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The Weekly Market Snapshot from Frazier Allen for the week of December 9th, 2012

Weekly Market Snapshot

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

Scott J. Brown Ph.D., Chief Economist Raymond James Investment ServicesThe economic data were mixed. The ISM Manufacturing Index weakened. Unit autos sales roared back in November from the Sandy-related decline in October. The Employment Report was moderate. Nonfarm payrolls rose by 146,000, more than expected, but the two previous months were revised a net 49,000 lower.

The unemployment rate fell to 7.7% (from 7.9%), but the drop was due entirely to a drop in labor force participation. The Bureau of Labor Statistics said that Hurricane Sandy did not have a significant impact on the numbers, but details of the Household Survey showed a spike in the number of people unable to get to work due to adverse weather.

There was little accomplished on the fiscal cliff. Both sides continued to dig in, but Republicans appeared to be less united and more disorganized. If a deal is going to get done before the end of the year, we’ll need to see it happen relatively soon.

Next week, the focus is expected to be on the Fed policy meeting. The Federal Open Market Committee is widely expected to announce that it will add Treasury purchases to QE3 beginning in 2013. The Fed is currently buying $45 billion per month in long-term Treasury as part of Operation Twist, financed by sales of short-term Treasuries out of its portfolio (leaving the size of the balance sheet unchanged).

In QE3, the Fed would finance such purchases with newly created money. Fed officials will debate whether to add economic thresholds to its forward guidance (such as a specific level of unemployment), but any changes to the guidance would more likely be made at a future meeting. Inflation figures will reflect lower gasoline prices. November retail sales and industrial production are expected to rebound from Sandy’s hit to the October figures.


  Last Last Week YTD return %
DJIA 13074.04 13021.82 7.01%
NASDAQ 2989.27 3012.027 14.74%
S&P 500 1413.94 1415.95 12.43%
MSCI EAFE 1569.46 1554.47 11.11%
Russell 2000 821.79 823.20 10.91%

Consumer Money Rates

  Last 1-year ago
Prime Rate 3.25 3.25
Fed Funds 0.17 0.08
30-year mortgage 3.34 3.98


  Last 1-year ago
Dollars per British Pound 1.604 1.558
Dollars per Euro 1.295 1.340
Japanese Yen per Dollar 82.380 77.720
Canadian Dollars per Dollar 0.992 1.012
Mexican Peso per Dollar 12.925 13.496


  Last 1-year ago
Crude Oil 86.26 101.28
Gold 1698.25 1724.95

Bond Rates

  Last 1-month ago
2-year treasury 0.24 0.26
10-year treasury 1.62 1.64
10-year municipal (TEY) 2.66 3.00

Treasury Yield Curve – 12/7/2012

Treasury Yield Curve – 12/7/2012

S&P Sector Performance (YTD) – 12/7/2012

S&P Sector Performance (YTD) – 12/7/2012

Economic Calendar

December 11th


Trade Balance (October)
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 19th


Building Permits, Housing Starts (November)
December 20th


Real GDP (3Q12, 3rd estimate)
December 25th


Christmas Holiday (markets closed)
January 1st


New Year’s Holiday (markets closed)
January 4th


Employment Report (December)

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.

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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