Weekly Market & Economic Update 2/23/2015

Global markets jumped up this past week primarily driven by the release of the US Federal Reserve (FED) Federal Open Market Committee (FOMC) meeting minutes. The FOMC minutes gave global markets some reassurance that interest rates will continue to stay in the lower bound. The highlights of the FOMC minutes that led markets to see the minutes as dovish were:

  • Many FED officials were inclined to stay at zero (interest rates) longer
  • Officials say continued tepid wage growth could restrain spending
  • Expectation that continued dollar strength could hurt exports
  • FED officials saw risks if foreign weakness worsened

There was more focus on international markets in this FOMC statement than is typical. Very simply, it appears that the FED is concerned of the impact international markets could have on the FED’s ability to take actions. Declining oil prices have put downward pressure on prices which, remember, the FED is desperate to move up. Additionally, the large number of countries lowering interest rates due to weak economies is going to make it hard for the FED to finally start raising rates.

Overseas this past week, Japan reported a better than expected preliminary 4th quarter 2014 Gross Domestic Product. Additionally, Japan reported declining imports and increasing exports which are key to its economy picking up. The Euro Area economy continues to struggle; however, the Euro Area economy did report a pick-up in economic sentiment and manufacturing.

As always, we continue to monitor global markets looking for opportunities and/or stresses.

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.

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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 Henry Becker

Henry L. Becker, Jr., CFP® has 15 years of experience in the financial services and investment advisory business. Henry is the Director of Research and Investment Strategy for Lighthouse Wealth Management. In addition, Henry is a world traveler (23 countries and counting), blogger, Hemingway reader, historian, Austrian economist, Roman history enthusiast, mountain biker, and skier.