Weekly Economic Update



|Maggie Roche Presents: |

|MONTHLY ECONOMIC UPDATE |

| |

| | |

|MONTHLY QUOTE |December 2014 |

| |THE MONTH IN BRIEF |

|“It is wise to apply the oil of|November brought a dizzying plunge in oil prices, confirmation of a recession in Japan and distinct hints of one |

|refined politeness to the |in the euro area, and declines in the pace of manufacturing activity in America, Europe and China. Even so, the |

|mechanisms of friendship.” |month was remarkably placid on Wall Street – unlike October, we didn’t see a lot of days marked by triple-digit |

| |Dow swings. The Dow, in fact, rose 2.52% on the month; many overseas benchmarks posted nice gains as well. Losses |

|– Colette |plagued the commodities sector. The latest GDP estimates out of Washington suggested our economy was in better |

| |shape than some analysts thought.1 |

| | |

|MONTHLY TIP |DOMESTIC ECONOMIC HEALTH |

| |By the estimate of the federal government, the second and third quarter of 2014 amounted to the best six months |

|Make sure you take your 2014 |for the U.S. economy since 2003. The Commerce Department revised Q3 output up to 3.9%, complementing 4.6% growth |

|RMD in time. The deadline is |for Q2.2 |

|December 31; if you will be | |

|taking your very first RMD, it |Another key economic indicator improved further. The jobless rate had ticked down to 5.8% in October, with the U-6|

|can be delayed until April 1. |rate (encompassing part-time workers, jobseekers and those out of the job hunt) falling 0.3% to 11.5%. Labor |

|Remember that all of your IRAs |Department data showed companies adding 214,000 new hires to their payrolls in that month.3,4 |

|need to be considered when | |

|calculating the RMD. |While economists certainly found this encouraging, households weren’t feeling so upbeat. The Conference Board’s |

| |consumer confidence index fell to 88.7 from its October reading of 94.5; the University of Michigan’s consumer |

| |sentiment index did better, finishing November 1.9 points higher at 88.8.5 |

|MONTHLY RIDDLE | |

| |The Consumer Price Index was flat in October, and up just 1.7% year-over-year. Still, the tenth month of the year |

|You saw me where I never was |brought only modest gains for consumer spending (0.2%) and retail sales (0.3%). Total Black Friday sales were down|

|and where I could not be. And |11% from 2013 levels, according to National Retail Federation estimates; this could have reflected online sales |

|yet within that very place, my |growth and more stores having deep discounts on Thanksgiving Day.5,6 |

|face you often see. What am I? | |

| |Declining gas prices across the month effectively put more money in consumers’ pockets, a factor that may lead to |

| |greater personal spending for November. By December 1, AAA’s Daily Fuel Gauge Report showed regular unleaded |

|Last month’s riddle: |averaging just $2.77 a gallon.7 |

|An elephant manages to drink | |

|water from a puddle 26' away, |U.S. manufacturing activity cooled a bit in November, but our factory sector was still hotter than many others |

|but how does the elephant do |worldwide. The Institute for Supply Management’s November manufacturing PMI came in with a reading of 58.7, down |

|this with an 18' chain around |from 59.0 in October. (ISM’s service sector PMI had slipped 1.5 points to 57.1 in October.) Overall durable goods |

|his left hind leg? |orders rose 0.4% in October, but core durable orders fell 0.9%. The headline Producer Price Index was up 0.2% for |

| |October, but only 1.5% annually.5,8,9 |

| | |

|Last month’s answer: |GLOBAL ECONOMIC HEALTH |

|The chain isn’t attached to |Unexpectedly, Japan fell into a recession in Q3. Analysts surveyed by Reuters thought its economy would expand |

|anything. |2.1%; instead, there was a 1.6% contraction following a 7.3% reversal in Q2. This affirmed and underscored the |

| |Bank of Japan’s decision to ease for the foreseeable future.10 |

| | |

| |The euro area hadn’t slipped back into recession yet, but it was coming perilously close in the eyes of many |

| |economists. Its yearly inflation measured just 0.3% last month and its jobless rate was at 11.5%. European Central|

| |Bank President Mario Draghi said that ECB leaders would consider exceptional moves (such as buying sovereign debt)|

| |to ward off deflation. The Markit manufacturing PMI for the eurozone barely showed expansion for November with a |

| |50.1 mark.10,11,12 |

| | |

| |Word came that China’s economy had grown 7.3% in Q3, putting it on pace for its worst year since 1990. China’s |

| |official factory PMI came in a half-point lower in November at 50.3, and the HSBC/Markit PMI for the PRC showed no|

| |expansion for the sector at all with a reading of 50.0 that represented a 6-month low. Markit manufacturing PMIs |

| |in Indonesia and Japan also fell, but India’s rose to a 21-month high in November.12,13 |

| | |

| |WORLD MARKETS |

| |Generally speaking, November was a good month with many consequential indices advancing. Some of the gains in the |

| |Asia Pacific region: Sensex, 2.97%; KOSPI, 0.83%; Shanghai Composite, 10.85%; Nikkei 225, 6.37%; KSE 100, 2.70%. |

| |The Hang Seng was flat (-0.04% to be precise) while Australia's ASX 200 suffered a 3.86% retreat. Elsewhere in the|

| |Americas, the Bovespa had a flat month (+0.07%) while the TSX Composite rose 0.90% and the IPC All-Share lost |

| |1.86%.1 |

| | |

| |Major European indices saw the following November gains: CAC 40, 3.71%; DAX, 7.01%; IBEX, 2.80%; FTSE MIB, 1.17%; |

| |FTSE 100, 2.69%. Russia's RTS was the big November loser, retreating 10.74%.1 |

| | |

| |As for multinational and regional benchmarks, the Global Dow rose 1.72% in November, the Europe Dow 2.71% and the |

| |Dow Jones Americas 1.91%; the Asia Dow lost 0.53%. Europe’s STOXX 600 bourse advanced 3.10% for the month. The |

| |MSCI World Index gained 1.84%, but MSCI’s Emerging Markets Index lost 1.12%.1,14 |

| | |

| |COMMODITIES MARKETS |

| |On November 28, OPEC ministers made no move to reduce oil output from their respective nations. That cemented an |

| |awful monthly loss for NYMEX crude – prices fell 18.23% for November to a settlement of $66.15 a barrel. Heating |

| |oil (-12.60%) and RBOB gasoline (-12.54%) were also crushed last month. The same couldn’t be said for natural gas;|

| |it rose 5.72% in November. Cold weather was not only a boon to natgas futures, but also an aid to wheat futures: |

| |they rose 8.74% for November, standing out in a field of losses among crops. Corn did advance 0.27%, but coffee |

| |dipped 0.90%, cocoa 0.69%, cotton 5.16%, sugar 2.87% and soybeans 2.59%.15 |

| | |

| |Gold didn’t fare too badly in November, losing only 0.54% and settling at a COMEX price of $1.175.20 an ounce at |

| |month’s end. Copper fell 6.43% on the month, platinum 1.35% and silver 3.24% (it wrapped up the month at $15.49 an|

| |ounce). The U.S. Dollar Index tacked on another 1.43% to its YTD gain and ended November at 88.16.15,16 |

| | |

| |REAL ESTATE |

| |The month’s last Freddie Mac Primary Mortgage Market survey (November 26) found the average interest rate for a |

| |30-year FRM at 3.97%, down 0.01% from the October 30 survey. Rates on other types of home loans moved appreciably |

| |during the month. On November 26, the mean rates for the 15-year FRM, 5/1-year ARM and 1-year ARM were |

| |respectively at 3.17%, 3.01% and 2.44%; compare that with 3.13%, 2.94% and 2.43% on October 30.17 |

| | |

| |Home sales (new and existing) again improved to minor degree. The National Association of Realtors found resales |

| |up 1.5% in October – but most importantly, October brought the first year-over-year gain in sales (2.5%) seen in |

| |12 months. Across a year of data, distressed sales had fallen to 9% of the market from 14%. (Not all the news from|

| |NAR was good; its pending home sales index fell 1.1% for October.) New home purchases increased in October as well|

| |– the Census Bureau measured a 0.7% gain, marking a third straight month of increasing sales volume.5,18 |

| | |

| |NAR stated that the median existing-home price was $208,300 in October, down from $209,700 in September. |

| |September’s S&P/Case-Shiller Home Price Index showed only a 4.9% annualized gain (this was across the full 20-city|

| |index).5,18 |

| | |

| |As for new projects, the Census Bureau also noted a 4.8% gain in building permits in November, with the indicator |

| |reaching a 6-year peak. A drop in multi-family projects sent overall housing starts down 2.8% in October, though |

| |single-family starts rose 4.2%.19 |

| | |

| |LOOKING BACK…LOOKING FORWARD |

| |While the Russell 2000 had a flat month (actually losing 0.02% to 1,173.23), other major U.S. indices fared well |

| |in November, with the S&P 500 rising 2.45% to 2,067.56, the NASDAQ gaining 3.47% to 4,791.63 and the DJIA |

| |advancing 2.52% to 17,828.24. The CBOE VIX ended November at 13.33, sliding 4.99% for the month.1 |

| | |

| |% CHANGE |

| |Y-T-D |

| |1-YR CHG |

| |5-YR AVG |

| |10-YR AVG |

| | |

| |DJIA |

| |+7.55 |

| |+10.83 |

| |+14.58 |

| |+7.02 |

| | |

| |NASDAQ |

| |+14.73 |

| |+18.02 |

| |+24.81 |

| |+12.74 |

| | |

| |S&P 500 |

| |+11.86 |

| |+14.49 |

| |+18.03 |

| |+7.54 |

| | |

| |REAL YIELD |

| |11/28 RATE |

| |1 YR AGO |

| |5 YRS AGO |

| |10 YRS AGO |

| | |

| |10 YR TIPS |

| |0.39% |

| |0.60% |

| |1.15% |

| |1.74% |

| | |

| | |

| | |

| |Sources: online., , - 11/28/141,20,21 |

| |Indices are unmanaged, do not incur fees or expenses, and cannot be invested into directly. These returns do not |

| |include dividends. 10-year TIPS real yield = projected return at maturity given expected inflation. |

| | |

| |The fall earnings season, the waning fears about Ebola invading the U.S. and the ease with which Wall Street |

| |accepted the end of QE3 were factors in a very positive November. Will stocks continue to rally in December as |

| |energy investors wait for a point of capitulation? One view says cheap oil is good for the consumer, the broad |

| |economy and the stock market. Another view sees an extended lack of demand not only hurting energy shares, but |

| |also breeding unemployment and deflation. Eyes will also be on the Fed – as we are on the cusp of 2015, its |

| |December policy meeting might be a moment at which some clues emerge about the timing of an interest rate hike. |

| |Still, stocks don’t seem too beset by obstacles as we head toward the New Year, and with any luck, the December 31|

| |close for the S&P 500 just might be a record one. |

| | |

| |UPCOMING ECONOMIC RELEASES: Here is a roll call of the important stateside reports and releases in the year’s |

| |final month: November’s ISM services PMI, a new Federal Reserve Beige Book and the November ADP employment report |

| |(12/3), November’s Challenger job-cut report (12/4), the November jobs report from the Labor Department and |

| |October factory orders (12/5), October wholesale inventories (12/9), November retail sales and October business |

| |inventories (12/11), the preliminary December consumer sentiment index from the University of Michigan plus the |

| |November PPI (12/11), November industrial production (12/15), November housing starts and building permits |

| |(12/16), a Fed policy statement and November’s CPI (12/17), the Conference Board’s leading indicator index for |

| |November (12/18), November existing home sales (12/22), the final estimate of Q3 GDP, the final December consumer |

| |sentiment index from the University of Michigan, and November new home sales, personal spending and hard goods |

| |orders (12/23), October’s Case-Shiller home price index and 2014’s last Conference Board consumer confidence index|

| |(12/30), and then finally NAR’s report on November pending home sales (12/31). |

| |

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|Securities offered through Cetera Advisors LLC, Member FINRA/SIPC. Roche Financial and Cetera Advisors LLC, are not affiliated entities. |

| |

|This material was prepared by MarketingPro, Inc., and does not necessarily represent the views of the presenting party, nor their affiliates. This|

|information has been derived from sources believed to be accurate. MarketingPro, Inc. is not affiliated with any broker or brokerage firm that may|

|be providing this information to you. This information should not be construed as investment, tax or legal advice and may not be relied on for the|

|purpose of avoiding any Federal tax penalty. This is not a solicitation or recommendation to purchase or sell any investment or insurance product |

|or service, and should not be relied upon as such. The Dow Jones Industrial Average is a price-weighted index of 30 actively traded blue-chip |

|stocks. The NASDAQ Composite Index is an unmanaged, market-weighted index of all over-the-counter common stocks traded on the National Association|

|of Securities Dealers Automated Quotation System. The Standard & Poor's 500 (S&P 500) is an unmanaged group of securities considered to be |

|representative of the stock market in general. It is not possible to invest directly in an index. The Russell 2000 Index measures the performance |

|of the small-cap segment of the U.S. equity universe. The CBOE Volatility Index® (VIX®) is a key measure of market expectations of near-term |

|volatility conveyed by S&P 500 stock index option prices. NYSE Group, Inc. (NYSE:NYX) operates two securities exchanges: the New York Stock |

|Exchange (the “NYSE”) and NYSE Arca (formerly known as the Archipelago Exchange, or ArcaEx®, and the Pacific Exchange). NYSE Group is a leading |

|provider of securities listing, trading and market data products and services. The New York Mercantile Exchange, Inc. (NYMEX) is the world's |

|largest physical commodity futures exchange and the preeminent trading forum for energy and precious metals, with trading conducted through two |

|divisions – the NYMEX Division, home to the energy, platinum, and palladium markets, and the COMEX Division, on which all other metals trade. The |

|BSE SENSEX (Bombay Stock Exchange Sensitive Index), also-called the BSE 30 (BOMBAY STOCK EXCHANGE) or simply the SENSEX, is a free-float market |

|capitalization-weighted stock market index of 30 well-established and financially sound companies listed on the Bombay Stock Exchange (BSE). The |

|Korea Composite Stock Price Index or KOSPI is the major stock market index of South Korea, representing all common stocks traded on the Korea |

|Exchange. The SSE Composite Index is an index of all stocks (A shares and B shares) that are traded at the Shanghai Stock Exchange. Nikkei 225 |

|(Ticker: ^N225) is a stock market index for the Tokyo Stock Exchange (TSE). The Nikkei average is the most watched index of Asian stocks. Karachi |

|Stock Exchange 100 Index (KSE-100 Index) is a stock index acting as a benchmark to compare prices on the Karachi Stock Exchange (KSE) over a |

|period. The Hang Seng Index is a freefloat-adjusted market capitalization-weighted stock market index that is the main indicator of the overall |

|market performance in Hong Kong. The S&P/ASX 200 is Australia's “premier” share market index. The Bovespa Index is a gross total return index |

|weighted by traded volume & is comprised of the most liquid stocks traded on the Sao Paulo Stock Exchange. The S&P/TSX Composite Index is an index|

|of the stock (equity) prices of the largest companies on the Toronto Stock Exchange (TSX) as measured by market capitalization. The Mexican IPC |

|index (Indice de Precios y Cotizaciones) is a major stock market index which tracks the performance of leading companies listed on the Mexican |

|Stock Exchange. The CAC-40 Index is a narrow-based, modified capitalization-weighted index of 40 companies listed on the Paris Bourse. The DAX 30 |

|is a Blue Chip stock market index consisting of the 30 major German companies trading on the Frankfurt Stock Exchange. The IBEX 35 is the |

|benchmark stock market index of the Bolsa de Madrid, Spain's principal stock exchange. The FTSE MIB (Milano Italia Borsa) is the benchmark stock |

|market index for the Borsa Italiana, the Italian national stock exchange. The FTSE 100 Index is a share index of the 100 companies listed on the |

|London Stock Exchange with the highest market capitalization. The RTS Index (abbreviated: RTSI, Russian: Индекс РТС) is a free-float |

|capitalization-weighted index of 50 Russian stocks traded on the Moscow Exchange. The Global Dow is a 150-stock index of corporations from around |

|the world created by Dow Jones & Company. The Europe Dow measures the European equity markets by tracking 30 leading blue-chip companies in the |

|region. The Dow Jones Americas Index measures the Latin American equity markets by tracking 30 leading blue-chip companies in the region. The Asia|

|Dow measures the Asia equity markets by tracking 30 leading blue-chip companies in the region. The STOXX Europe 600 Index is derived from the |

|STOXX Europe Total Market Index (TMI) and is a subset of the STOXX Global 1800 Index. The MSCI World Index is a free-float weighted equity index |

|that includes developed world markets, and does not include emerging markets. The MSCI Emerging Markets Index is a float-adjusted market |

|capitalization index consisting of indices in more than 25 emerging economies. The US Dollar Index measures the performance of the U.S. dollar |

|against a basket of six currencies. Additional risks are associated with international investing, such as currency fluctuations, political and |

|economic instability and differences in accounting standards. This material represents an assessment of the market environment at a specific point|

|in time and is not intended to be a forecast of future events, or a guarantee of future results. Past performance is no guarantee of future |

|results. Investments will fluctuate and when redeemed may be worth more or less than when originally invested. All economic and performance data |

|is historical and not indicative of future results. Market indices discussed are unmanaged. Investors cannot invest in unmanaged indices. The |

|publisher is not engaged in rendering legal, accounting or other professional services. If assistance is needed, the reader is advised to engage |

|the services of a competent professional. |

| |

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