Weekly Newsletter 9/22/2014

On the whole global markets enjoyed a solid week after the US Federal Reserve (FED) reassured investors that although it will be stopping additions to the economic punch bowl, it will not be draining it anytime soon.  The FED stated that it is planning to bring the QE3 bond buying program to an end next month.  Additionally, the FED reassured that although it will be stopping new purchases, it will not be draining prior bond purchases out of the system. Further, the Fed reassured that interest rates will continue to be held in the zero bound range for a ‘considerable’ time beyond the end of bond purchases.

Outside of the Fed’s statement global economic indicators were mixed with a slight tilt to the negative side.  Here in the US we saw mixed results from the regional Federal Reserve bank manufacturing indexes with the Philly Fed index sinking and the NY Fed index rising.  On the housing front we saw a bump up in mortgage applications as reported by the Mortgage Bankers Association yet housing starts and building permits lagged.

Overseas, Europe continues its struggles as the August Euro Area Consumer Price Index (CPI) and UK CPI both came in disappointingly lower than expected.  Similar to the US, Europe is looking to move the CPI needle to above 2% annualized.  In other words the European Central Bank and the Bank of England want inflation higher.

It is our assessment that Europe is desperate to find a way to legally stimulate its economy with its own version of bond purchases.  If Europe finds a way to stimulate its economy, it could provide a global tail wind to stocks in the short-term.

Global Market Index Performance

Global Market Perf 9-22-14

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 9-22-14

Chart 2 – US Aggregate Bond Index

$AKG 9-22-14

Global Data Points

Econ Data Points 9-22-14

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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.