Economic Journal - Tuesday, 7/14/2015

(As of 7:00 am PST)

US stocks opened lower today for the first time in four sessions, as investors digested a weaker than expected retail sales report along with tumbling oil prices on the heels of an Iranian nuclear deal. For the first time in what seems like many weeks, headlines today are not being dominated by Greece. Although Greece is not out of the woods completely, the debt laden country made great strides Monday after accepting terms to a fresh bailout proposal from its lenders. After rallying yesterday on the Greece story, markets have fizzled a bit today, with investors turning to weak data at home. US retail sales fell 0.3% in June as consumers spent less on several different goods and services. Data for May and April were also lower suggesting that the pace of economic growth may be slowing. Oil prices tumbled as much as 2% Tuesday after a nuclear deal was reached with Iran which would limit Iran's nuclear activities in exchange for a release of certain economic sanctions. The deal is expected to cause a further supply glut as Iran steps up its oil exports putting further pressure on oil prices. A barrel of oil is trading near $51 today. Asian markets finished mixed today, with China's rally unable to take hold today as the Shanghai index fell over 1%. European indexes were lower across the board after rallying yesterday on Greece. Gold is up slightly while interest rates and the US dollar are down.

Economic Journal - Monday, 7/13/2015

(As of 7:10 am PST)

US stocks are extending their rally from Friday after a deal was reached in Greece early Monday morning. After a 17 hour summit in Brussels over the weekend, euro-zone leaders appear to have reached a bailout agreement valued at 86 billion euros ($96 million USD) which would avoid a Greek exit from the euro-zone. The reform package includes austerity measures that must be approved by the national parliament in Greece before formal funding can begin, which many suggest could happen by the end of this week. European equities rallied Monday on the news with indexes higher by more than 1%. In Asia, stocks continued their winning streak with Chinese stocks up 2% despite many shares of Chinese companies remaining halted for trading on the heels of the recent sharp selloff in China. In the US, economic data is light today but will pick up as the week wears on with reports on retail sales, manufacturing, housing, and consumer sentiment all due out. Investors also have plenty of earnings announcements to sift through this week as Q2 earnings season kicks into full swing. Commodity prices are lower today with oil down 1.5% and gold also down to $1,150/oz. With the risk trade on today, treasury prices are lower sending rates up with the 10 yr. yield at 2.44%.

Economic Journal - Friday, 7/10/2015

(As of 7:15 am PST)

US stock futures jumped Friday and are so far maintaining solid footing with the Dow up nearly 200 points while the S&P500 and Nasdaq are also higher by 1%. Sentiment towards Greece’s future changed early Friday after Greek officials submitted a fresh set of reform proposals late Thursday that appear to entail acceptable terms for Greece’s creditors. A decision on the proposal is expected to be made before the weekend, but the market’s perception (especially in Europe) is that we could be getting close to a deal. Chinese stocks rallied again Friday while most other Asian indexes ended flat. China’s Shanghai composite index jumped 4.5% Friday, extending its recovery into a second session after starting the week in a free fall. With half of Chinese listed stocks still suspended for trading, its too early to tell if this recovery is sustainable in China, as nearly $4 trillion in value of Chinese equities has been wiped out over the past few weeks. In any case, today’s rally has helped to ease fear around the globe and a positive trade throughout equity markets has ensued heading into the weekend. If US benchmarks can sustain today’s rally, they will finish the trading week roughly where they started. Gold and oil prices are flat today, while interest rates are higher.

Economic Journal - Thursday, 7/9/2015

(As of 7:15 am PST)

US stocks rebounded today after yesterday’s sharp selloff which sent the Dow Jones tumbling 261 points in a memorable session which included a 3.5 hour trading halt on the NYSE. Investors are back in the buying mood today following a relief rally in China overnight which sent Chinese stocks soaring 5.8% - their biggest daily gain in six years. This, of course came a day after Chinese markets tumbled adding to the Chinese selloff which has wiped out nearly $4 trillion in value from Chinese equities over the past month. In Europe, stocks rallied over 2% while investors awaited new reform proposals from Greece set to be delivered before midnight tonight. At home, investors seem to have forgotten about yesterday’s frenzy of activity which included the shutdown of the New York Stock Exchange (NYSE) mid-morning. The halt in trading was attributed to a technical glitch on the exchange. Data is light today although a report which showed jobless claims increased more than expected last week, may also be adding to investor enthusiasm today. Any signs of weakness in the labor market tend to lead to speculation that the Federal Reserve may push back its timeline to raise short term interest rates. Speaking of the Fed, several Fed officials are set to give separate speeches today, a day after the release of the most recent FOMC meeting minutes showed only 1 of the 10 central bank officials voted for a June rate hike. The timing of the Fed rate hike remains an important issue for the market, however its implications have largely been overshadowed by Greece and China the past few weeks. Expect the subject to resurface as we head deeper into the third quarter. Oil is making a comeback today, up 2.5%, while gold is flat. Interest rates are up as is the US dollar.