Weekly Economic & Market Update 5/18/2015

Global stocks moved higher this past week on mixed economic data. One of the more notable points from last week was the Chinese effort to restructure some of its local government debt as well as its efforts to stimulate Chinese banks to lend more. Part of the effort is for commercial banks in China to use local-government bailout bonds that they purchase as collateral for low-rate loans from the Chinese central bank. This type of stimulus effort is aimed at helping banks to create new loans. China has been struggling with its own economic slowdown and is now resorting to more unconventional methods to support its economy outside of its blatant currency interventions.

Also overseas, Europe reported Gross Domestic Product (GDP) that came in at a 1% year-over-year increase. The EuroArea has been showing a similar year-on-year growth rate for the last 18 months. While a positive growth rate is a good thing, this level of growth is not only too slow in normal times, but also worse considering the extraordinary efforts in place to create growth.

Here in the US the data was mixed with the National Federation of Independent Businesses (NFIB) Business Optimism Index moving up to 96.9 for April versus 95.2 in March. This index gives a very quick glimpse of the attitude of small business owners in America. While not at all-time highs, it has been moving upward. Conversely, retail sales for the US continue to come in lower than expectation and are giving some investors pause as consumption makes up 70% of US economic activity.

As always we continue to watch both market and economic fundamentals to identify market opportunities and risks.

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 5-18

Chart 2 – Aggregate Bond

$AKG 5-18

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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.