Weekly Economic & Market Update 5/26/2015

Week in review

Global stocks moved up through this past week and moved sharply higher on Wednesday with the release of the Federal Reserve’s Open Market Committee’s (FOMC) minutes release. The highlights from the FOMC minutes that led the market higher were:

• FED officials see a June interest rate hike as unlikely
• FED gave a number of reasons why the weakness in the first quarter of 2015 was due to ‘transitory’ factors

The above two points alone were enough for the equity markets to jump higher. Also within the release there were some conflicting comments such as:

• FED officials did not rule out the potential for an interest rate rise in June
• FED officials also admitted to the potential for an increase in market volatility after liftoff of rate hikes

The conflicted FED release gave the market just enough encouragement and caution. The FED’s view of the economic headwinds as transitory continues to be the justification for weak economic performance. On some level these transitory factors do truly impact economic performance but transitory issues are mostly ever present.

Overseas, economic data releases were on the light side. The most notable release was the .6% increase year-over-year in EuroArea CPI. The positive number was welcomed but still well under target of 2-2.5%.

Overall global markets are still welcoming the economic stimulus from China, Europe, Japan and the US. For now, foreign markets have the tail wind as the dollar is being allowed to rise or stay elevated versus foreign currencies.

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 5-26

Chart 2 – Aggregate Bond

$AKG 5-26

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.