| MARKET ROUNDUP | |
| Dow | +29.69 to 18,040.37 |
| S&P 500 | +4.34 to 2,111.73 |
| Nasdaq | +12.90 to 5,082.93 |
| 10-YR Yield | +0.097 to 2.192% |
| Gold | -$0.20 to $1,189.60 |
| Crude Oil | +$0.01 to $60.31 |
It’s “Game On” this week for the global markets! Three major events are looming, each of which has the potential to cause stocks, bonds, commodities and currencies to sink or soar.
First, Greece owes the first of several major payments to the International Monetary Fund (IMF) this Friday. It will be very tough for Greece to make the 300 million euro payment due June 5 without debt relief, much less the 1.2 billion euros in payments that follow shortly thereafter.
Greek Prime Minister Alexis Tsipras blasted his counterparts in the European Union and IMF for being intransigent and unyielding in their debt relief negotiations. Both sides failed to reach a new agreement on debt relief over the weekend, and if they can’t come together before Friday, all heck could break out in markets!
Second, ministers from the 12 nations in the Organization of the Petroleum Exporting Countries (OPEC) will meet in Vienna this Friday. The gathering comes amid increasing tensions in the group.
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| OPEC ministers will meet this week in Vienna. |
Some members are pushing for immediate production cuts. But others are willing to keep the group’s 30 million barrel per day production quota in place, despite the fact crude oil prices are much lower now than this time last year.
The general consensus is that OPEC will sit tight overall. Officials believe that rising demand and falling U.S. production will help bring supply and demand back into line. Crude oil prices soared around 5% on Friday alone, helping the bull case. With prices knocking on overhead resistance just over $60 a barrel, any additional bit of bullish news from OPEC could set off the next leg up!
Third, the Labor Department will release the all-important monthly jobs report for May this Friday. Economists are forecasting that the U.S. created 225,000 jobs last month, roughly unchanged from 223,000 in April. The unemployment rate is expected to hold steady at 5.4%, a multi-year low.
A strong reading could prompt the Federal Reserve to act even sooner to normalize monetary policy. The problem? The huge dollar surge of late-2014, and the corresponding drop in oil prices, helped crater the U.S. economy earlier this year as I explained Friday.
| “A strong reading could prompt the Federal Reserve to act even sooner to normalize monetary policy.” |
So there are a lot of ways things could play out here. If we get a Greek deal, an OPEC output cut, and a weak jobs number, we’d probably see the dollar tank, oil surge and materials stocks rally sharply. If Greece defaults, OPEC keeps pumping and jobs surge, stocks and oil could tank amid fears of a hawkish Fed and the lack of relief on energy supplies.
I’ve given you my general outline of how I expect the big picture to play out in recent weeks. I see the dollar rally running out of steam, energy continuing to catch a bid, and select, highly rated stocks in key sectors to perform well. But this is definitely one of those “Game On!” weeks that could lead to significant market moves. So be sure you pay attention to Money and Markets for all the latest news and guidance.
Now, let me ask you what you expect to see? Do you think this will be an important week for the markets, and if so, why? What do you think OPEC will do, or the jobs data will show? How should the Fed react – and what shifts in your own investments are you planning? Let me know over at the Money and Markets website.
| Our Readers Speak |
Should we be more worried about the economy, in the wake of the lousy first-quarter data we got late last week? That’s what you chimed in on over the weekend.
Reader H.C.B. said the secret to understanding the economy is understanding credit growth. His take: “In a ‘managed’ economy like we now have, credit contraction and credit expansion are the primary influences on the domestic, consumer-based economy. You can infer the driver of our first quarter slowdown in aggregate demand. The rest is all talk and noise (radio static).”
Reader Cal C. added the following observations: “I would think the lower price of fuel would more than offset the higher dollar for domestic reasons. Even with the higher dollar, we still pay less for fuel for fleets and airlines, etc. Lumber is soft and interest rates are down. That’s a plus.”
Reader Tom also saw a few reasons for optimism, saying: “It’s true that the economy is weak thanks to Obama’s policies. But one stat that got overlooked is that corporate profits are up. Remember, profits are the mother’s milk of stocks.
“My advice? Buy the dips (via a diversified index fund). Then kick back, enjoy your summer, and count your profits later.”
But Reader Henry A. offered a much more pessimistic take: “Will the economy improve? No! Bad debt started the recession and it is a fact that we have even more debt now. Until this debt is deleveraged, we will stay is this slow depression because the fundamentals are unchanged.”
Thanks for sharing your thoughts over the last couple of days. I think we’re rapidly approaching some key dates, where either the rubber will meet the road in this economic expansion … or we’ll veer off into a pretty big ditch! I’ll be watching closely to see which way things look like they’re headed, and I’ll be sure to keep you updated along the way.
If you want to add anything else, here’s the link again where you can do so.
| Other Developments of the Day |
All the rumors were apparently true. Intel (INTC) is officially buying chipmaker Altera (ALTR) for $16.7 billion. The large tech sector deal will increase Intel’s reach in the non-PC sector of the semiconductor business.
Its estimated value? $200,000 or more, considering it would be one of only around 200 such models left in the world. The good news is that the firm will share half the bounty with the woman, if she sees the news and returns to the offices of Clean Bay Area.
So do you have any old computer equipment worth thousands of dollars, and have you gotten big bucks from it in the past? What do you think of Rand Paul’s intelligence collection efforts? Will consumer spending pick up soon? Let me know your thoughts on those stories or any others over at the website.
Until next time,
Mike Larson
Mike Larson graduated from Boston University with a B.S. degree in Journalism and a B.A. degree in English in 1998, and went to work for Bankrate.com. There, he learned the mortgage and interest rates markets inside and out. Mike then joined Weiss Research in 2001. He is the editor of Safe Money Report. He is often quoted by the Washington Post, Reuters, Dow Jones Newswires, Orlando Sentinel, Palm Beach Post and Sun-Sentinel, and he has appeared on CNN, Bloomberg Television and CNBC.
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Predictions: Greece will default “in place”. No one will dismantle the Parthenon and carry it away but EU will eat about fifty cents on the dollar. OPEC wil muddle through, i.e., each country will look out for themselves first and production will stay amost the same. In the US the jobs report going forward will have less and less real meaning because of distortions caused by shrinking, part time, unreported and just plain dropouts of the workforce. Overall; little of value will get done before 2017.
Rand Paul is right on. The government over reach and warmongering is incredible and I’m a republican!!!!
So Section 215, I think it is, has been defeated, but another Bill has already passed the House, and has Senate support, that will do the same thing – maybe more. Big Brother Is Watching You!
Revised estimates for March showed that people spent $61.6 billion more than the increase in earnings, and $65.1 billion more than the increase in disposable personal income. This means either they spent from savings, or they borrowed money. Neither would seem to good alternatives for the economy. April’s first estimates were better, but still not good. We are in a Depression. Remember, a Depression is not a collapse, but a period of decreased economic activity, with ups and downs, but no real prosperity for most people. Our unemployment level is actually much higher than the doctored official figures, and wages have been falling for quite a few years, when adjusted for inflation. Only people in the top few percent are very happy with their income – most are not happy at all. Inflation itself has been falling, and the Fed can’t raise interest rates without pushing over into DEflation – which may soon happen anyway. Negative interest may be coming to the U.S., as it already has to most of Europe. If China starts allowing foreigners to buy its bonds, they will become the most desirable in the world.
In this day and age of so much manipulation of facts & figures; lies & fabrications; basically worthless currencies wherever you look, why use such data in what seems more and more futility when predicting market movement? Just look around and see the world for what it is. Base your investments on what you see happening daily across the wires, and use your gut, and common sense to make your movements. Watch what the banks, politicians, and big investors are doing, and forget all that other manipulation crap! Whatever you do, don’t rely on government “facts” and figures, unless you want to set yourself up for a fall.
Mike, I don’t think that the Europeans are ready to throw in the towel yet on Greece, but Greece might have the ability to overplay their hand on how far they can push things. Germany likely has a line in the sand out there somewhere, which the Greek government could inadvertently cross. Only time will tell.
OPEC has equal worries with how non-Saudi members might differ with the Saudi royals. OPEC also has an equal worry with the North American oil growth picture, which “will” be complicated much further beginning January 2017 should Hillary Clinton become POTUS. She has taken a boatload of $’s from people interested in increasing the pipeline situation in North America.
Slightly farther out in time, but very quickly picking up the pace is the South China Sea situation with China, Japan, the US, and the Phillipines/Viet Nam. This situation is equal in magnitude to the emerging Islamic caliphate, which will boil over in southeast Asia next.
When one rolls this all together with our national balance sheet, the 18+ trillion in debt, and a rogue administration I start to get a tick on the side of my head regarding investing. Sorry.
If Rand Paul really believes what he preaches, he should drop out of the Republican Party and start a new Constitutionalist Party. Republicans are as willing to violate the Constitution as Democrats. Both parties only follow the principles of the Founding Fathers when they think it is in their interest to do so. ME FIRST, is their only principle.
The Republicans have proven beyond a doubt since the mid-terms that they have no interest whatsoever in being the opposition party. No one really represents the people any more. The experts say its impossible to successfully start a third party movement, but I have to wonder if the time isn’t right for some sort of drastic actions to once again make it a government of the people by the people as originally intended. If I were true to my heartfelt beliefs I would never vote Republican or Democrat ever again. They both disgust me. Watching Blood and Glory this weekend made me think that maybe Secession is our only means of escape.
I agree with both of you. A third party can never win; pick a party and change it. The most drastic action that’s possible is to put out as many signs, blogs and talk in favor of Rand and get everyone we know to vote in the primary. Everyone who isn’t glued to sports or television has to sound the alarm and wake up their friends. Secession, while attractive, isn’t likely without bloodshed. But that may be coming if we can’t reign in our overgrown beast.
I have to give Obama credit for one thing: he has tried to begin a dialogue with Iran. Even though that nation is Islamic, I understand people are free to follow other religions, if they choose. I’ve read that there is even a Synagogue in Teheran. You won’t find one in Riyadh, and the Saudis recently beheaded a couple of dozen of their own citizens who wanted to follow Christianity. I would not be surprised to find that much of the financial support for ISIS comes from Saudi sources. Do we really wish to be allied with a nation such as that? Do we really want to be allied with any of the Islamic sects?
I looked up from my hammock to the granite clifts of the Sierras with the strong wind playing with the leaves on the many trees. As I looked at the sky with enough clouds to make you forget that satellites can still resolve your mouth movements if per chance your cell phone close by isn’t tapped. And I asked God. Will You and I ever be alone again? Can I ever talk something over with you and make a request only you know about? If there is an answer was it God or was it someone else listening? Was it just part of childhood that only your dog knew all? Is that part of earth history over? I’m pretty sure that’s what’s at stake now. Will our behavior forever be altered by the thought someone is listening or watching? When will extreme carefulness become the norm and no longer some kind of mental classification? How safe do we want to be to continue to allow unimaginable surveillance? You may rue the day you criticized Rand Paul trying to turn the clock back that was moved forward in a times of shock and fear.
Thank goodness for Sen PAUL. Very few Politicians have that sort of Spine to call the shots as they are.
When is that Armageddon Wednesday you keep blabbing about?
Seems to me that we are in a deflationary era. Seven years of low interest rates has not given us sustainable growth. Low labor partcipation rate indicates a higher employment figure the Labor departments estimates.Wages have not increased indicating most new jobs are low pay and parttime. We have a 18 trillion dollar debt that has to paid down in order for sustainable growth. call this a boom and bust market
If NSA wants to disobey the 4th amendment, the on;y LEGAL way is a Constitutional amendment, not secretly violating it. The perps should be charged and convicted for what they’ve done to date.
Bravo for Rand Paul for pointing out their criminal conduct and demanding that it stop. If he weren’t right, they’d have gone ahead and repassed the so called Patriot Act with no changes.
If the Feds can ignore the 4th, why can’t they also violate all the other freedoms in the Bill of Rights?
Buying into government employment numbers is like buying swampland in Florida or walking on quick sand. They can make the numbers read whatever the want. OPEC will continue bumping along changing nothing Saudi Arabia rules. Greece and the EU will be shaking hands and stumbling all over each other in photo ops as a default is the worst option. Its called kicking the can down the road. It will be all plastered over. There you have my forecast on these 3 items and I only have a Grade 10 education.
I agree Gordon…However..they will run out of Cans..Soon..Give em 9 months..max! aloha
The NSA will KEEP doing what its Been Doing..period! They Told stories about what they said there were Not Doing…then Later said they….Were..Bingo..! Do you think a lil issue like not having congressional approval..means a squat..!?? lolol OPEC will hold Tight…Even though the US and Saudi’s have a lil tension between them….They NEED our Military Equipment Shipments..because of the on-going and ever slightly…Increasing war with Yemen..so if the Good Ole’ US of A says we need lower Oil prices to help “Goose” the Stagnant Economy….OPEC will give us all the “Geese” we Need..! lol aloha