Clarksville Weekly Market Snapshot from Frazier Allen for the week of December 10th, 2013

Clarksville, TN – Fear of Fed tapering hung over the stock market. Market participants believed that the November Employment Report would be the deciding factor for whether the Fed will begin to reduce the pace of asset purchases this month.

The jobs report was stronger than anticipated, but not as bad as feared. Payrolls rose by 203,000, a bit more than expected (median forecast: +180,000), with a mild net revision of +8,000 to the two previous months. Job gains were relatively broad-based.

The unemployment rate sank to 7.0%, vs. 7.3% in October and 7.2% in September, with improvement concentrated in the teenage and young adult categories. Average weekly hours edged up. Average hourly earnings rose 0.2%, up 2.0% y/y (in comparison, the CPI rose 0.9% over the 12 months ending in October).

The rest of the week’s economic figures were mixed. The ISM Manufacturing Index surprised to the upside, but the nonmanufacturing survey disappointed. Real GDP rose at a 3.6% annual rate in the second estimate for 3Q13 (vs. +2.8% in the advance estimate), but most of that was due to faster inventory growth (which is likely to slow in 4Q13, subtracting significantly from GDP growth).

The Fed’s Beige Book described growth as “modest to moderate” – the same phrase used in the four previous assessments. The Beige Book noted that hiring remained “modest” across the 12 Federal Reserve districts. Wage and price pressures were “contained.”

Next week, the economic calendar is thin, with a clear focus on Thursday’s retail sales data. Investors may be encouraged by the mini budget deal coming out of Washington. Details are still pending, but a compromise should avoid another government shutdown and unnecessary showdown over the debt ceiling.

This isn’t exactly what the budget committee was tasked with (a long-term budget deal), but it should suffice. Spending is expected to be authorized for the full fiscal year (and possibly FY15), preserving the level of sequester cuts, but allowing more leeway in deciding what gets cut. There should be increases in revenue, but not through higher tax rates (closing loopholes, etc.).

Indices

	Last	Last Week	YTD return %
DJIA	15821.51	16097.33	20.74%
NASDAQ	4033.17	4044.75	33.57%
S&P 500	1785.03	1807.23	25.16%
MSCI EAFE	1836.93	1877.31	14.52%
Russell 2000	1122.47	1141.33	32.16%

Consumer Money Rates

	Last	1-year ago
Prime Rate	3.25	3.25
Fed Funds	0.10	0.17
30-year mortgage	4.46	3.34

Currencies

	Last	1-year ago
Dollars per British Pound	1.633	1.611
Dollars per Euro	1.367	1.309
Japanese Yen per Dollar	101.750	82.370
Canadian Dollars per Dollar	1.064	0.991
Mexican Peso per Dollar	13.032	12.917

Commodities

	Last	1-year ago
Crude Oil	97.38	87.88
Gold	1233.68	1693.30

Bond Rates

	Last	1-month ago
2-year treasury	0.30	0.31
10-year treasury	2.85	2.75
10-year municipal (TEY)	4.43	4.28

Treasury Yield Curve – 12/6/2013

S&P Sector Performance (YTD) – 12/6/2013

Economic Calendar

December 2nd	—	Construction Spending (September, October) ISM Manufacturing Index (November)
December 3rd	—	Motor Vehicle Sales (November)
December 4th	—	ADP Payroll Estimate (November) Trade Balance (October) New Home Sales (September, October) ISM Non-Manufacturing Index (November) Fed Beige Book
December 5th	—	Jobless Claims (week ending November 30th) Real GDP (2nd estimate)
December 6th	—	Employment Report (November) Personal Income and Spending (October)
December 12th	—	Retail Sales (November)
December 18th	—	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 December 5th, 2013.

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