Monday Market Forecast 7/13/15
It's been quite some time since I've done a market forecast, mid-week update, or Friday Wrap, but I'm trying to get back into the swing of things, so what better time than now?
The name of the game over the past several weeks has been Greece. The country is in trouble (again) fiscally because of it's debt and seemingly incessant inability to repay that debt. The European Union has proposed a
bailout with some pretty strict austerity measures, and Greece is in a "damned if we do, damned if we don't" position. On one hand, they could refuse austerity actions, which would likely signal an exit from the EU. If they agree to austerity, that isn't good for the Greeks, either, as their economy has been at a standstill for years as they try to sort this out.
Being somewhat of an avid outdoorsman, I understand that forest fires that burn thousands of acres to the ground are sometimes immense tragedies, but are also sometimes what is needed for an ecosystem to be revitalized, re-grow stronger than before, and flourish. So it seems is the case with the bailout actions that have been seen over the past decade, with both Greece and domestically here in the US. Our stock markets have skyrocketed, and they'd have you believe everything is peachy keen, but in reality, the middle class is trudging along not all that far off from when the great recession began. Likewise, Greece has received a few bailouts and they simply haven't helped much.
This week brings us a few economic reports (retail sales being a biggie tomorrow), but chances are all of our domestic activity will take a back seat this week to what's going on between Greece & the EU. See, even despite an agreement on a bailout, Greece's parliament still needs to vote in new measures to be in line with the austerity demands -- this is far from a sure thing, especially in a government run on political promises to fight austerity measures.
While economic reports won't be in the driving seat this week, they could add support or resistance to any movements in trading.
Wednesday brings us a report on industrial production & another relating to inflation (remember - inflation is the worst enemy of mortgage rates, and the more tame inflationary readings are, the lower the chances of a premature rate hike by the feds). Thursday offers up the Philadelphia fed index, a report measuring the manufacturing sector of the Philadelphia region, and also on Thursday initial jobless claims are expected to come out. Friday, there is the CPI report (another measure of inflation) so all in all, this could be a pretty crazy week --- but recently, every week is a pretty crazy week.
I had a conversation with a client last week about locking in an interest rate. "But what if rates improve, won't we miss out?", he asked. "Yes", I said, "and if they get worse you'll miss out on that as well". Folks, we're still in the low 4's for rates - if you're happy with a monthly payment, then lock in your rate. With the volatility in the market, there is no room for games or delays. If you or your client is having trouble with a lock decision, just keep in mind- rates always go up faster than they come back down. One or 2 days of steep increases might take one or 2 weeks of good news to offset. Lock in, and enjoy being able to sleep at night.
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