Weekly Market Snapshot

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

Europe, again. Election results in France and Greece were not a surprise, but they added to concerns about the European crisis. The important aspect, for U.S. investors, is the uncertainty. Nobody knows exactly what will happen in Europe, but few doubt that the situation will be resolved anytime soon. The second bailout agreement for Greece was only a few months ago, but at the time many felt that Greece would never be able to live up to the requirements. Elsewhere in Europe, there has been some backsliding on austerity. Tighter budgets have weakened the troubled economies in Europe and have done nothing to resolve financial difficulties. Austerity is needed in the long term, but what’s needed in the short term is economic growth.

The economic calendar was thin. The trade deficit widened more than most analysts expected, but figures were only slightly wider than what was assumed in the advance GDP report. Jobless claims appear to have settled down (at nearly the same pace as in March) after seasonal adjustment quirks lifted the figures in the first three weeks of April. Consumer sentiment improved in the mid-May assessment.

Next week, Europe is expected to be an ongoing concern for U.S. investors, but the arrival of mid-month economic data will provide a distraction. The focus is likely to be on the retail sales and residential construction reports. April’s retail sales are likely to have been moderate. April building permits and housing starts are expected to reflect an unwinding of the multi-family noise from March (single-family construction appears to have turned the corner, but a full recovery in housing is years away). The FOMC policy meeting minutes could include some market-moving quotes.

Indices

	Last	Last Week	YTD return %
DJIA	12855.04	13206.59	5.22%
NASDAQ	2933.64	3024.30	12.61%
S&P 500	1357.99	1391.57	7.98%
MSCI EAFE	1446.19	1503.67	2.38%
Russell 2000	791.75	806.59	6.86%

Consumer Money Rates

	Last	1-year ago
Prime Rate	3.25	3.25
Fed Funds	0.16	0.08
30-year mortgage	3.78	4.59

Currencies

	Last	1-year ago
Dollars per British Pound	1.616	1.633
Dollars per Euro	1.296	1.436
Japanese Yen per Dollar	79.960	80.720
Canadian Dollars per Dollar	1.000	0.961
Mexican Peso per Dollar	13.446	11.593

Commodities

	Last	1-year ago
Crude Oil	97.08	103.88
Gold	1596.25	1516.05

Bond Rates

	Last	1-month ago
2-year treasury	0.26	0.27
10-year treasury	1.85	1.99
10-year municipal (TEY)	1.76	1.97

Treasury Yield Curve – 5/11/2012

S&P Sector Performance (YTD) – 5/11/2012

Economic Calendar

May 15	—	Consumer Price Index (April) Retail Sales (April) Empire State Manufacturing Index (May) Business Inventories (March) Homebuilder Sentiment (May)
May 16	—	Building Permits, Housing Starts (April) Industrial Production (April) FOMC Minutes (April 24-25)
May 17	—	Jobless Claims (week ending May 12) Philadelphia Fed Index (May) Leading Economic Indicators (April)
May 22	—	Existing Home Sales (April)
May 23	—	New Home Sales (April)
May 24	—	Durable Goods Orders (April)
May 28	—	Memorial Day Holiday (markets closed)
June 1	—	Employment Report (May)
June 20	—	FOMC Policy Decision Bernanke Press Briefing

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. 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.

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 May 10, 2012.