Clarksville Weekly Market Snapshot from Frazier Allen for the week of January 16th, 2016

Clarksville, TN – The important economic data reports were bunched up on Friday. December retail sales results were somewhat disappointing. Industrial production was weighed down by mild temperatures (lower output of utilities) and a further contraction in energy exploration.

Manufacturing output edged down modestly, mixed across sectors, but generally soft over the last several months. The New York Fed’s Empire State Manufacturing Index fell sharply in January.

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Clarksville Weekly Market Snapshot from Frazier Allen for the week of December 13th, 2015

Clarksville, TN – The economic calendar was thin. The headline retail sales figures for November were not far from expectations, but core sales (which exclude autos, building materials and gasoline) were up 0.6% (stronger than anticipated). The Producer Price Index continued to reflect disinflation pressure, with falling prices within the pipeline.

Commodity prices fell further, led by a drop in oil (now below the critical $40.00 level). Anxieties about the decline in commodity prices fed through to the stock market, which fell broadly during the week and cast some doubt about the Fed’s ability to raise rates next week (still likely, but increased financial instability could lead to a delay).

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

Clarksville, TN – Fed Chair Janet Yellen did not commit to raising rates in December, but she continued to lay the groundwork for an initial hike. She noted that with interest rates close to zero, the consequence of raising rates too soon or too late is not symmetric, which suggests that the Fed should be cautious as it prepares to tighten monetary policy.

However, she also noted that monetary policy affects the economy with a lag, and waiting too long raises risks for the economy and for financial stability.

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Clarksville Weekly Market Snapshot from Frazier Allen for the week of December 2nd, 2015

Clarksville, TN – Next week, the economic calendar has plenty of fresh figures. The ISM surveys and Friday’s employment report would normally be the highlights (and those reports will be important), but financial market participants will be more interested in what happens Thursday.

The European Central Bank’s Governing Council is expected to expand its asset purchase program, while Fed Chair Janet Yellen with testify before the Joint Economic Committee of Congress. Yellen is likely to provide a clearer signal that the Fed will begin raising short-term interest rates at the December policy meeting.

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Clarksville Weekly Market Snapshot from Frazier Allen for the week of November 15th, 2015

Clarksville, TN – The economic data calendar was relatively thin, leaving stock market investors to fret about a likely December rate hike from the Fed. A 25-basis-point increase in short-term interest rates should not have much of an impact on the economy, especially if the Fed follows up very gradually (as anticipated).

However, the financial markets see the initial tightening move as a big deal, so it is. Weak earnings results haven’t helped, but most of the weakness is tied to the strong dollar and slower growth abroad.

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Clarksville Weekly Market Snapshot from Frazier Allen for the week of November 8th, 2015

Clarksville, TN – The October employment report was much stronger than anticipated. However, figures should be considered in their proper context. Nonfarm payrolls rose by 271,000, with a net upward revision to the two previous months of +12,000.

Due to the start of the school year, seasonal adjustment can be tricky in October (we added 1.152 million jobs before seasonal adjustment, versus 1.081 million in October 2014).

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Clarksville Weekly Market Snapshot from Frazier Allen for the week of November 1st, 2015

Clarksville, TN – The Federal Open Market Committee left short-term interest rates unchanged, but the tone of the policy statement was unexpectedly hawkish. The FOMC removed the phrase about downside risks from the global economy, but said that it would monitor global economic and financial developments.

It also specifically talked about the decision framework for “the next meeting,” clearly putting a December 16th rate hike back in play.

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Clarksville Weekly Market Snapshot from Frazier Allen for the week of October 28th, 2015

Clarksville, TN – The economic calendar was light. Residential construction figures were mixed, largely reflecting the usual noise in the multi-family sector data (single-family starts and permits were little changed and still up strongly from a year ago). Existing home sales rebounded from a surprise drop in August. The four-week average for jobless claims fell to the lowest level since 1973.

Earnings reports were mixed, but investors appeared to be encouraged by the view that economic growth will continue, but not so fast that the Federal Reserve rushes to take away the punch bowl.

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Clarksville Weekly Market Snapshot from Frazier Allen for the week of October 4th, 2015

Clarksville, TN – The economic data were mixed, but consistent with the theme of global softness and domestic strength. Unit auto sales improved further in September – and, combined with the August data on personal income and spending, suggest that inflation-adjusted consumer spending (70% of GDP) is on track to have expanded at an annual pace of 3.5% to 4.0% in 3Q15.

The trade deficit in goods widened sharply in August, with that split evenly between stronger imports (despite lower oil prices) and weaker exports. Net exports and an inventory correction are expected to subtract significantly from 3Q15 GDP growth, but underlying domestic demand appears to have remained strong.

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Clarksville Weekly Market Snapshot from Frazier Allen for the week of September 27th, 2015

Clarksville, TN – In Janet Yellen’s first public speech after the recent FOMC meeting, the Fed chair downplayed concerns about the rest of the world and placed herself among the majority of Fed officials expecting to raise short-term interest rates by the end of the year. In a scary moment for investors, Yellen struggled to finish her speech.

She repeatedly lost her place, paused for long periods, and looked generally unwell. She received medical treatment. A Fed spokesperson said that she was dehydrated and that she felt fine later. While stock market participants have been worried about Fed tightening, they seemed to have been more encouraged by Yellen’s expressed confidence in the U.S. economy.

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