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Weekly Market Update – November 13, 2015

The Dow fell 203 points Friday on continued global growth concerns.  For the week the Dow was down 3.9% and for the year the index is now down 3.4%.

A spate of lackluster economic data took center stage Friday.  In the US, inflation data came in weaker than expected while October retail sales came in below forecasts, hinting of a slowdown in consumer spending that could depress fourth-quarter economic growth.  Despite the lack of inflation and soft consumer spending, the Fed is still expected to begin raising interest rates in December. 

In Europe, third quarter Eurozone GDP came in at .3%, slightly below expectations of .4%.  France and Germany reported in-line results while Portugal, Italy and Greece lagged.  The GDP report comes a day after European Central Bank President Mario Draghi hinted that the ECB could implement additional monetary easing measures in December, including another round of quantitative easing and an interest rate cut, given Eurozone inflation remains muted and overall economic growth tepid. 

The yield on the 10-year Treasury fell 4 basis points Friday to 2.28%, down 5 bps for the week and now up 11 bps for the year.  Trust preferred shares held steady in spite of the downturn in stocks.

Oil fell $1.01 Friday to close at $40.74 (its lowest level since late August) in part due to a report released by the International Energy Agency in which the IAE projected oil demand in 2016 to fall to 1.2 million barrels per day, well below the 1.8 million per day realized so far this year.  The report also showed that oil inventories of OPEC countries reached a record 3 billion barrels at the end of September.  In the US, oil production increased slightly last week to 9.2 million barrels a day while the number of drill rigs in operation rose (by two) for the first time in eleven weeks.  The high levels of supply, demand projections and current global economic growth concerns continue to heavily pressure the commodity.

Next week’s economic calendar highlights include October inflation and industrial production (factory output) data on Tuesday, October housing data on Wednesday and weekly jobless claims on Thursday.  Expect inflation to hold steady from September, industrial production to increase slightly from the prior reading, the housing data (housing starts and building permits) to show a decline in activity from September and weekly jobless claims to settle in the 260-270,000 range (from 276,000 this week).  The latest Fed minutes will also be released on Thursday.

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