Clarksville Weekly Market Snapshot from Frazier Allen for the week of December 19th, 2013

Clarksville, TN – Taper, no tantrum. The Federal Open Market Committee decided to reduce the monthly pace of asset purchases from $85 billion to $75 billion in January. The FOMC added that it expects to further reduce the pace of asset purchases “in measured steps” depending on the economic data (that may mean every other Fed policy meeting in 2014).

It also emphasized that the federal funds target rate would remain in its current low range (0-0.25%) even after the unemployment rate falls below 6.5%.

Chairman Bernanke and other Fed officials had expressed this idea many times over the last six months, but this was the first time that sentiment was included in the policy statement. Investors took some encouragement from that. Fed officials expect real GDP growth of 2.8% to 3.2% in 2014 (4Q/4Q), with a further pick up in 2015.

Unemployment should continue to trend lower. Inflation is expected to remain relatively low, rising gradually back toward the Fed’s 2% target. Most Fed officials don’t expect to begin raising the overnight lending rate until 2015 and most see the rate remaining well below normal at the end of 2016.

The economic data were mostly on the strong side of expectations. Industrial production picked up, boosted by increased output from utilities (colder than normal weather). Residential construction figures were strong, even as existing home sales disappointed.

The estimate of 3Q13 GDP growth was revised to a 4.1% annual rate (vs. 3.6% in the second estimate and +2.8% in the advance estimate). Most of that revision was in consumer spending (now at a 2.0% annual rate, vs. the previous estimate of +1.4%) – such a large revision in the third estimate is rather unusual, but paints a brighter picture.

Next week, market activity is expected to be thin and uneventful. Personal income and spending data will help fill in the picture of the fourth quarter.

Indices

	Last	Last Week	YTD return %
DJIA	16179.08	15739.43	23.47%
NASDAQ	4058.14	3998.40	34.40%
S&P 500	1809.60	1775.50	26.88%
MSCI EAFE	1855.14	1822.54	15.66%
Russell 2000	1125.45	1103.27	32.51%

Consumer Money Rates

	Last	1-year ago
Prime Rate	3.25	3.25
Fed Funds	0.08	0.18
30-year mortgage	4.59	3.37

Currencies

	Last	1-year ago
Dollars per British Pound	1.638	1.627
Dollars per Euro	1.367	1.325
Japanese Yen per Dollar	104.120	84.440
Canadian Dollars per Dollar	1.067	0.987
Mexican Peso per Dollar	12.979	12.729

Commodities

	Last	1-year ago
Crude Oil	98.77	89.51
Gold	1196.11	1668.60

Bond Rates

	Last	1-month ago
2-year treasury	0.39	0.28
10-year treasury	2.94	2.77
10-year municipal (TEY)	4.48	4.34

Treasury Yield Curve – 12/20/2013

S&P Sector Performance (YTD) – 12/20/2013

Economic Calendar

December 23rd	—	Personal Income and Spending (November) Consumer Sentiment (December)
December 24th	—	Durable Goods Orders (November) New Home Sales (November)
December 25th	—	Christmas Holiday (markets closed)
December 26th	—	Jobless Claims (week ending December 21st)
December 30th	—	Pending Home Sales Index (November)
December 31st	—	Chicago Purchasing Managers Index (December) Consumer Confidence (December)
January 1st	—	New Year’s Day (markets closed)

Important Disclosures

[320left]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 19th, 2013.

©2013 Raymond James Financial Services, Inc. member FINRA / SIPC.