Weekly Economic & Market Update 6/8/2015

Global stocks moved lower this past week on a large amount of economic data releases. As has been the case for the last few years, economic data points continue to be a focal point for investors. The data points themselves are not so much the focal point but how those data points will impact central bank economic accommodation. Here in the US the most significant data point released last week was the non-farm payrolls report that showed the US created 280k jobs on a seasonally adjusted basis in May which is 20k above the 2014 average of 260k. The 280k number was enough to give some investors worry that an interest rate hike is not too far off. But, as we have said the FED also peaks at the quality of jobs in the number and that is still lacking.

Additionally, here in the US, the Institute for Supply Management (ISM) released its monthly reports on the state of economic activity. The ISM manufacturing Index for May came in slightly higher than the previous month at 52.8 versus the previous of 51.5. And, the ISM non-manufacturing Index came in at 55.7 for May versus 57.8 in April. Since the US economy is primarily driven by consumerism versus manufacturing we tend to look at both with a heavier eye to non-manufacturing. Below is a graph of both ISM indexes and the S&P 500.

ISM Manuf

You will note that since the bottom of the recession in early 2009 the stock market has climbed to all-time highs while the ISM indexes of economic activity rebounded and have plateaued. In our view, economic activity seems to be relatively stable although subpar and well below where it needs to be to maintain the level of the stock market. But, the economic stimulus from global central banks has helped to gird the markets. Hence, the laser focus of investors on every word and move from the western central banks.

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 6-8

Chart 2 – Aggregate Bond

$AKG 6-8

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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.