Weekly Newsletter 7/7/2014

Global stocks moved higher this past week in the midst of weaker economic data. A significant driver to the move in stocks this past week was the June Non-Farm Payrolls data that showed 288,000 jobs added in June. In addition, the unemployment rate moved lower to 6.1%. Over the last few years we have pointed out that while the jobs situation on the surface looks good, it is in the details that many find concern. Consider the following chart of jobs added in June by industry:

June Jobs Changes 7-7-14

Unfortunately, the above chart has more or less looked the same for some time. Additionally, the fall in the unemployment rate from 6.3% to 6.1% has had more to do with people leaving the labor force than it does with more people finding jobs. The importance of unemployment, jobs, and job quality is pinnacle to a sustaining economic recovery. In some small part (or large) the employment situation is a reason why the Fed not only continues its zero interest rate policy, but also continues to move the time frame for raising rates further into the future. The logic flow is that 70% of the US economy is consumerism which is supported by spending and if Americans’ ability to spend is constrained by lack of jobs, the economy will falter. Therefore, while the top line jobs numbers look good, it is under the surface that the Fed sees as troubling and continues to support the economy with low rates.

As always, we continue to monitor the economic data points for clues as to when and if the Fed will raise interest rates for it is interest rates that could tell the story of the sustainability of this current, nascent recovery.

Global Market Index Performance

Global Market Perf 7-7-14

Getting Technical with Market Charts

In this section we present charts of the S&P 500 Stock Index and the US Bond Market Index relative to their 50 day (blue line) and 200 day (red line) moving averages.  In addition, we have added the blue shaded area which represents the recent trading channel. The 50 and 200 day moving averages are widely followed market trend indicators that provide a general picture of the health of the broad indexes.

Chart 1 – S&P 500 Index

$SPX 7-7-14

Chart 2 – US Aggregate Bond Index

$AKG 7-7-14

Global Data Points

Global Econ 7-7-14

Securities are offered through First Allied Securities, Inc. (FASI), a registered Broker Dealer, Member FINRA/SIPC. Advisory Services offered through Lighthouse Financial Advisors, Inc., a Registered Investment Advisor dba Lighthouse Wealth Management (LWM). Lighthouse Financial Advisors, Inc. is not a subsidiary or control affiliate of FASI.

Disclaimer – Information contained herein is taken from sources believed to be reliable, but cannot be guaranteed as to its accuracy. Market opinions contained herein are intended as general observations and are not intended as specific investment advice. The Standard and Poors 500 Index is an unmanaged group of securities considered to be representative of the stock market in general. The Barclays Aggregate Bond Index represents securities that are SEC-registered, taxable, and dollar denominated. The index covers the U.S. investment-grade fixed rate bond market, with index components for government and corporate securities, mortgage pass-through securities, and asset-backed securities. Contact your investment professional to discuss suitability for your particular circumstances. This article does not constitute an offer of sales of any securities. Securities trading is speculative and involves the potential loss of investment. Past results are not necessarily indicative of future results. Lighthouse Financial Advisors, Inc., dba Lighthouse Wealth Management, is registered as an investment advisor with the SEC and only transacts business in states where it is properly registered, excluded or exempted from registration requirements. SEC registration does not constitute an endorsement of the firm by the Commission nor does it indicate that the advisor has attained a particular level of skill or ability.

About Katy Chase

Katy Chase, MBA, contributes her own perspective to the team. With previous training in Marketing and French, her perspective offers a mixture of macroeconomic, cultural, and client-focused experiences. In addition, Katy is a baker (with a specialty in chocolate), athlete, perpetual student/learner, volunteer, blogger, Nittany Lion, daughter, grand-daughter, sister, and wife.