Clarksville Weekly Market Snapshot from Frazier Allen for the week of November 3rd, 2013
November 3, 2013
Clarksville, TN – As expected, the Federal Open Market Committee did not alter the pace of asset purchases (currently $85 billion per month). The FOMC noted that “the recovery in the housing sector slowed somewhat in recent months,” but removed the phrase (from the September 18th statement that “the tightening of financial conditions observed in recent months, if sustained, could slow the pace of improvement in the economy and labor market.”
That suggests that the Fed could still begin to taper the pace of asset purchases at the December policy meeting if the economic data between now and then are strong enough (although that’s not seen as likely).
Frazier Allen
Stock market offers tricks and treats in October 2013
November 1, 2013
Clarksville, TN – The markets sent investors mixed messages in October, generally trending upwards despite signs of volatility around the government shutdown and subsequent reopening.
At the end of the month, stocks – which had enjoyed a days-long record run – began to show some weakness after Federal Reserve policymakers said the economy wasn’t growing quickly enough to curtail its bond purchases and dial back on some of its economic stimulus.
Frazier Allen
Clarksville Weekly Market Snapshot from Frazier Allen for the week of October 28th, 2013
October 28, 2013
Clarksville, TN – The September Employment Report (delayed from October 6) was disappointing relative to expectations (although hardly “weak”). Nonfarm payrolls rose by 148,000 (median forecast: +180,000). The two previous months were revised a net 9,000 higher.
Note that seasonal adjustment is often tricky in September (due to the start of the school year). The unemployment rate edged down to 7.2%, while the labor force participation rate held steady. The employment/population rate held steady, but was down slightly from a year earlier.
Frazier Allen
Clarksville Weekly Market Snapshot from Frazier Allen for the week of October 22nd, 2013
October 22, 2013
Clarksville, TN – As was widely anticipated, lawmakers reached an 11th-hour agreement on the budget and debt ceiling. The “Continuing Appropriations Act, 2014” funds the government through January 15th, suspends the debt ceiling to February 7th, and requests bipartisan House/Senate budget negotiations by December 13th.
Thus, while the deal dodges a near-term financial catastrophe, it does not remove uncertainty entirely. Lawmakers will have less than three months to agree on a new spending authorization.
Frazier Allen
Clarksville Weekly Market Snapshot from Frazier Allen for the week of October 13th, 2013
October 13, 2013
Clarksville, TN – The partial government shutdown and brinksmanship over the debt ceiling continued. However, financial market participants were encouraged by signs that the two sides were at least willing to talk to each other.
House Republicans appear to have abandoned demands for a repeal or delay of the Affordable Care Act, but it hasn’t been clear what they want instead. Note that a temporary (six-week or three-month) extension of the debt ceiling does not remove uncertainty completely, but it would sidestep a near-term financial catastrophe.
Frazier Allen
Stocks up despite U.S. Government Budget Impasse
October 2, 2013
Clarksville, TN – The third quarter of the year proved quite eventful.
The Federal Reserve opted to wait a little longer before beginning to dial back its bond purchases, and a budgetary showdown in D.C. resulted in a partial government shutdown on the same day the private healthcare exchanges mandated by the 2010 Affordable Care Act (ACA) opened.
Political tensions arose over whether to defund or delay major provisions of the ACA.
Frazier Allen
Investors looking for answers from the Fed, Government
September 4, 2013
Clarksville, TN – August saw all three of the major U.S. stock market indexes fall into negative territory, as investors become more concerned about the possibility of rising rates and potential military action in Syria.
Emerging markets, particularly Brazil and India, also took a hit in August as their economies weakened and their currencies fell against the dollar.
Frazier Allen
Market Update from Frazier Allen, June 23rd, 2013
June 23, 2013
Clarksville, TN – Equities across the globe fell sharply after Federal Reserve Chairman Ben Bernanke implied that the central bank may start to wind down its asset purchases later this year if the economy continues to improve. The three major domestic indices took a hit, and the CBOE Volatility Index spiked to a new high this year.
The statement triggered a selloff on Wednesday and Thursday, as markets reacted to the prospect of higher interest rates. Many market observers already had forecast when this third round of quantitative easing would dial down, but the markets responded regardless. [Read more]
Weekly Market Snapshot from Frazier Allen for the week of February 24th, 2013
February 24, 2013
Market Commentary by Scott J. Brown, Ph.D., Chief Economist
The FOMC minutes from the January 29th-30th policy meeting showed a greater level of discomfort regarding the Fed’s large-scale asset purchases. “Many participants,” suggesting a majority, “expressed some concerns about potential costs and risks arising from further asset purchases.”
Several participants “discussed the possible complications that additional purchases could cause for the eventual withdrawal of policy accommodation, a few mentioned the prospect of inflationary risks, and some noted that further asset purchases could foster market behavior that could undermine financial stability.” Several others “argued that the potential costs of reducing or ending asset purchases too soon were also significant, or that asset purchases should continue until a substantial improvement in the labor market outlook had occurred.” [Read more]
Weekly Market Snapshot from Frazier Allen for the week of February 10th, 2013
February 10, 2013
Market Commentary by Scott J. Brown, Ph.D., Chief Economist
Federal Reserve Governor Jeremy Stein fell short of declaring that credit markets are overheating, but suggested that an extended period of low interest rates could lead to the taking on of greater duration of credit risks, or to employment of greater leverage in a “reach for yield.” He said that the Fed must monitor the financial markets closely and could address signs of excessive risk-taking through regulatory efforts or through monetary policy.
Next week, President Barack Obama will deliver his State of the Union Address on Tuesday evening (which is also Mardi Gras). Most likely, the President will ask that Congress postpone the sequester through the end of the year. Note that it’s not costless to do so – there has to be an offsetting increase in revenues (possibly closed loopholes) or reduction in other types of spending (say, reduced farm subsidies). The reports on retail sales and industrial production have some market-moving potential, but seasonal adjustment could exaggerate what would otherwise be minor shifts in the data. [Read more]
