MARKET-VIEW 3RD QUARTER 2013 – October 2013 Newsletter

While fears over Federal Reserve (the Fed) tapering and some uneven economic data hurt stocks earlier in the quarter, September was a surprisingly strong month for equities. The Fed’s decision to keep its quantitative easing program going, combined with moderating tensions in Syria, helped stocks to easily outperform bonds for the third quarter.  Three other market themes emerged during 3rd Quarter 2013:  cyclical stocks outperformed defensive stocks, the equity market rally widened its focus to include international stocks and emerging markets, and corporate and municipal bonds outperformed Treasuries.  Despite a mediocre jobs market, retailers and other consumer discretionary stocks continued to outperform. US Economic Outlook As we enter the fourth quarter, the debate over funding for the federal government and the need to increase the debt ceiling are leading to risks in US credibility on the fiscal front.  Just two years after Congress led America to a fiscal cliff that prompted Standard & Poor to downgrade the United States’ long-term credit rating; we now appear poised to repeat the same fiasco. Despite the political dysfunction in Washington, the private sector Read on! →