Weekly Economic & Market Update 9/28/2015

Week in Review

Global stocks lost ground this past week across the US and foreign markets. This week’s missive focuses on two important charts that help to understand the back drop of the global macroeconomic scene.

The first chart is a timeline of the US S&P 500 stock index (SPX) laid over the US Federal Reserve’s monetary easing programs. You will note there are periods shaded in grey during which there were no programs. The takeaway here is that during the periods of no programs, we see the SPX flatten or move lower. Now consider that since the end of the last easing program on October 29, 2014 the S&P 500 index is down -3.72%.

S&P 500 and QE

The second chart is a breakdown of the 40 countries that have had their respective central banks lower interest rates in 2015. This is an important point considering that the US Federal Reserve is considering a rate increase in the US. You will note that the list in not comprised only of third-world countries. Highlighted in red are the countries of global economic significance. The bottom line is that in a global economy where the rest of the world is cutting rates due to economic weakness, it is hard to imagine the FED having success in raising rates in the short-term.

Central Bank Rate Cuts 9.28.15

When considered together, the two charts above tell us that the end of the Federal Reserve’s easing programs certainly has negatively impacted stocks, and that trying to raise interest rates may add more volatility to global markets.

We continue to monitor global markets to try to gain insight as to how to effectively grow and protect client wealth.

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

S&P 500 9.28.15

Chart 2 – Aggregate Bonds

AKG 9.28.15

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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.