Clarksville Weekly Market Snapshot from Frazier Allen for the week of December 22nd, 2014

Clarksville, TN – The stock market’s anxieties about oil prices, the Fed, and the rest of the world gave way to a renewed sense of optimism (or at least less pessimism).

Heading into the Federal Open Market Committee meeting, the key question was whether it would abandon the “considerable time” phrase. The FOMC had it both ways, removing the phrase, saying instead that it could “be patient” in deciding when to begin normalizing policy, but quickly adding that the intent is exactly the same.

The dots in the dot plot, Fed officials’ projections of the appropriate federal funds rate at the end of each of the next few years, were still all over the place, but the 2015 dots may be starting to split into two camps: one that wants to begin raising rates a little sooner (March, April), the other a little later (July, September, October).

Fed Chair Janet Yellen continued to emphasize that future policy decision will be data dependent and downplayed the “transitory” impact of lower oil prices. Still, the body language suggested that officials will be cautious.

Yellen dispelled two popular misconceptions. One was that the Fed can begin tightening at any meeting, not just those with scheduled press briefing (March, June, September). The other was that people shouldn’t assume that the Fed will move in measured steps (25 basis points per policy meeting) when tightening begins.

Next week, the financial markets should be in holiday mode. The reports on home sales and durable goods orders are often volatile and the markets could overreact to a surprise, but it should be a relatively dull week.

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.

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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 18th, 2014.

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