Clarksville Weekly Market Snapshot from Frazier Allen for the week of May 6th, 2015

Clarksville, TN – GDP growth slowed to a 0.2% annual rate in the advance estimate for 1Q15, reflecting a variety of restraints (weather, West Coast port delays, the strong dollar, and a contraction in energy exploration), many of which are likely to be transitional. Consumer spending rose at a 1.9% pace (vs. +4.4% in 4Q14). Business investment fell, with “mining exploration, shafts, and wells” falling at a 48.7% annual rate.

Inventories rose more than anticipated, adding 0.7 percentage point to growth. Net exports subtracted 1.3 percentage points. Personal income was flat in March, but inflation-adjusted disposable income rose at a 6.2% annual rate in 1Q15 (which is likely to support consumer spending growth in 2Q15).

As expected, the Federal Open Market Committee left policy unchanged and provided no further guidance on the timing of the first rate hike. The FOMC recognized that growth slowed in the first quarter, but saw that as reflecting “transitory factors.”

The financial markets didn’t react much to the economic data or the Fed policy statement. Stock market volatility remained elevated. Treasury yields moved higher, mirroring an increase in bonds yields in Germany.

Next week, the focus is expected to be on the April employment figures (Friday). Weather was a factor during the March payroll survey week, so we should see a rebound in job growth. However, the underlying trend has moderated relatively to the very strong pace seen in the final months of 2014. The ADP estimate of private-sector payrolls (Wednesday) is not a good predictor of the official Bureau of Labor Statistics data, but the markets can react if we get a surprise.

Note that the ADP figures have a breakout by size of firms. March figures suggested a slowing in hiring at large firms, but continued strength at small and medium-sized firms. The markets could react to other developments, including the news out of Europe.

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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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 April 30th, 2015.

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