Blog Post

US Stocks ended little changed after this highly volatile week.  As we headed into this weekend, Greece did an about face to accept most of the creditor’s demands.  A deal between Greece and the Eurozone is now in place that will provide $96Bn in new funding contingent upon the implementation of the agreed upon austerity measures.

China’s stocks rose over 5% last week after falling over 30% since early June.  While this is encouraging, it was mainly due to government intervention including preventing large stock holders from selling stock, government funding to margin buyers and actually requiring some institutions to buy stock.  While China has moved to become a market economy, they are quick to revert to greater government intervention when the markets are negative.  Where this all ends up six months to a year from now remains to be seen.  Keep in mind that Chinese stocks are still 75% higher than a year ago and valuations are still very high.

Treasury prices were little changed from a week ago but commodity prices were sharply slower based on the slowdown in China. The dollar also declined.  In economic news this week:

  • The Commerce Department reported
    • the US trade gap widened by 2.9% in May. The numbers reflected a continuing decline in exports and stable demand for imports, other than oil.  From a year earlier May exports were down 4.5% and non-petroleum imports were up 1.9%.
    • Wholesale inventories rose 0.8%in May much more than forecast. This bodes well for the second quarter gross domestic product.  The biggest gains were in petroleum products, computer equipment and drugs.
  • The Institute for Supply Management’s non-manufacturing index rose to 56 in June from 55.7 in May showing an acceleration in the services sector of the US economy. The new order index rose from to 58.3 in June from 57.9 in May.  Anything over 50 represents expansion.
  • The Labor Department reported that first time claims for unemployment rose 15,000 to 297,000. The previous week’s claims were revised up from 281,000 to 282,000.  The four week moving average of claims was 279,500, an increase of 4,500.  Still claims remaining below 300,000 is considered good for jobs growth.

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Best Regards,

Loren C. Rex, CFP®, AIF®                                                                               Erik Smith

President                                                                                                           Partner

Generations Financial Planning & Wealth Management                269-441-4143

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