Clarksville Weekly Market Snapshot from Frazier Allen for the week of February 9th, 2014

Clarksville, TN – The January Employment Report was a mixed bag. Nonfarm payrolls rose by a less-than-expected 113,000 (vs. a median forecast of +185,000), following a subpar 75,000 gain in December.

However, seasonal adjustment and weather effects added uncertainty to the results. Details suggest that the weather may not have been much worse than a normal January, but December weather was more unfavorable.

Manufacturing and construction jobs appeared to fall less than they normally would have (resulting in seasonally adjusted gains).

Retail and education payrolls fell, which is consistent with bad weather, while hours declined. The unemployment rate fell to 6.6%, but for once that wasn’t due to a drop in the labor force.

The household survey data showed a jump in the unemployment rates for teenagers and young adults (possibly reflecting seasonal adjustment issues), while the rate for those aged 25-54 fell further (to 5.6%, vs. 6.7% a year ago). Note that unadjusted payrolls fell by 2.87 million in January. Take the adjusted figures with a big grain of salt.

The stock market seemed to be searching for direction, using minor economic data to provide support. None of the economic reports in the last few weeks have altered the overall economic outlook for 2014, nor has any of the information pointed to a shift in monetary policy.

The federal debt ceiling went back into effect on February 7th. Through “extraordinary measures,” Treasury should be able to borrow for a few weeks. Republicans have indicated that this won’t turn into a crisis, but they don’t yet know what they want in exchange for raising the debt limit.

Next week, Fed Chair Janet Yellen will testify on monetary policy before the House Financial Services Committee on Tuesday and before the Senate Banking Committee on Thursday. While Yellen has testified many times as a Federal Reserve official, this will be her first major appearance as Fed chair.

Yellen will present the Fed’s economic outlook. She’s likely to stress that while the tapering of asset purchases is not “on a preset path,” officials expect that conditions will warrant further reductions “in measured steps” in the months ahead.

The expectation is that the Federal Open Market Committee will reduce the monthly rate of asset purchases by $10 billion at each policy meeting. The FOMC could taper quicker or more slowly as conditions warrant, but the bar for that is fairly high.

Indices

	Last	Last Week	YTD return %
DJIA	15628.53	15848.61	-5.72%
NASDAQ	4057.12	4123.13	-2.86%
S&P 500	1773.43	1794.19	-4.05%
MSCI EAFE	1832.15	1847.18	-4.36%
Russell 2000	1103.93	1139.36	-5.13%

Consumer Money Rates

	Last	1-year ago
Prime Rate	3.25	3.25
Fed Funds	0.06	0.15
30-year mortgage	4.23	3.53

Currencies

	Last	1-year ago
Dollars per British Pound	1.634	1.565
Dollars per Euro	1.360	1.351
Japanese Yen per Dollar	101.890	93.430
Canadian Dollars per Dollar	1.106	0.997
Mexican Peso per Dollar	13.224	12.683

Commodities

	Last	1-year ago
Crude Oil	97.84	96.62
Gold	1257.53	1677.08

Bond Rates

	Last	1-month ago
2-year treasury	0.30	0.39
10-year treasury	2.67	2.90
10-year municipal (TEY)	4.49	4.54

Treasury Yield Curve – 02/07/2014

S&P Sector Performance (YTD) – 02/07/2014

Economic Calendar

February 11	—	Yellen Monetary Policy Testimony (House)
February 13	—	Jobless Claims (week ending February 8) Retail Sales (January) Yellen Monetary Policy Testimony (Senate)
February 14	—	Industrial Production (January)
February 17	—	Presidents Day Holiday (markets closed)
February 19	—	New Producer Price Index (January)
February 20	—	Consumer Price Index (January)
March 7	—	Employment Report (February)
March 19	—	FOMC Policy Decision, Yellen Press Briefing

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 February 6th, 2013.

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