Weekly Newsletter 10/27/2014

Global stock markets enjoyed a strong rally last week on the back of very little economic data releases. While there was little economic data there was important, market-relevant economic talk. Of note was the increase in talks of currency wars last week. Consider the following Bloomberg headlines from last week alone.

Currency Wars Evolve With Goal of Avoiding Deflation
Slower Australian Inflation Signals RBA to Keep Record-Low Rates
SNB Ready to Take Further Measures If Needed, Zurbruegg Says
ECB Said to Expand Bond Purchases

All of the above headlines were from last Tuesday and in our opinion had a significant impact on changing the trajectory of the market. To be clear, a currency war is where countries engage in competitive devaluations of currencies in an effort to boost exports or export deflation to other countries. Since the financial crisis in 2008, the world has been wrapped in a round robin currency war where particular countries have taken a more pronounced role at one time or another. The bottom line is that the currency war and low interest rates have been a boost, thus far, to global stocks and talk of the currency war last week seems to have had some impact. Over the medium to long-term currency wars are dangerous and historically have led to bad outcomes.

We continue to monitor global economics and markets to find signs of stress that might show that the economic patches of the last few years are losing potency. In the meantime we remain cautiously optimistic.

Global Market Index Performance

Global Market 10-27

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 10-27

Chart 2 – US Aggregate Bond Index

$AKG 10-27

Global Data Points

Econ Data 10-27

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.