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Clarksville Weekly Market Snapshot from Frazier Allen for the week of December 14th, 2014

 

F&M Investment Services - Raymond James - Clarksville, TNClarksville, TN – Retail sales figures for November were stronger than expected, while results for September and October were revised higher. The report suggests that consumer spending growth is on a moderately strong path in 4Q14 – and we aren’t even close to seeing the full impact of the drop in gasoline prices (expect a bigger benefit for the consumer in the first half of 2015).

The retail sales data did little to offset the negative mood in equities. A further sharp decline in crude oil prices added to the anxiety. A sustained drop in oil prices will be a significant negative for oil producers here and abroad.

Frazier Allen

Frazier Allen

However, consumers and businesses will benefit significantly from lower gasoline prices, easily offsetting the negative impact on the energy sector. A greater concern may be why oil prices are falling. Some of that reflects increased supply, which is a net positive – but softer demand reflects weakness in the global economy.

Next week, the focus will be on the Fed’s policy statement (and the “considerable time” phrase in particular that signals how long interest rates may stay near zero. ) Minutes of the October 28th-29th policy meeting showed that officials were moving closer to getting rid of the phrase, but were nervous that the financial markets might overreact. If the language changes (and it’s expected to be a close call), we may see something similar (such as the Fed needs to be “patient” before raising rates.)

The Fed will also release revised projections of growth, unemployment, inflation, and the expected federal funds rate at each of the next few years. The dot plot in September showed a wide range, indicating no consensus view on the timing of Fed tightening. There may not be much of a consensus this time either, but the dots may begin to bunch up a bit, suggesting that a consensus policy view may be starting to form. Fed Chair Janet Yellen will explain it all in her post-meeting press conference, where she’s likely to again emphasize that policy action will be data-dependent.

Indices

Last Last Week YTD return %
DJIA 17533.15 17912.62 5.77%
NASDAQ 4684.03 4774.472 12.15%
S&P 500 2026.14 2074.33 9.62%
MSCI EAFE 1797.34 1831.41 -6.17%
Russell 2000 1161.87 1179.01 -0.15%

 Consumer Money Rates

Last 1 year ago
Prime Rate 3.25 3.25
Fed Funds 0.12 0.08
30-year mortgage 3.93 4.42

 Currencies

Last 1 year ago
Dollars per British Pound 1.565 1.646
Dollars per Euro 1.238 1.374
Japanese Yen per Dollar 119.340 103.110
Canadian Dollars per Dollar 1.146 1.064
Mexican Peso per Dollar 14.407 12.823

 Commodities

Last 1 year ago
Crude Oil 60.94 98.51
Gold 1226.78 1246.65

 Bond Rates

Last 1 month ago
2-year treasury 0.57 0.54
10-year treasury 2.13 2.36
10-year municipal (TEY) 3.21 3.44

 Treasury Yield Curve – 12/12/2014

Treasury Yield Curve – 12/12/2014

 

S&P Sector Performance (YTD) – 12/12/2014

S&P Sector Performance (YTD) – 12/12/2014

 

 Economic Calendar

December 15th Industrial Production (November)
December 16th Building Permits, Housing Starts (November)
December 17th Consumer Price Index (November)
FOMC Policy Decision (Yellen Press Conference)
Revised Fed Projections
January 9th Employment Report (December)
January 22nd ECB Policy Meeting
January 28th FOMC Policy Decision (no 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 December 11th, 2014.

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


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