TBT Financial ServicesAn Independent Firm

Weekly Market Snapshot

September 26, 2014

Market Commentary
by Scott J. Brown, Ph.D., Chief Economist

The economic data were mixed. The estimate of second quarter gross domestic product (GDP) growth was revised upward from 4.2% to 4.6%, as expected. Existing home sales fell in August, reflecting a decline in speculators (i.e., fewer all-cash transactions). New home sales surged 18.9%, but that likely reflects the usual volatility in the data. Durable goods orders fell 18%, reflecting an unwinding of July’s sharp spike in civilian aircraft orders. The three-month averages of shipments and orders for nondefense capital goods (ex-aircraft) suggest good strength in business fixed investments.

Stocks fell sharply on Thursday, with no apparent catalyst (other than the old adage: "sell on Rosh Hashanah, buy on Yom Kippur").

Next week, the economic data will be more important and should help to fill in the picture for the third quarter, and Friday’s employment figures will set the near-term economic outlook. Personal income and spending should be consistent with moderately strong growth in consumer spending. The ISM Manufacturing Survey should show relative strength. Nonfarm payrolls were restrained in July by a seasonal quirk in autos and by labor strife at a New England grocery chain. Those impacts should reverse, adding 25,000 to 30,000 to the payroll figure for September. Seasonal adjustment is hard in September due to the start of the school year and an end to summer jobs. The unemployment rate should be flat or slightly lower.


Indices

  Last Last Week YTD return %
DJIA 16945.80 17265.99 2.23%
NASDAQ 4466.75 4593.43 6.95%
S&P 500 1965.99 2011.36 6.36%
MSCI EAFE 1866.41 1903.37 -2.57%
Russell 2000 1110.24 1159.27 -4.59%

Consumer Money Rates

  Last 1-year ago
Prime Rate 3.25 3.25
Fed Funds 0.08 0.09
30-year mortgage 4.23 4.32

Currencies

  Last 1-year ago
Dollars per British Pound 1.630 1.604
Dollars per Euro 1.272 1.351
Japanese Yen per Dollar 109.230 98.490
Canadian Dollars per Dollar 1.111 1.031
Mexican Peso per Dollar 13.322 12.966

Commodities

  Last 1-year ago
Crude Oil 94.33 102.76
Gold 1209.05 1323.42

Bond Rates

  Last 1-month ago
2-year treasury 0.58 0.50
10-year treasury 2.52 2.35
10-year municipal (TEY) 3.46 3.38

Treasury Yield Curve – 9/26/2014


S&P Sector Performance (YTD) – 9/26/2014



Economic Calendar

September 29  —  Personal Income and Spending (August)
Pending Home Sales Index (August)
September 30  —  Case-Shiller Home Price Index (July)
Chicago Purchasing Managers Index (September)
Consumer Confidence (September)
October 1  —  ADP Payroll Estimate (September)
ISM Manufacturing Index (September)
Motor Vehicle Sales (September)
October 2  —  Jobless Claims (week ending September 27)
Factory Orders (August)
October 3  —  Employment Report (September)
Trade Balance (August)
ISM Non-Manufacturing Index (September)
October 8  —  FOMC Minutes (September 16-18)

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. 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. Also municipal bonds may be subject to capital gains taxes if sold or redeemed at a profit. 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) assumes a 35% tax rate. Municipal securities may lose their tax-exempt status if certain legal requirements are not met, or if tax laws change.

Material prepared by Raymond James for use by its financial advisors.

Data source: Bloomberg, as of close of business September 25, 2014.

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