Weekly Economic & Market Update 8/31/2015

Week in Review

Global markets put in a rocky week that ultimately ended positive as investors reacted to mixed economic data points, Chinese market interventions, and FED rate hike sound bites. This past week the US Bureau of Economic Analysis (BEA) released their preliminary estimates for Q2 Gross Domestic Product, which came in at an increase of 3.7% on an annual basis. Investors looked at this positively but also kept their enthusiasm in check as an accelerating economy also means we get closer to a rate hike.

Additionally, in the US, we saw the release of Durable Goods Orders from the US census Bureau that came in 2% higher in July. However, Durable Goods Orders ex transportation came in at just .6% higher in July. While on the surface the number in Durable Goods is positive, we tend to look at year-over-year nondefense Durable Goods Orders ex Transports (Core CAPEX) three-month averages. By looking at the year-over-year three-month average of Core CAPEX, as well as the year-over-year three-month average of the S&P 500, we see a smoother path that removes some of the short-term noise. The result is a longer–term trend line in both the core US economy and the S&P 500. See chart below.

Core CAPEX 8.31.15

Many institutional investors use the Core CAPEX chart above as a gauge of the ‘Core’ performance of the US economy. Hence, the tepid investor reaction to what looked like a good durable orders report. We continue to be cautiously optimistic on the markets but continue to watch China, the US consumer and investor sentiment closely.

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 8.31.15

Chart 2 – Aggregate Bonds

AKG 8.31.15

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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.