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Clarksville Weekly Market Snapshot from Frazier Allen for the week of May 31st, 2015

 

F&M Investment Services - Raymond James - Clarksville, TNClarksville, TN – The economic data reports remained mixed. Real GDP fell at a 0.7% annual rate in the second estimate for 1Q15 (vs. +0.2% in the advance estimate). The revision largely reflected slower inventory growth and a wider trade deficit. Consumer spending rose at a 1.8% pace (vs. +1.9%), while business fixed investment fell 2.8% (vs. -3.8%).

There is currently a debate about whether the seasonal pattern in a number of GDP components may have changed post-recession. Unfortunately, we really don’t have enough data to say for sure.

Frazier Allen

Frazier Allen

One way around this is to look at year-over-year changes. GDP rose 2.7% y/y, with Domestic Final Sales at 2.9%. Corporate profits fell in the preliminary estimate, no surprise.

Durable goods orders fell 0.5% in April, reflecting only a partial retreat in aircraft orders (which had surged in March). More importantly, core capital goods orders rose 1.0%, following a 1.5% gain in March (they plunged 5.1% in February).

The Chicago Purchasing Managers’ Index unexpectedly fell below the breakeven level in May, with new orders, backlogs, production and employment all contracting.

Except for the Chicago PMI, financial market participants largely ignored the economic data, seemingly anxious about developments in the rest of the world.

Next week, we’ll receive some fresh economic data (ISM surveys, motor vehicle sales, the Fed Beige Book), but the focus is likely to be on Friday’s job market figures. The end of the school year often presents some difficulties for the seasonal adjustment (we can expect to add about a million jobs before adjustment).

The unemployment rate should hold steady. The employment/population ratio is trending gradually higher, but still suggests an ample amount of slack in the job market.

Indices

Last Last Week YTD return %
DJIA 18126.12 18285.74 1.70%
NASDAQ 5097.98 5090.79 7.64%
S&P 500 2120.79 2130.82 3.01%
MSCI EAFE 1913.47 1948.41 7.81%
Russell 2000 1253.10 1256.74 4.02%

Consumer Money Rates

Last 1 year ago
Prime Rate 3.25 3.25
Fed Funds 0.06 0.07
30-year mortgage 3.96 4.12

Currencies

Last 1 year ago
Dollars per British Pound 1.532 1.671
Dollars per Euro 1.095 1.359
Japanese Yen per Dollar 123.950 101.850
Canadian Dollars per Dollar 1.244 1.088
Mexican Peso per Dollar 15.315 12.874

Commodities

Last 1 year ago
Crude Oil 57.68 102.72
Gold 1188.40 1258.14

Bond Rates

Last 1 month ago
2-year treasury 0.61 0.54
10-year treasury 2.11 1.90
10-year municipal (TEY) 3.56 3.20

Treasury Yield Curve – 05/29/2015

Treasury Yield Curve – 05/29/2015

S&P Sector Performance (YTD) – 05/29/2015

S&P Sector Performance (YTD) – 05/29/2015

 

Economic Calendar

May 29th Real GDP (1Q15, 2nd estimate)
Chicago Purchasing Managers Index (May)
Consumer Sentiment (May)
June 1st Personal Income and Spending (April)
ISM Manufacturing Index (May)
June 2nd Motor Vehicle Sales (May)
June 3rd ADP Payroll Estimate (May)
Trade Balance (April)
ISM Non-Manufacturing Index (May)
Fed Beige Book
June 4th Jobless Claims (week ending May 30)
June 5th Employment Report (May)
June 11 Retail Sales (May)

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 May 21st, 2015.

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


About Frank White

    Frank White

    Frank White is a native of east Tennessee and reveres the hills and nature of the Cumberland Plateau and east Tennessee. He enjoys backpacking, canoeing and flyfishing. He and his wife, Natalie, have been Clarksville residents since 1979. Frank is the owner of MediaWorks, a design and printing company in Clarksville, TN.

    He earned a BS in mass communications and political science from Middle Tennessee State University and a master of arts in journalism from the Indiana University School of Journalism at Bloomington. He is a distinguished military graduate from ROTC at Indiana University and is retired from the U.S. Army Reserve having also served in the Tennessee Army National Guard. He served with the U.S. Army VII Corps in Operation Desert Storm.

    Frank is a passionate follower of Christ and seeks to mentor others in exploring the endless depths of grace.

    Web Site: http://www.mediaworksdesign.com/
    Email:

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