Perspectives from Above the Noise – Week of September 23, 2013

3 Stories in the global economy that should not go un-noticed 

Despite weeks of hints and rumors, the Federal Reserve did what few analysts expected at last week's FOMC meeting and decided not to taper their bond-buying program - at least for right now. Markets moved up last week on news that the Federal Reserve will delay tapering until economic data improves. Despite some end-of-week jitters about Washington's debt ceiling debates, the major indices all closed in the black.

For the week, the S&P 500 grew 1.3%, the Dow gained 0.5%, and the Nasdaq increased by 1.4%.

Here are the 3 stories this week that rose above the noise:

U.S. Housing Recovery Continues

Home prices in 20 U.S. cities rose in the 12 months through July by the most in more than seven years, helping boost owner equity. The S&P/Case-Shiller index of property values in 20 cities increased 12.4 percent from July 2012, matching the median projection of 31 economists surveyed by Bloomberg and the biggest year-to-year advance since February 2006, according to a report from the group issued today. Gains in home and stock values are contributing to increases in household wealth that are helping bolster consumer spending, the biggest part of the economy.

Republicans Debt-Ceiling Strategy Relies on Obama Budget

In the past few days market participants have begun to pay some attention to the potentially ugly political fight developing in Washington over funding the government and raising the debt ceiling. Up to now, global financial markets have exhibited limited concern that a prolonged government shutdown or technical default on U.S. debt is a likely outcome.

A Bloomberg article details an optimistic scenario which may explain some of the market’s apparent complacency. In this scenario, part of the sequester spending cuts which took effect earlier this year would be replaced with modest long-term entitlement reform. This general framework appears, at this point, to have some bipartisan support.

However, should it become apparent in the coming weeks that there is not enough common ground to pass a debt limit increase without intense last-minute negotiations, market volatility is likely to increase significantly during October.

Emerging Market Tourist Spend Boosts U.S. Travel

Increasing wealth in emerging market nations is providing a boost to the U.S. economy and tourism industry. Tourists from emerging nations including China, India, and Brazil are increasingly travelling to the United States with an emphasis on shopping for consumer goods and luxury items during their stay.

Currently, the level of products and services purchased by international tourists within the United States is at an all-time high and reached $14.9 billion in June. Overall, the number of tourists visiting the United States has increased by 6.4 percent over the last year and spending rose by 10.6 percent, according to the U.S. Department of Commerce.

Articles chosen and summarized by the First Allied Asset Management, Inc. investment management team.