Our weekly Down & Dirty on the events in the global markets & economy...

1. Disclosures: The information provided in this paper is for general informational purposes only and should not be considered an individualized
recommendation of any particular security, strategy or investment product, and should not be construed as investment, legal or tax advice. Capital
Investment Advisory Services, LLC makes no warranties with regard to the information or results obtained by third parties and its use and disclaim any
liability arising out of or reliance on the information. This information is subject to change and, although based on information that Capital Investment
Advisory Services, LLC considers reliable, it is not guaranteed as to accuracy or completeness. Source information is obtained from independent financial
data suppliers. For investment related terms definitions, please visit: www.investopedia.com Past performance is no guarantee of future results.
Additional information about CIAS and its Form ADV Part 2A are available on the SEC’s website at www.adviserinfo.sec.gov Advisory services through
Capital Investment Advisory Services, LLC Securities may be offered through Capital Investment Group, Inc. Member FINRA/SIPC
Both firms located at 100 E. Six Forks Rd. Suite 200, Raleigh, NC 27609 919-8931-2370
Market Down & Dirty
Last Week’s Economic/Market Summary – October 10, 2016
Data
 U.S. equity benchmarks showed broad moves to the downside on the week.1
o S&P 500 subsectors were all negative on the week with the exception of Financials as the yield
curve moving higher seems to boost the sector.
 Utilities continued its downward slide as it finished -3.82% on the week.1
o The CBOE Volatility Index (VIX) finished slightly higher at 13.48 after a 5% rise on Friday.1
 The Fixed Income market saw US Treasury yields move notably higher on the week.1
o We believe this was as a direct result of the rising expectation for a Fed rate hike in December as
well as selling by institutions that had large speculative interest in longer duration bonds.
o Global yields were also up on the week, especially in Europe.1
 Commodities as an aggregate asset class moved higher on the week, led by WTI Crude oil.1
o WTI Crude Oil ended the week higher as a continuation of the OPEC agreement to limit member
country’s daily output.1
o Gold moved lower by over 4.7% while the US Dollar showed notable strength.1
 In our opinion, U.S. economic data was mixed on the week.
o An early indicator on the September economy was positive as vehicle sales surged 4.7%.1
o ISM’s manufacturing index increased a better than expected 2 points to 51.5.1
o The consumer comfort index continued to trend below other readings relating to consumers.1
o The September employment report came in at the low end of +156k jobs.1
 An index of equities outside the U.S. (MSCI EAFE) and Emerging Markets both outperformed the
domestic indices on the week.1
1
Source: Bloomberg – 10/7/2016

2. Disclosures: The information provided in this paper is for general informational purposes only and should not be considered an individualized
recommendation of any particular security, strategy or investment product, and should not be construed as investment, legal or tax advice. Capital
Investment Advisory Services, LLC makes no warranties with regard to the information or results obtained by third parties and its use and disclaim any
liability arising out of or reliance on the information. This information is subject to change and, although based on information that Capital Investment
Advisory Services, LLC considers reliable, it is not guaranteed as to accuracy or completeness. Source information is obtained from independent financial
data suppliers. For investment related terms definitions, please visit: www.investopedia.com Past performance is no guarantee of future results.
Additional information about CIAS and its Form ADV Part 2A are available on the SEC’s website at www.adviserinfo.sec.gov Advisory services through
Capital Investment Advisory Services, LLC Securities may be offered through Capital Investment Group, Inc. Member FINRA/SIPC
Both firms located at 100 E. Six Forks Rd. Suite 200, Raleigh, NC 27609 919-8931-2370
Conclusion
 U.S. equities saw weakness across the major indices last week.2
o Dollar strength as a result of increasing Fed fund futures’ bets for a December hike was the
primary theme last week despite what ended up being the release of a mediocre U.S.
September employment number on Friday.2
o As discussed last week, this type of market environment continues to expose the small cap
Russell 2000 index to more vulnerability than the broader markets.2
 Major, developed country global sovereign bond yields rose on the week.2
o In the US, we believe this to be a result of a large amount of speculative interest in long maturity
US bonds by institutions/traders being sold off and not a result of an increase on long term
growth or inflation expectations.
o Euro-zone bond yields also rose notably higher last week as rumors emerged that the European
Central Bank was planning a future “tapering” of its stimulus program.2
 We believe this to be nothing more than rumors as inflation remains extremely low
amidst weak economic conditions across the euro-zone.
 In our opinion it could simply be European Central Banker’s trying to “shake out”
speculators’ combined interest in trading long term gov’t bond futures.
o In our opinion, Asian yields rose for different reasons as recent strength in the Chinese economy
could be starting to push yields in peripheral country’s debt higher from historically low levels.
 We believe if this dynamic continues, it could carry over into the area’s equity markets.
 While we believe the recent US Dollar strength has served as a major reason for recent weakness in
both gold and bonds, the real issue surrounding such price action has been simply over-bought positions
by institutions.
o Until recent weakness occurred in both government bonds and gold, net speculative long
interest in the derivative market was at or near all-time highs in both markets.2
o In our opinion, the recent correction is entirely normal and far more likely the product of
decreased speculative long interest than a fundamental change in the dynamic that supported
both asset classes to the upside earlier in the year.
 Interesting to note is that while many asset classes have shown weakness to the recent US Dollar
strength, Emerging Market bonds and equities, which have in the past reacted very negatively to US
Dollar strength, were fairly strong on the week.2
 As we go into 3rd
quarter corporate earnings season in the U.S., analysts are collectively calling for what
would be a sixth consecutive quarterly decline in corporate profits.2
 While the Fed Funds derivative market points to a 60% chance of the Fed raising rates in December2
, our
analysis remains focused on the trajectory of monetary tightening.
o In our opinion, data continues to point to a shorter and shallower tightening cycle when
compared to past Fed tightening cycles.
Ryan A. Mumy, CFP®, AIF®
Chief Investment Officer
Contact: 828/855-9400 or info@CIASonline.com
2
Source: Bloomberg – 10/7/2016