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Clarksville Weekly Market Snapshot from Frazier Allen for the week of November 25th, 2014

 

F&M Investment Services - Raymond James - Clarksville, TNClarksville, TN – There are a few key financial market themes of the last several weeks. While the outlooks for the domestic economy and Federal Reserve policy are important, U.S. investors are sensitive to developments in the rest of the world.

Basically, poor economic news from the euro area, China, or Japan is a negative for U.S. equities, while any efforts by foreign central banks to address weakness are seen as a positive.

Japan posted a second quarterly decline in real GDP. Manufacturing gauges for the euro area and China were weak. The Bank of Japan extended its quantitative easing at the end of October.

Frazier Allen

Frazier Allen

The People’s Bank of China surprised with an interest rate cut. The European Central Bank’s Mario Draghi has repeatedly suggested that QE (central bank purchases of sovereign debt) is on the way (ECB policymakers will meet on December 4th).

The mid-month economic data reports for the U.S. were a mixed bag. The Producer Price Index and Consumer Price Index were both a bit higher than anticipated, reflecting what appears to be one-time anomalies – but the underlying trends remain low. Industrial production showed varied results across industries in October.

Residential construction was mixed (but with strength in single-family activity). Existing home sales exceeded expectations, although up only meagerly from a year ago. The October index of Leading Economic Indicators suggested very little chance of entering a recession anytime soon.

Next week, the economic data reports pile up on Tuesday and Wednesday. The estimate of 3Q14 GDP growth is expected to be revised a bit lower (reflecting mixed revisions to the component data). The reports on new home sales and durable goods are often erratic and any surprises could be exaggerated by thin market conditions ahead of the holiday. Financial markets will close early on Friday.

Indices

Last Last Week YTD return %
DJIA 17719.00 17652.14 6.89%
NASDAQ 4701.87 4680.14 12.58%
S&P 500 2052.75 2039.33 11.06%
MSCI EAFE 1815.14 1812.60 -5.24%
Russell 2000 1170.75 1175.42 0.61%

 Consumer Money Rates

Last 1 year ago
Prime Rate 3.25 3.25
Fed Funds 0.10 0.10
30-year mortgage 3.99 4.22

 Currencies

Last 1 year ago
Dollars per British Pound 1.569 1.613
Dollars per Euro 1.254 1.344
Japanese Yen per Dollar 118.090 100.120
Canadian Dollars per Dollar 1.130 1.045
Mexican Peso per Dollar 13.620 13.028

 Commodities

Last 1 year ago
Crude Oil 75.58 93.33
Gold 1191.46 1260.86

 Bond Rates

Last 1 month ago
2-year treasury 0.51 0.39
10-year treasury 2.33 2.26
10-year municipal (TEY) 3.49 3.07

 Treasury Yield Curve – 11/21/2014

 Treasury Yield Curve – 11/21/2014

 

S&P Sector Performance (YTD) – 11/21/2014

S&P Sector Performance (YTD) – 11/21/2014

Economic Calendar

November 25th Real GDP (3Q14, 2nd estimate)
Consumer Confidence (October)
November 26th Jobless Claims (week ending November 21st)
Personal Income and Spending (October)
Durable Goods Orders (October)
Chicago Purchasing Managers Index (November)
Consumer Sentiment (November)
New Home Sales (October)
Pending Home Sales Index (October)
November 27th Thanksgiving Holiday (markets closed)
November 28th Markets close early
December 1st ISM Manufacturing Index (November)
December 3rd ADP Payroll Estimate (November)
ISM Non-Manufacturing Index (November)
Fed Beige Book
December 4th ECB Policy Meeting
December 5th Employment Report (November)
December 17th FOMC Policy Decision (Yellen Press Conference)

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 20th, 2014.

©2014 Raymond James Financial Services, Inc. member FINRA / SIPC.


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