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Jun 25 2015

Optimism Gave Way To Pessimism Yesterday

Market Recap 6/24/15:

Optimism gave way to pessimism yesterday as it became clear that there are still significant roadblocks to a deal that would save Greece from a debt default. According to several reports, including one from the Wall Street Journal, there were plenty of red colored notations made by creditors on Greece’s latest drafted proposal. Major hurdles between the two sides include issues regarding pension reforms and where tax increases should come from. The disagreement even spilled into social media after Greek Prime Minister blasted creditors on Twitter stating that as long as Greece presents measures to accomplish the agreed upon deficit targets, those measures should be accepted by the creditors. He said further, “The repeated rejection of equivalent measures by certain institutions never occurred before, neither in Ireland nor Portugal. This odd stance seems to indicate that either there is no interest in an agreement or that special interests are being backed.” This wrench in the Greek debt drama pulled markets lower during today’s session after two days of positive momentum when the air around the negotiations was significantly more positive. Not even the upwardly revised final estimate of first quarter GDP, matching consensus expectations, could save the day. At the end of the day, losses were broad based with all four major averages and ten S&P sectors recording losses. Among the averages, the blue chip Dow Jones index fell the most, closing one percent lower on the session. It was the index’s worst one day performance in over a month. Materials performed the worst of the S&P sectors, falling by over 1.3%.


Looking Ahead:

Despite continued uncertainty in the Greek debt talks, futures are higher this morning as investors are choosing to focus on upcoming economic data. Complications in the Greek negotiations was the main cause of yesterday’s decline in the markets and though there was no major significant breakthrough in the talks overnight it is clear that the US investor is more interested in today’s data, which is expected to show that the economy is continuing to rebound at a moderate pace. Consumer income and spending, due at 8:30, is expected to show a rise in both income and outlays. Investors are particularly interested on the consumer spending side as there is increasing evidence that the American consumers are starting to loosen their wallets after a few months of no spending growth. Jobless claims, meanwhile, are once again expected to stay under the psychological 300k threshold, a continuing mark of the growing strength of the employment market. In overnight trading, Treasuries are falling slightly while the dollar has given up some ground against its major counterparts.


Make sure to listen to Money Matters with Gary Goldberg this Sunday at 11:00 AM on WOR 710 AM Radio to hear our latest economic and market analysis.  This week, Gary and his guest, former White House Chief of Staff John Sununu, have a terrific discussion regarding his book, “The Quiet Man: The Indispensable Presidency of George H.W. Bush.”  Visit our website for details.