	FOMC Policy Decision, Bernanke Press Briefing
December 13th	—	Producer Price Index (November) Retail Sales (November)
December 14th	—	Consumer Price Index (November) Industrial Production (November)
December 25th	—	Christmas Holiday (markets closed)
January 1st	—	New Year’s Holiday (markets closed)

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 29th, 2012.

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