Weekly Economic & Market Update 8/10/2015

Week in Review

US stocks moved lower this past week on continued, overarching uncertainty over what the US Federal Reserve may or may not do with interest rates. Although US corporate earnings releases have been good for the most part, the uncertainty over the cost of money (interest rates) is tempering investors’ appetites to add risk. Additionally, it is summertime after all and that means investing volume is low which leads to market sensitivity both to the upside and downside.

Overseas, China continues to struggle to contain its stock market selloff. Over the last few months, China has gone to extraordinary lengths to control the slide in its stock market. For a few years now, Chinese economic activity has been waning while the Chinese central planners have tried to convert the export economy into a consumer-driven economy. Part of that plan has been to boost investor activity in stocks. While they were successful in getting more investors in their market, large drivers have been new investors and heavy use of margin investing. The combination of inexperienced investors and margin will make for sharp moves in markets.

In Europe, stocks have hit a rough patch as Germany, the European economic lynchpin, appears to be slowing. As we have seen in the last few years, the European economy is still looking for broad footing and appears to be getting such with the decline in the Euro currency versus other major currencies. Typically, economic activity takes six months to begin reacting to economic stimulus. Therefore, a positive turn in the European economy could be in the near future should oil prices stay down and if their currency stays lower.

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 8.10.15

 

 

 

 

 

 

 

 

Chart 2 – Aggregate Bonds

AKG 8.10.15

 

 

 

 

 

 

 

 

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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.