Weekly Economic & Market Update 5/4/2015

Global stocks drifted lower this past week on mixed economic data that tilted toward the negative side. Here in the US, both the Richmond and Dallas Federal Reserve Bank’s Manufacturing Indexes dropped for the month of April. Coupled with tepid homes sales data it would appear that investors are starting to wonder if the items holding the economy back are ‘transitory’ or structural.

Overseas in Europe, the economic environment is still under pressure with private loan creation and economic sentiment readings coming in weaker than expected. The Japanese economy continues to have a wind at its back with low oil prices. Since the nuclear reactor disaster in 2013, Japan has had to import virtually all of its energy needs which led to high levels of personal consumption on energy. With oil prices down, consumers in Japan are one of the largest benefactors as their households have more discretionary spending.

The 30,000 foot view of the global macro environment is still best viewed as tepid to weak global economic growth supported by central bank accommodation through zero interest rates and extraordinary sovereign bond purchases. As we have seen over the last few years, the disconnect between the economy and the investing markets can exist. Further, that disconnect can last for extended periods. But, that does not mean investors would be asleep at the wheel. In both 2000 and 2008 we saw periods where reality and expectations got stretched and markets corrected. We are not calling for a correction merely pointing out that history shows that markets and economies can stay out of synch for a while. The key for investors is to maintain attention to market fundamentals and technicals. As always, we continue to watch both.

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 5-4

Chart 2 – Aggregate Bond

$AKG 5-4

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.