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Weekly Advisor Analysis December 30, 2013 Stocks Sprint Toward Finish Line Holiday cheer spread through Wall Street last week as investors bid up prices of equities 1.27 percent, as measured by the S&P 500, pushing the yearly performance of the index above 29 percent for calendar year 2013. With only two trading days remaining in the year, stocks are poised to register the largest calendar year advance since 1997. Stocks marched forward on positive readings concerning the U.S. consumer and largely ignored the fact the yield on the 10year U.S. Treasury bond breached 3 percent. Source: Yahoo! Finance Consumer Spending Rises by Most in 5 Months The Commerce Department announced last Monday consumer spending advanced in November at the strongest pace seen since June, giving investors more reason to believe the U.S. economy is strengthening. Consumer spending officially rose by 0.5 percent in November and October’s reading was revised higher to 0.4 percent growth. Also, overall consumer income rose by 0.2 percent in November as wages and salaries grew 0.4 percent, echoing the positive readings on the jobs market we’ve seen over the last several months. Consumers Feeling Better, Too As one could probably surmise from the data above, consumers are reportedly feeling more confident as evidenced by the most recent consumer sentiment index compiled by the University of Michigan. The official reading showed consumer sentiment leaping to 82.5 in December from 75.1 in November. This survey is leading many investors to believe consumer spending habits witnessed in November are likely to carry over, and even potentially accelerate, into December. The University of Michigan Consumer Sentiment Index (MSCI) is a survey of consumer confidence conducted by the University of Michigan. The Michigan Consumer Sentiment Index (MCSI) uses telephone surveys to gather information on consumer expectations regarding the overall economy. Bulls Yawn as Interest Rates Move Higher The 10-year Treasury breached 3 percent last week, but equity investors seemed disinterested. A key concern of a reversal in the Federal Reserve’s bond purchase program is it could result in increased borrowing costs. Most market experts would agree low interest rates have been at least partially instrumental to the revival of the U.S. economy. Despite potentially higher interest rates looming in the future, sectors of the economy, which are traditionally sensitive to interest rates such as the housing market, are still widely expected to continue improving next year. For example, experts, such as forecasting firm IHS Global and Zelman & Associates, along with the chief economist at real estate website Trulia.com, are painting rosy pictures for the U.S. housing market for both existing homes and new construction, according to a recent article published by The Wall Street Journal. While investors can only educationally speculate on what may actually transpire next year, one thing does seem to be abundantly clear: the stock market is riding a forceful wave of optimism out of 2013 and into the new year. Source: CNN Money Best regards, UDB Financial Securities offered through LPL Financial, Member FINRA/SIPC. * Government bonds and Treasury Bills are guaranteed by the U.S. government as to the timely payment of principal and interest and, if held to maturity, offer a fixed rate of return and fixed principal value. However, the value of fund shares is not guaranteed and will fluctuate. * This newsletter was prepared by Peak Advisor Alliance. Peak Advisor Alliance is not affiliated with the named broker/dealer. * The Standard & Poor's 500 (S&P 500) is an unmanaged group of securities considered to be representative of the stock market in general. * The 10-year Treasury Note represents debt owed by the United States Treasury to the public. Since the U.S. Government is seen as a risk-free borrower, investors use the 10-year Treasury Note as a benchmark for the long-term bond market. * 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/101298678 http://chart.finance.yahoo.com/z?s=%5eGSPC&t=1y&q=l&l=on&z=l&a=v&p=s&lang=enUS®ion=US (Chart) http://www.marketwatch.com/story/stocks-set-to-end-2013-on-a-high-note-2013-12-29?pagenumber=1 http://www.latimes.com/business/money/la-fi-mo-consumer-spending-november20131223,0,3384920.story#axzz2osjQYzra http://research.stlouisfed.org/fredgraph.png?g=jLQ (Chart) http://www.bloomberg.com/news/2013-12-23/consumer-sentiment-in-u-s-rose-to-five-month-high-indecember.html http://www.cmegroup.com/education/events/econoday/CSENT456243_chart1.gif (Chart) http://www.cnbc.com/id/101297564 http://i2.cdn.turner.com/money/dam/assets/131226115204-10-year-620xa.png (Chart) http://online.wsj.com/news/articles/SB10001424052702304773104579266230593471534 (or go to http://peakclassic.peakadvisoralliance.com/app/webroot/custom/editor/12-30-13_WSJHousing_Outlook_for_2014_Steadier_Sturdier.pdf)