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

Clarksville, TN – The economic data were mixed, but generally consistent with moderately strong growth. Unit auto sales improved in August. The ISM Manufacturing Index slowed. The Non-Manufacturing Index pulled back a bit after surging in July (still strong). The Fed’s Beige Book described growth as evenly split between “modest” and “moderate” across the 12 Fed districts.

The August employment report was mixed, but generally strong. Nonfarm payrolls rose by 173,000 (median forecast: +220,000), but with a net revision of +44,000 to June and July.

The unemployment rate fell to 5.1% (median forecast: 5.2%) and average hourly earnings rose by 0.3% (median forecast: +0.2%), giving the Fed’s hawks some ammunition in arguing for a September 17th rate hike (although one should really take those figures with a grain of salt).

The financial markets remained focused on the volatility in China, but with the Chinese market closed on Thursday and Friday, fears of the Fed and slower global growth remained. In his Jackson Hole speech on August 29th, Fed Vice Chair Stanley Fischer suggested that the Fed was still on track to begin raising short-term interest rates this year and implied that a September move was still on the table.

The Fed does take into account what’s happening in the rest of the world, said Fischer, but needs to focus on the domestic economy – what’s good for the U.S. economy is good for the global economy.

Next week, the economic calendar is thin. Investors will return from the three-day weekend with a focus on the rest of the world (China, in particular). Monetary policy makers in Canada and the United Kingdom will meet (neither is expected to act, but the Bank of Canada is contemplating another rate cut and the Bank of England is contemplating when to raise rates). The Fed’s September 17 decision is seen as being determined by financial market volatility (this week and next), but the Fed is still looking to begin raising rates by the end of the year.

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.

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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 September 3rd, 2015.

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