Market Summary – February 2, 2014

The final week of February turned in relatively strong performances with equity markets in the U.S. closing at fresh all‐time highs. The rally was fairly broad based with only utilities and telecom stocks losing ground while consumer, energy and industrial names were up sharply. The strong week brought most indices into positive territory on the year. Forward and trailing P/E multiples stand at 15.8 and 17.2 respectively and both guidance and analyst estimates continue to be revised downward looking ahead.

Major geopolitical news on the week was growing tensions in Ukraine‐Russian situation. The three largest Russian natural gas recipients are Germany, Ukraine, and Turkey with many other European nations reliant on Russian energy as well – possibly unnerving markets in the short term. Bond markets remained calm with high yield and investment grade spreads declining 4 and 1 basis point to finish at 383 and 122 respectively. UST yields dropped on the week, particularly on the long end of the curve with the 10yr yield finishing down 7bps at 2.66% and the 20yr down 10bps at 3.31%.

Economic news on the week included U.S. 4Q GDP being revised down to 2.4% from the original 3.2% reading. New home sales surprised on the upside while initial jobless claims came in slightly weaker than expected. December Case/Shiller home prices data was released showing month to month home prices slowing toward year end but finished up 13% on an annual basis.

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