Peek of the Week
June 30, 2015
The
Markets
Not quite as popular as Branjelina and Kimye, ‘Grexit’
(short for Greek Exit) has
gained traction as a nickname during the past few
months. The British press appropriated
a variation, Brexit, when they
discovered that the Bank of England was researching the
potential risks of
renegotiating membership in the European Union, or possibly even l
eaving the
group—but that’s another story.
This is about Greece, and it’s a Grexhausting tale.
Last week, The Economist
explained
the state of affairs this way,
“…euro-zone finance ministers failed for the third
time in four days [on June 25] to
find a breakthrough in their talks over
Greece's bail-out…But four days before its
twice-extended bail-out expires and
a €1.5 billion ($1.7 billion) payment to the
[International Monetary Fund]
IMF
falls due, Greece and its far-left prime minister, Alexis Tsipras… still have
no deal.”
By Saturday, a deal was off the table. After days of
negotiations, CNN Money stated,
“Prime Minister Alexis Tsipras…could not accept the terms being offered by
Europe
and the IMF. He said he would recommend that Greeks vote against them in
a
referendum on July 5.” The move was perceived to be a delaying tactic and,
when Greece requested bailout extension, European finance ministers refused.
Greece owes about 1.5 billion euros to the IMF, and a
payment is due on Tuesday. In the
meantime, the European Central Bank (ECB) has
been providing emergency
funding—a line of credit currently worth about $95
billion—to keep Greek banks from collapse.
It’s unclear whether Greece will be able to make the
payment due to the IMF this week.
If it does not, Bloomberg Business reported the country is at risk of joining a
rather
disreputable club: countries that have failed to repay the IMF on time.
Current membership
includes Sudan, Somalia, Zimbabwe, Cuba, Cambodia, and
Honduras.
CNN Money explained that Greeks are queuing at ATMs, banks are
strapped for cash,
and the European Central Bank may decide to curtail
emergency funding. On Sunday,
in an attempt to manage the financial fallout,
Greece decided to keep its banks closed on
Monday and close the Athens stock
exchange.
One expert cited by the International Business Times suggested that a Greek default
could
make international credit markets unavailable to the country for many years.
In
addition, Greece may experience rapidly accelerating inflation and economic
decline.
If the economic effects of default prove less dire
than anticipated, other debt-strapped
Eurozone countries such as Italy, Spain,
and Portugal, may decide to follow suit.
The possibility has many worried about
the future of the Euro.
There is a good chance markets will be
volatile this week as events play out.
Data as of 6/26/15
|
1-Week
|
Y-T-D
|
1-Year
|
3-Year
|
5-Year
|
10-Year
|
Standard & Poor's 500 (Domestic Stocks)
|
-0.4%
|
2.1%
|
7.4%
|
16.8%
|
14.4%
|
5.8%
|
Dow Jones Global ex-U.S.
|
0.7
|
5.6
|
-4.0
|
9.8
|
5.3
|
3.4
|
10-year Treasury Note (Yield Only)
|
2.5
|
NA
|
2.5
|
1.6
|
3.0
|
3.9
|
Gold (per ounce)
|
-2.7
|
-2.4
|
-10.8
|
-9.4
|
-1.5
|
10.3
|
Bloomberg Commodity Index
|
1.3
|
-3.1
|
-25.8
|
-8.3
|
-4.6
|
-4.4
|
DJ Equity All REIT Total Return
Index
|
-2.5
|
-4.2
|
6.1
|
10.9
|
13.4
|
7.3
|
S&P 500, Dow Jones Global
ex-US, Gold, Bloomberg Commodity Index returns exclude
reinvested dividends
(gold does not pay a dividend) and the three-, five-, and 10-year returns
are
annualized; the DJ Equity All REIT Total Return Index does include reinvested
dividends
and the three-, five-, and 10-year returns are annualized; and the
10-year Treasury Note is
simply the yield at the close of the day on each of
the historical time periods.
Sources: Yahoo! Finance,
Barron’s, djindexes.com, London Bullion Market Association.
Past performance is no
guarantee of future results. Indices are unmanaged and cannot
be invested into
directly. N/A means not applicable.
has Your car
joined the internet of everything?
Auto buyers have mixed feelings about cars and connectivity.
A McKinsey &
Company survey found that more than 25 percent of participating car buyers
in Brazil, China, Germany, and the United States prioritized automobile
connectivity ahead
of traditional features like engine power and fuel
efficiency. Thirteen percent wouldn’t even
consider purchasing a vehicle unless
it had Internet access.
At the other end of the spectrum,
37 percent of respondents said they would not buy a car
that was connected to
the Internet — although here were significant regional differences.
Concerns
about potential privacy violations were highest in Germany (51 percent), the
United States (45 percent), and Brazil (37 percent). Just 21 percent of Chinese
respondents
said digital safety and data privacy was an issue.
Of greater concern to
respondents was the chance that connected vehicles
could be hacked. Fifty-nine
percent of Germans and Brazilians were worried that
others could take control
of connected vehicles and manipulate them. Fifty-three
percent of the Chinese
shared this concern, and 43 percent of Americans.
Hacking is a serious issue. Last summer, a group of automobile engineers,
policy-makers,
security experts, and high school and college students had a
confab. The topic of discussion
was the security of connected automobiles. Autoblog wrote that a student was tasked
with
remotely infiltrating a car; an assignment some security experts predicted
would take months
of planning. They were wrong. The student spent $15 on
equipment, built his own circuit board,
and took control of the car.
After a technician from the National
Highway Traffic Safety Administration laboratory used
his mobile phone to
switch off the engine of a test car being driven by a representative
from Consumer Reports, the magazine cautioned
readers against plugging any unknown
or unscreened devices—even thumb drives
with music—into their cars’ USB or OBD-II
diagnostic ports.
Connected
cars are here, but there are a few bugs to be worked out.
Weekly Focus – Think About It
“Beware of little expenses. A small leak
will sink a great ship.”
-- Benjamin Franklin, Founding Father of
the United States
Best regards,
Leif M. Hagen
Leif
M. Hagen, CLU, ChFC
LP Financial Advisor
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P.S.S. Also, please remind your
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* This newsletter was
prepared by Peak Advisor Alliance. Peak Advisor Alliance is not affiliated with
the named broker/dealer.
* The Standard & Poor's
500 (S&P 500) is an unmanaged group of securities considered to be
representative of the stock market in general. You cannot invest directly in
this index.
* The Standard & Poor’s
500 (S&P 500) is an unmanaged index. Unmanaged index returns do not reflect
fees, expenses, or sales charges. Index performance is not indicative of the
performance of any investment.
* The 10-year Treasury Note
represents debt owed by the United States Treasury to the public. Since the
U.S. Government is seen as a risk-free borrower, investors use the 10-year
Treasury Note as a benchmark for the long-term bond market.
* Gold represents the
afternoon gold price as reported by the London Bullion Market Association. The
gold price is set twice daily by the London Gold Fixing Company at 10:30 and
15:00 and is expressed in U.S. dollars per fine troy ounce.
* The Bloomberg Commodity
Index is designed to be a highly liquid and diversified benchmark for the
commodity futures market. The Index is composed of futures contracts on 19
physical commodities and was launched on July 14, 1998.
* The DJ Equity All REIT
Total Return Index measures the total return performance of the equity
subcategory of the Real Estate Investment Trust (REIT) industry as calculated
by Dow Jones.
* Yahoo! Finance is the
source for any reference to the performance of an index between two specific
periods.
* Opinions expressed are
subject to change without notice and are not intended as investment advice or
to predict future performance.
* Economic forecasts set
forth may not develop as predicted and there can be no guarantee that
strategies promoted will be successful.
* Past performance does not
guarantee future results. Investing involves risk, including loss of principal.
* You cannot invest directly
in an index.
* Consult your financial
professional before making any investment decision.
* Stock investing involves
risk including loss of principal.
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Sources:
