Clarksville Weekly Market Snapshot from Frazier Allen for the week of January 18th, 2015

Clarksville, TN – Investors remained concerned about the global economy. The Swiss National Bank abandoned its currency ceiling against the euro, generating turmoil in the foreign exchange markets and adding to investor anxiety in the U.S.

While the Swiss franc surged, the U.S. dollar gained further ground against other currencies and a flight to safety pushed yields on long-term Treasuries lower (the 30-year bond yield to an all-time low). The SNB’s move reflected the central bank’s inability to defend the ceiling (especially with the European Central Bank expected to embark on QE next week), but investors took it as a sign of global financial instability.

Retail sales fell unexpectedly in December. However, seasonal adjustment is difficult and it was still a strong quarter. Warmer temperatures reduced the output of utilities, restraining the headline industrial production figure for December.

Manufacturing was mixed, but moderate. Oil and gas drilling activity declined, but energy extraction jumped (likely to help make up for the drop in prices).

The CPI fell 0.4% in December, up just 0.8% in 2014 (vs. +1.5% in 2013). Ex-food & energy, the CPI was flat, +1.6% y/y (vs. +1.7% in 2013). Consumer sentiment continued to rise.

Next week, the focus will be on the European Central Bank’s policy meeting, where officials are expected to vote (not unanimously) for quantitative easing. While widely anticipated, there are a number of questions to be answered if QE is approved (how large and for how long?). U.S. economic data should be unimportant (it’s hard to get excited about December housing activity – the bigger test will come in the spring).

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 January 15th, 2015.

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