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Clarksville Weekly Market Snapshot from Frazier Allen for the week of October 26th, 2014

F&M Investment Services - Raymond James - Clarksville, TNClarksville, TN – Mixed, but generally favorable, earnings reports and an ebbing in Ebola fears helped propel the major stock market indices higher.

The economic data were largely irrelevant. The Consumer Price Index continued to show a low trend in inflation (+1.7% y/y for both the headline index and the core). Home sales figures were mixed. The Index of Leading Economic Indicators rose 0.8% suggesting little chance of a recession anytime soon

Next week, the earnings calendar is brisk with about a third of the companies in the S&P 500 reporting. There are two key items on the economic calendar: the Fed policy meeting and the advance estimate of 3Q14 GDP growth.

Frazier Allen
Frazier Allen

The Federal Open Market Committee is widely expected to bring its asset purchase program (QE3) to a close. Being well advertised, this should not create any problems for the financial markets.

For investors the key will be the language of the forward guidance – in particular, whether the Fed will remove the “considerable period” phrase. Such a change is coming, but it’s more likely that this will happen at the next policy meeting (mid-December).

The advance GDP estimate is always an adventure. The government will have to make assumptions about a number of missing components and the figures will be revised in late November and revised again in December. The story behind the figures is what’s important (although the financial markets tend to put a lot of weight on the headline number).

Consumer spending appears to have been on a lackluster-to-moderate pace in 3Q14. Business fixed investment is expected to have been strong. A slower pace of inventory growth should subtract, while a narrower trade deficit should add.

 

Indices

Last Last Week YTD return %
DJIA 16677.90 16117.24 0.61%
NASDAQ 4452.79 4217.39 6.61%
S&P 500 1950.82 1862.76 5.54%
MSCI EAFE 1776.57 1714.64 -7.26%
Russell 2000 1116.49 1085.85 -4.05%

 

Consumer Money Rates

Last 1 year ago
Prime Rate 3.25 3.25
Fed Funds 0.08 0.09
30-year mortgage 3.92 4.13

 

Currencies

Last 1 year ago
Dollars per British Pound 1.601 1.613
Dollars per Euro 1.267 1.374
Japanese Yen per Dollar 107.460 97.320
Canadian Dollars per Dollar 1.125 1.032
Mexican Peso per Dollar 13.532 12.948

 

Commodities

Last 1 year ago
Crude Oil 82.34 96.36
Gold 1239.26 1330.14

 

Bond Rates

Last 1 month ago
2-year treasury 0.39 0.58
10-year treasury 2.26 2.52
10-year municipal (TEY) 3.18 3.51

 

Treasury Yield Curve – 10/24/2014

Treasury Yield Curve – 10/24/2014

 

S&P Sector Performance (YTD) – 10/24/2014

S&P Sector Performance (YTD) – 10/24/2014

Economic Calendar

October 27th Pending Home Sales Index (September)
October 28th Durable Goods Orders (September)
Consumer Confidence (October)
October 29th FOMC Policy Decision (no press conference)
October 30th Jobless Claims (week ending October 25th)
Real GDP (3Q14, advance estimate)
October 31st Employment Cost Index (3Q14)
Personal Income and Spending (September)
November 3rd IISM Manufacturing Index (October)
Motor Vehicle Sales (October)
November 4th Election Day
November 6th ECB Policy Meeting
November 7th Employment Report (October)
November 11th Veterans Day (bond market closed)
November 14th Retail Sales (October)

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 October 16th, 2014.

©2014 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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