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Jim: Hi everyone today is Wednesday, January 4, 2017 and this is our midweek, market update call, brought to you each Wednesday to bring you observations and decisions we are making in our investment thinking.

Today’s comments cover financial news items as well as a review of our indicators that help us provide guidance for our discretionary portfolios.

But first here are some thoughts from Bernice Murff on Tax Preparation. Bernie, what’s on your mind this Wednesday?

Bernie: Thank you, Jim.

Happy New Year, as with each New Year we need to discuss tax preparation. Our first step in the process is to make sure that we have updated information for your CPA on file. I know that most of you have used the same CPA for years, if for some reason something has changed, please make sure you give us a call to update or confirm our records.

I’ll cover dates next week on when to start expecting tax mailings from the firm.

As always we are here to help, and will work with you throughout the tax season and assist in any way possible.

I’ll now turn the call over to Jim for his overview of our market comments and observations.

Jim: Thank you Bernie!

Some of you may remember from years past that in the first week of the New Year we provide a review of economic and investment forecasting made by different investment firms the 12 months prior.We started this practice almost 10 years ago at Wells Fargo.It has become a popular reflection and helps prove our point that forecasting is not just difficult but risky.It also helps underscore the habits of investors to keep going back to a well that was dry or had the wrong kind of water to begin with when they rely on forecasting that is unsuccessful.

We originally thought we’d do that review in today’s call, but we don’t have all the approvals in place to do so, we thought we would have them this morning, but we don’t so we are going to push that discussion off to next Wednesday when we certainly expect to have those approvals in place.

But I do have some comments on some other business and finance news before I go over our technical attributes.

• It’s with great interest that I read the Financial Times story this morning on issuing 50 year Euro bonds out of France.This makes a lot of sense from a cost management decision by the French.Interest rates are historically low, so financing government operations at these levels is extremely attractive.The longest US bond is the 30 year maturity and it used to be the bellwether instrument, the finance metric used to base rates for mortgages and other borrowing activities.In recent years, in the US, that bellwether moniker has shifted to the 10 year treasury, which is used more often than any other benchmark besides the fed funds rate.If France does tap a 50 year bond for issuance, by the way, it will shadow in time the 100 year bonds offered last year by Belgium and Ireland.
• Multiple sources this morning reported that Ford has cancelled plans for a $1.6bn auto plant in Mexico and vowed to make future electric and self-driving cars in Michigan.This all follows threats from Donald Trump to impose punitive tariffs over its plans to shift manufacturing south of the border.Let’s see if this trend continues, perhaps this is a very desired outcome.
• The Chicago Tribune led this morning with the MacDonald’s story in Rome.They have opened a restaurant in a building owned by the Vatican for a cool $31,000 per month.Housed also in the building above the restaurant are apartments, many rented by Vatican cardinals and other church members.Unlike 85% of all its restaurants, there is no franchise owner, MacDonald’s the parent company owns this one.The choice of MacDonald’s in that space has created a stir in that the decision flies in the face of a Pope whose mission for the Catholic religion is a “poor church for the poor.”It’s not known if the Pope, who drives a Ford Focus, will be using the drive in at MacDonald’s to pick up a new product that is featured at this location, the “Sweety.”That’s the new menu item—available only in Italy—with a hamburger whose bun is coated, that’s right, with Nutella.

Our indicators? The attributes we follow continue to act favorably. The large groups** of stocks we follow,

• the 2000+ on the New York Stock Exchange
• the almost 2500 in the Over-the-Counter Market and
• the combined group of those two – a select group of almost 3000 found in both of those markets that have options that trade with the stocks.

Remember last week we commented on the New York Stock Exchange bullish percent, an indicator that measures the percentage of stocks whose most recent signal is a buy signal.That chart is still poised to break its position in a bullish action, but has not happened yet.

Asset Class Rankings? It’s still a close race with little difference from last week: The top three are Domestic Equities, Commodities, and then International equities. The last three classes ranked are fixed income, cash and currencies respectively.

Sector Rankings?Continue to be Oil Exploration, Oil Service, Computers and Waste Management.

Finally, Interest Rates?The 13 week unchanged from last week, pushing on 50 basis points, one half of one percent. The other three we follow, the 30-year, the 5-year and the 10-year bellwether we mentioned earlier, have each pulled back, their yields have pulled back since last Wednesday.

**The [New York Stock Exchange] [Over-the-Counter Market] BULLISH PERCENT measures the % number of stock price charts whose most recent signal has been a BUY signal. If that % is increasing or decreasing, it may be helpful in making investment decisions to buy, sell or hold.

Opinions expressed are not necessarily those of Raymond James & Associates. The author's opinions are subject to change without notice. Information contained was received from sources believed to be reliable, but accuracy is not guaranteed. Past performance is not indicative of future results. Investing always involves risk and you may incur a profit or loss. No investment strategy can guarantee success. There is no assurance these trends will continue or that forecasts mentioned will occur.

Information provided is general in nature, and is not a complete statement of all information necessary for making an investment decision, and is not a recommendation or a solicitation to buy or sell any security.

There is an inverse relationship between interest rate moments and bond prices. Generally, when interest rates rise, bond prices fall and when interest rates fall, bond prices rise. One basis point is equal to 1/100^th of 1%, or 0.01% (0.0001).

Commodities are generally considered speculative because of the significant potential for investment loss. U.S. Treasury securities are guaranteed by the U.S. government and, if held to maturity, offer a fixed rate of return and guaranteed principal value.

Investing in the energy sector involves special risks, including the potential adverse effects of state and federal regulation and may not be suitable for all investors.

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