Weekly Market & Economic Update 3/16/2015

Global stocks markets moved lower this past week as the US Dollar continues to climb versus global currencies. The strength in the US dollar is becoming a headwind and is now showing up in corporate earnings reports. The US dollar began what has now become a 20% move higher back in July 2014. Many multinational US companies can withstand reasonable moves in the dollar but the sustained rise of 20% may just be the beginning of a stronger dollar. The few reasons we may see a long stretch of dollar strength is that global central banks are cutting interestrates, as well, Europe and Japan are still devaluing their currencies at rapid paces versus the dollar.

The newfound strength in the dollar has translated in share price pressure in large, US-based multinational companies. It is important to remember that a stronger dollar makes US goods more expensive overseas. Conversely, a stronger dollar makes foreign goods cheaper to Americans. On the flip side, smaller US companies and companies that sell mostly into the US economy will likely have an advantage by a stronger dollar.

On the global economic data front we had mixed signals in the US with the National Federation of Independent Businesses (NFIB) Optimism Index climbing higher yet retail sales continuing its multi-month slide lower. Overseas, China reported strong exports for February and significantly lower imports which are both positive for its economy.

We will continue to monitor the global currency war and the global macroeconomic picture for stresses and opportunities.

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

$SPX 3-16

Chart 2 – Aggregate Bond

$AKG 3-16

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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.