Clarksville Weekly Market Snapshot from Frazier Allen for the week of February 3rd, 2014

Clarksville, TN – Real GDP rose at a 3.2% annual rate in the advance estimate for 4Q13, about as expected, but the details were a bit surprising. Consumer spending and business fixed investment, the key components, each rose at a respectable pace.

However, inventory growth, already elevated in 3Q13, rose further (and will likely subtract from GDP growth in 1H14). Net exports (a smaller trade deficit) added. Residential home building and government subtracted. Personal income figures rose meagerly in 4Q13, suggesting that we may see some slowing in spending ahead.

The Fed lowered the monthly pace of asset purchases by another $10 billion (to $65 billion, vs. $75 billion in January and $85 billion in 2013). The tapering of asset purchases is “not on a preset path,” according to the Fed, but officials expect to make further reductions “in measured steps” as the economy improves.

The busy economic calendar did not distract U.S. market participants from worries about emerging economies. The stock market was choppy. Bond yields fell.

Next week, the ISM manufacturing data may set the early tone, although investors are expected to keep an eye on emerging market developments. The employment report is always important for the financial markets, but there’s a lot of uncertainty heading on the January release.

Seasonal adjustment is a bit tricky and can magnify any weather effects. We’ll get annual benchmark revisions to the payroll data, which will include a correction in the methodology (shifting about 469,000 workers from private households, not included in the establishment survey, into healthcare services).

Extended unemployment benefits expired for 1.35 million at the end of 2013. Some of these people may give up looking for a job, reducing labor force participation and the unemployment rate.

Indices

	Last	Last Week	YTD return %
DJIA	15848.61	16197.35	-4.39%
NASDAQ	4123.13	4218.88	-1.28%
S&P 500	1794.19	1828.46	-2.93%
MSCI EAFE	1847.18	1916.36	-3.57%
Russell 2000	1139.36	1172.40	-2.09%

Consumer Money Rates

	Last	1-year ago
Prime Rate	3.25	3.25
Fed Funds	0.05	0.10
30-year mortgage	4.32	3.53

Currencies

	Last	1-year ago
Dollars per British Pound	1.648	1.580
Dollars per Euro	1.355	1.357
Japanese Yen per Dollar	102.790	91.070
Canadian Dollars per Dollar	1.117	1.002
Mexican Peso per Dollar	13.337	12.734

Commodities

	Last	1-year ago
Crude Oil	98.23	97.94
Gold	1244.00	1678.95

Bond Rates

	Last	1-month ago
2-year treasury	0.33	0.39
10-year treasury	2.66	3.00
10-year municipal (TEY)	4.48	4.52

Treasury Yield Curve – 01/31/2014

S&P Sector Performance (YTD) – 01/31/2014

Economic Calendar

February 1st	—	Janet Yellen sworn in as Fed chair
February 3rd	—	ISM Manufacturing Index (January) Motor Vehicle Sales (January)
February 5th	—	ADP Payroll Estimate (January) ISM Non-Manufacturing Index (January)
February 6th	—	Jobless Claims (week ending February 1st) Trade Balance (December)
February 7th	—	Employment Report (January)
February 13th	—	Retail Sales (January)
February 17th	—	Presidents Day Holiday (markets closed)
March 19th	—	FOMC Policy Decision, Yellen 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 January 30th, 2013.

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