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Clarksville Weekly Market Snapshot from Frazier Allen for the week of November 16th, 2014
Posted By Frazier Allen On Sunday, November 16, 2014 @ 12:00 pm In Business | No Comments
Clarksville, TN – The economic calendar was thin. The report on retail sales, the only significant release during the week, was a little better than expected, restrained by the decline in gasoline prices. Note that lower gasoline prices should provide some support for consumer spending in the important holiday shopping season.
However, that support is likely to merely offset the impact of sluggish wage growth (leading to “okay” holiday sales). The impact of lower gasoline prices on consumer spending depends on how low gasoline prices go and how long they stay low, but usually arrives with a lag.
If sustained, the drop in gasoline prices is more likely to benefit the consumer in the first half of 2015.
However, the University of Michigan’s consumer sentiment index rose more than expected in the mid-November reading – and that likely reflects lower gasoline prices.
Next week, the economic calendar picks up again. The mid-month data are expected to reflect moderately strong growth in the overall economy. Seasonal adjustment can be tricky in November, especially in residential construction (where adjustment can magnify weather effects).
The inflation reports are expected to be mild. The soft global economy has put downward pressure on commodity prices. Lower gasoline prices will restrain the headline CPI number, but core inflation is expected to remain at a low trend.
The markets are likely to be more interested in the minutes from the Fed policy meeting of late October. The October 29th policy statement was not as dovish as anticipated. Many expect a low trend in inflation to lead to a delay in the Fed’s initial rate hike.
However, there was no signal of concern from the Fed. In contrast, in the first half of this year, the Federal Open Market Committee repeatedly noted that too-low inflation can generate some problems for the economy.
We did get one formal dissent at that meeting (Minneapolis Fed President Kocherlakota, who wanted to keep QE3 going for a while longer). However, the minutes are likely to show a range of opinions regarding the inflation outlook – and we could see the financial markets react to certain quotes.
|Last||Last Week||YTD return %|
|Last||1 year ago|
|Last||1 year ago|
|Dollars per British Pound||1.576||1.595|
|Dollars per Euro||1.247||1.342|
|Japanese Yen per Dollar||115.530||99.560|
|Canadian Dollars per Dollar||1.131||1.050|
|Mexican Peso per Dollar||13.557||13.184|
|Last||1 year ago|
|Last||1 month ago|
|10-year municipal (TEY)||3.46||3.23|
|November 17th||—||Industrial Production (October)|
|November 18th||—||Producer Price Index (October)
Homebuilder Sentiment (November)
|November 19th||—||Building Permits, Housing Starts (October)
FOMC Minutes (October 28th-29th)
|November 20th||—||Jobless Claims (week ending November 15th)
Consumer Price Index (October)
Real Weekly Earnings (October)
Existing Home Sales (October)
Leading Economic Indicators (October)
|November 25th||—||Real GDP (3Q14, 2nd estimate)
Consumer Confidence (October)
|November 26th||—||Durable Goods Orders (October)|
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.
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 13th, 2014.
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