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Weekly Advisor Analysis December 9, 2013 Winning Streak Snapped, but Stocks Finish Strong While the S&P 500 failed to extend its weekly winning streak to nine this past week, stocks bolted higher on Friday following the release of more positive U.S. economic data. Going into 2014, investors continue to debate whether or not positive economic data is in fact good for stocks considering it accompanies an increased likelihood of a tapering of asset purchases by the Federal Reserve. However, recent reports that have shown a strengthening U.S. economy are so far being received warmly by investors indicating, that once again, good news for the economy could also be good news for equity investors. The S&P 500 finished 0.04 percent lower for the week, but remains up 26.5 percent so far this year. Source: Yahoo! Finance Employment Conditions Continue Improvement The U.S. Labor Department announced last Friday that 203,000 net new jobs were created in November, besting consensus expectations for an 185,000 gain, according to Bloomberg. Furthermore, the headline unemployment number dropped to the lowest level since November 2008 and now stands at 7.0 percent, as depicted below. The report indicated broad strength across many industries, including overall factory jobs breaching the 12 million mark for the first time since 2009. Perhaps most interesting, the labor participation rate, or the percentage of the working age population that either has a job or is actively seeking employment, rose to 63 percent from last month’s 62.8 percent, which was the lowest level seen since March 1978. This should be interpreted as a positive sign for the health of the U.S. job market because despite more people entering the labor force, the unemployment rate still managed to decline from last month. Gross Domestic Product (GDP) Revised Higher The Commerce Department, who initially reported the U.S. economy grew at 2.8 percent in the third quarter, revised their data to indicate the economy grew at a much faster 3.6 percent rate. Many economists expressed skepticism the report indicates the U.S. economy has truly improved at a substantial pace; however, citing the majority of the growth was due to business inventories growing by an annualized pace of $116.5 billion, this was the most rapid acceleration witnessed since the first quarter of 1998, according to Bloomberg. An undeniably bright increase in household disposable income of 2.9 percent in the third quarter, on top of a revised 4.1 percent gain in the second quarter, gives much credence to corporations’ expectations that increased spending is on the way as households have more money to spend. Phenomenal Year for Stocks? Actually, Not Really… As we mentioned above, the S&P 500 has rallied an impressive 26.5 percent so far this year, but how does that performance rank against the historical performance? The answer is, not as great as you might think. According to J.P. Morgan, a year in which stocks rally more than 20 percent isn’t all that uncommon. In fact, 1 in every 3 calendar years since 1897 have seen equities rally by more than 20 percent. While investors have been, on average, deprived of normal market conditions since the turn of the millennium, history would show that it’s three times more likely to have equities return double-digits in a calendar year than to have single-digit gains. Should 2013 yearto-date gains hold steady, this calendar year won’t even crack the top 20 of all-time greatest years for stocks. Best regards, UDB Financial Securities offered through LPL Financial, Member FINRA/SIPC. * This newsletter was prepared by Peak Advisor Alliance. Peak Advisor Alliance is not affiliated with the named broker/dealer. * Gross Domestic Product (GDP) is the monetary value of all the finished goods and services produced within a country’s borders in a specific time period, through GDP is usually calculated on an annual basis. It includes all of private and public consumption, government outlays, investments and exports less imports that occur within a defined territory. * The Standard & Poor's 500 (S&P 500) is an unmanaged group of securities considered to be representative of the stock market in general. * Yahoo! Finance is the source for any reference to the performance of an index between two specific periods. * Opinions expressed are subject to change without notice and are not intended as investment advice or to predict future performance. * Past performance does not guarantee future results. * You cannot invest directly in an index. * Consult your financial professional before making any investment decision. Sources: http://www.cnbc.com/id/101252916 http://money.cnn.com/data/markets/sandp/ http://chart.finance.yahoo.com/z?s=%5eGSPC&t=5d&q=&l=&z=l&a=v&p=s&lang=en-US®ion=US (Chart) http://www.bloomberg.com/news/2013-12-05/economy-in-u-s-expands-at-3-6-rate-on-bigger-inventorybuild.html http://blogs.reuters.com/data-dive/files/2013/12/guw34t.gif (Chart) http://www.sfgate.com/business/bloomberg/article/Payrolls-Rise-More-Than-Forecast-as-U-S-Jobless5041113.php http://dattaman.com/wp-content/uploads/2013/06/Unemployment-Rate3.jpg (Chart) http://www.valuewalk.com/2013/11/sp-500-up-26-percent/ http://ify.valuewalk.com/wp-content/uploads/2013/11/annual-price-performance-JPM-113.png (Chart)