MARKET WEEK: FEBRUARY 3, 2014

The Markets
It's a small, small world: Despite various attempts at propping up local currencies, emerging
markets continued to suffer from concerns that 1) assets being moved to stronger currencies
could undermine already fragile economies, and 2) a slowdown in Chinese manufacturing could
reduce demand for commodities, exports of which are crucial to many emerging-market
countries. Fueled by additional Fed tapering, risk aversion also spread to markets in developed
countries, hurting large caps that derive a large portion of their revenues overseas. The Dow's
losses gave the index its worst January since 2009. Traditional safe-haven refuges such as U.S.
Treasuries continued to benefit from the turmoil.

Market/Index 2013 Close

DJIA

16576.66

Prior Week

15879.11

As of 1/31

15698.85

Weekly Change

-1.14% -5.30%

Nasdaq

4176.59

4128.17

4103.88

-.59% -1.74%

S&P 500

1848.36

1790.29

1782.59

-.43% -3.56%

Russell 2000 1163.64

1144.13

1130.88

-1.16% -2.82%

Global Dow

2484.10

2422.47

2389.81

-1.35% -3.80%

Fed. Funds

.25% .25% .25% 0 bps 0 bps

10-year Treasuries

YTD Change

3.04% 2.75% 2.67% -8 bps -37 bps

Chart reflects price changes, not total return. Because it does not include dividends or splits, it
should not be used to benchmark performance of specific investments.

Last Week's Headlines

For the second month in a row, the Federal Reserve's monetary policy committee will cut
$10 billion a month from its bond purchases. That will leave the total at $65 billion a month
instead of the $85 billion it had been buying as recently as December.


Some emerging-market countries whose currencies have been hurt in recent months
attempted to fight back. Turkey hiked its key interest rate from 7.5% to 12% to try to halt a
decline in the country's lira, while South Africa's central bank raised its interest rate to 5.5% and
India's repo rate went to 8% from 7.75%. The moves came in the wake of Brazil's decision to
raise its key interest rate by a half-point to 10.5% and Venezuela's recent attempt to impose
currency controls indirectly by limiting the amount of airline tickets that can be exchanged for
U.S. dollars.

The U.S. economy expanded at an annualized rate of 3.2% during the fourth quarter of
2013. Though that was somewhat less than Q3's annualized 4.1% growth, the Bureau of
Economic Analysis said the 3.7% growth during 2013's second half was stronger than the 1.8%
expansion during the first six months. The growth was led by consumer spending, exports, and
business spending on capital goods.

Sales of new homes dropped 7% in December. However, the Department of Commerce

said the figure is still 4.5% ahead of the previous December, and sales for all of 2013 were
16.4% higher than in 2012. Meanwhile, home prices in the cities covered by the S&P/CaseShiller 20-City Composite Index were up 13.7% year-over-year in November. Though the 0.1%
drop was the first monthly decline in nine months, it represented the best November since 2005.

Durable goods orders fell 4.3% in December, according to the Commerce Department;
that's the second decline in the last three months. Aside from the volatile transportation sector,
new orders for U.S. manufactured goods fell 1.6%, and business spending on equipment was
down 5% for the month.

The Bureau of Economic Analysis said personal incomes were basically flat in
December, though after adjusting for inflation, they were down 0.2% for the month. Meanwhile,
holiday spending helped push consumer spending up 0.4%, cutting the personal savings rate to
3.9% from November's 4.3%.

Eye on the Week Ahead

In addition to the ongoing focus on emerging markets and earnings reports, Friday's
unemployment numbers will be of interest. And in light of currency concerns around the world,
the European Central Bank's announcement on Thursday could receive extra attention.

Data sources: Economic: Based on data from U.S. Bureau of Labor Statistics (unemployment,
inflation); U.S. Department of Commerce (GDP, corporate profits, retail sales, housing);
S&P/Case-Shiller 20-City Composite Index (home prices); Institute for Supply Management
(manufacturing/services). Performance: Based on data reported in WSJ Market Data Center

(indexes); U.S. Treasury (Treasury yields); U.S. Energy Information

Administration/Bloomberg.com Market Data (oil spot price, WTI Cushing, OK);
www.goldprice.org (spot gold/silver); Oanda/FX Street (currency exchange rates). All
information is based on sources deemed reliable, but no warranty or guarantee is made as to its
accuracy or completeness. Neither the information nor any opinion expressed herein constitutes
a solicitation for the purchase or sale of any securities, and should not be relied on as financial
advice. Past performance is no guarantee of future results.
The Dow Jones Industrial Average (DJIA) is a price-weighted index composed of 30 widely
traded blue-chip U.S. common stocks. The S&P 500 is a market-cap weighted index composed
of the common stocks of 500 leading companies in leading industries of the U.S. economy. The
NASDAQ Composite Index is a market-value weighted index of all common stocks listed on the
NASDAQ stock exchange. The Russell 2000 is a market-cap weighted index composed of
2,000 U.S. small-cap common stocks. The Global Dow is an equally weighted index of 150
widely traded blue-chip common stocks worldwide. Market indices listed are unmanaged and
are not available for direct investment.