“The Economy Doesn’t Stink”

The Greek debt crisis is temporarily on the back burner, so back to our regularly scheduled fixation: When will the Federal Reserve raise interest rates? During her semi-annual testimony before Congress, Federal Reserve Chair Janet Yellen said “If the economy evolves as we expect, economic conditions likely would make it appropriate at some point this year to raise the federal funds rate.” After Representative Scott Tipton (R-CO) got testy and said that the Fed is keeping rates low, because “our economy stinks right now,” Yellen responded by underscoring that the central bank is on the cusp of a rate lift off and when that happens, the Fed will be saying: “No, the economy doesn’t stink”.

There is plenty of corroborating evidence that Yellen can trot out to make her case. Last week, home builder confidence jumped to a 10-year high; Housing Starts and Permits showed continued progress; a report on consumer prices showed that core CPI was up 1.8 percent in June from a year ago, within striking distance of the Fed’s 2 percent target; and the Fed’s Beige Book indicated a general tightening of labor market conditions around the country.

When I discuss these improving trends on the air, I inevitably receive nasty-gram tweets or long-winded e-mails explaining that I am sugar coating “the truth about the economy”. My favorite last week was “Do you ever say anything not officially handed to you by someone inside a #CentralBank? FYI, OUR ECONOMY SUCKS. #cheerleader”.

The rancor is understandable: just because the economy is on a positive trajectory does not mean that it is on fire. Pokey growth, combined with flat productivity is not on any economist’s wish list. As the WSJ’s Timothy Aeppel pointed out, with productivity “at a 2 percent annual growth rate, it takes 35 years to double the standard of living; at 1 percent it takes 70. Low productivity slows the economy and holds down wages.”

Yet despite relatively slow growth, low productivity and lots of disgruntled Twitter users, there is enough evidence of economic progress to prompt the Fed to start nudging up rates as early as September. 

MARKETS: Investors breathed a sigh of relief after Greece and the Euro Group agreed to fresh bailout. The deal will not resolve the long term issue that there is no chance that Greece can repay the more than $330 billion to the Europeans, but for now, the heat is down. With the inking of the Iran nuclear deal and the end to economic sanctions, the International Energy Association forecasts Iran, which has the fourth largest proven crude oil reserves in the world, will ramp up production and bring new supply to the market. Crude oil is down by over 10 percent over the past two weeks.

• DJIA: 18,086 up 1.8% on week, up 1.5% YTD
• S&P 500: 2,126, up 2.4% on week, up 3.3% YTD
• NASDAQ: 5,210 up 4.3% on week, up 10% YTD (New closing high)
• Russell 2000: 1267, up 1.2% on week, up 5.2% YTD
• 10-Year Treasury yield: 2.35% (from 2.41% a week ago)
• September Crude: $51.21, down 3.5% on week
• August Gold: $1,131.80, down 2.2% on week
• AAA Nat'l avg. for gallon of reg. gas: $2.76 (from $2.76 wk ago, $3.59 a year ago)

THE WEEK AHEAD:

Mon 7/20:

Halliburton, Hasbro, Morgan Stanley

Tues 7/21:

Apple, GoPro, Microsoft, Yahoo

Weds 7/22:

Boeing, Coca-Cola

10:00 Existing Home Sales

Thurs 7/23:

3M, Amazon, AT&T, Caterpillar, GM, McDonald’s, Starbux, Visa

Fri 7/24:

Biogen

10:00 New Home Sales

#228 Preparing for Retirement

Sure it's summer, but that doesn't mean you can't spend a little of your time at the beach or the mountains contemplating your retirement, right? In fact, your time off might encourage you to think a little more seriously about how you might spend those non-working years. In addition to dreaming, you'll have to think ahead and get your portfolio in shape for the transition.

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Paul is 70 and asked about his portfolio as well as his Required Minimum Distribution, Angela from Phoenix is preparing her investments for retirement and Sybil has been advised to combine several of her TSA accounts - should she? Scott MI is just 45, but he is "retiring" from a union job--what should he do with his pension?

Our younger listeners are also thinking ahead to retirement. Jack and his wife are in great shape and want to know what to know how to continue to maximize their cash flow; Amey wants to concentrate on accumulation for the next five years; and Christine from Perth, Australia has about $5-$7K each month that she and her husband are saving for a new home in CA. Should they direct the money into a money market account or should they pay down an existing mortgage?

Thanks to everyone who participated this week, especially Mark, the Best Producer in the World. Here's how to contact us:

• Call 855-411-JILL and we'll schedule time to get you on the show LIVE 

• Send an email: askjill@jillonmoney.com 

• Tweet us: @jillonmoney and @MTalercio

Greek Deal Done: Will Tsipiras Lose His Job?

"22 hours and all I got was this lousy deal!" That's the tee shirt that Greek Prime Minister Alexis Tsipiras will likely have to wear, when he heads back to Greece and tries to convince the Greek Parliament to approve a three-year, €82-86 billion bailout deal ($91 billion to $96 billion). While the 22-hour marathon negotiation allows Greece to remain in the common currency zone, it does so at a steep price. Price tag = €82-86 billion: The first thing to note about the deal is that it is larger than the €53.5 billion the Greeks had requested and the reason is clear: In the past month, while Tsipiras was messing around with trips to Russia and a snap referendum, the Greek economy ground to a halt, further crippling commerce. The upshot is the Europeans believed that the Greece asked for too little in its third bailout request.

Austerity: Greece will immediately implement tax increases, tough pension reforms and privatization of certain industries, like energy transmission. Additionally, Greece agreed to changes in labor laws and administrative overhauls.

New €50 Independent Fund: Greece will transfer €50B of state-owned assets into a fund, which will be sold off or wound down to help pay down the country’s debt over the coming years. Because there is no trust in the Greeks, the Europeans will supervise the fund.

U-Turn on Greek Legislation: When Tsipiras came into office at the beginning of the year, he enacted legislation that tried to ease up on austerity, including rehiring of some laid off public employees. The new bailout requires that Greece undo those measures.

IMF IN: Greece asked for the IMF to be excluded from a deal, but the Europeans liked the concept of an adult in the room, so the IMF will continue to monitor the Greek’s adherence to its bailout commitments.

Greek Banks: The Europeans will earmark €10 - 25 billion to recapitalize the banking system, though it is unclear when the banks will be able to reopen.

Re-Profiling debt: Europe will not write down Greece's existing debt, but will consider "re-profiling" it, which essentially means that after Greece passes its first review, the Euro group might potentially elongate the terms and reduce the interest rates applied to various loans.

Deadline: The Europeans said that the Greek Parliament has until Wednesday to approve the deal, which could mean that Tsipiras will have to cozy up to become "frenemies" with some right wing legislators.

Tsipiras Out?: The parliamentary process could  trigger fresh elections and Mr. Tsipiras could find himself not only as the architect of a lousy deal, but an unemployed one as well.

BOTTOM LINE: Although the Europeans may have won the battle, they will likely lose the war. Yes, Greece will remain in the Euro zone, but the deal just kicks the can down the road. Without a significant write-down of the now more than $350 billion in debt, the Europeans are unlikely to see total repayment and Greece may ultimately have to leave the Euro zone. For the Greek citizens, this lousy deal will amount to even more suffering.

Time Running Out for Greece

As of this writing (Sunday 10:35ET), there is no deal yet for Greece. What we know is that with little fanfare and as the clock ticked towards the Sunday deadline, Greece’s newly minted Finance minister Euclid Tsakalotos submitted a formal request for a new three-year 53.5 billion euro ($59.4B) aid package from the Euro zone. In return for the much-needed cash, Greece would immediately commit “to a comprehensive set of reforms and measures to be implemented in the areas of fiscal sustainability, financial stability, and long-term economic growth.” In other words, we need the money so much that we will now agree to tax and pension reform, two of the stumbling blocks that prevented a deal over the past six months. What happened to all of the tough talk about standing up to the Europeans, not to mention the big victory at the polls last Sunday? A funny thing occurred during the fortnight since Prime Minister Alexis Tsipiras called for his referendum: markets were pretty calm and contagion to other markets barely materialized. That fact strengthened the Europeans’ bargaining power. After all, if the markets were basically fine, given all of the uncertainty surrounding Greece, maybe a Grexit wouldn’t be the worst thing in the world, right?

But as Mark Spindel of Potomac River Capital said, “Just because I might be able to survive walking across a major interstate, doesn’t mean I should undertake that experiment.” Even if global markets could withstand Greek’s departure from the Euro zone, wouldn’t it be preferable to mutually engineer and manage it? And does Europe really want to help create a destabilized country, where tens of thousands of Syrian refugees are already knocking on the door?

Perhaps that was the nature of Treasury Secretary Jack Lew’s calls to both European and Greek officials over the past few weeks. While the U.S. is not involved with the negotiations, Lew may have dusted off his history book to review “The Truman Doctrine,” which established that the U.S. would provide political, military and economic assistance to all democratic nations under threat from external or internal authoritarian forces.

The Truman Doctrine arose in 1947, after the British Government withdrew military and economic assistance to the Greek Government in its civil war against the Greek Communist Party. Truman asked Congress to support the Greek Government against the Communists. Of course it was not a coincidence that Tspiras, a far left socialist (some say he is Marxist), went to Russia to meet with Putin last month-it was a not-so-subtle signal that he would be willing to turn to any port in a storm.

Presuming that nobody wants to see Greece adrift, both sides will have to feel some pain. Olivier Blanchard, the IMF’s Economic Counselor and Director of the Research Department summed it up succinctly: “At the core of the negotiations is a simple question: How much of an adjustment has to be made by Greece, how much has to be made by its official creditors?” Blanchard has been vocal about something that few Europeans want to hear: The total amount of debt will have to be cut in order for Greece to get on a sustainable path of progress. And the longer that they wait to write down the debt, the bigger the necessary write down will be. As economist Mohamed El-Erian notes, “Every day that goes by intensifies the Greek economy’s economic and financial implosion…the deeper the economy sinks, the larger the reform and financing requirements to restore its vitality.”

Meanwhile, time is running out for Greece, as cash reserves dwindle and anxiety increases...

CHINA: As if Greece were not enough, gyrations in the Chinese stock markets have prompted some to wonder whether the real contagion risk is centered in Beijing, not Athens. First, some context: Chinese stocks started a steep ascent in mid 2014, after the Chinese government urged investors to enter the market. “Policy makers and state media continued to trumpet the rally even as prices rose well beyond most reasonable estimates of fair valuation,” according to Capital Economics.

The government did a good job of encouraging small, retail investors to enter the fray with gusto. They pushed stocks ever higher until a full-blown bubble formed. At its height on June 12th, the Shanghai Composite was up over 160 percent from the 2014 lows. Not only had prices become completely disconnected from fundamentals, margin debt tripled over the course of a year.

At that point, Chinese officials stepped in to try to prick the bubble that it had fostered. Unfortunately, as is the case with most bubbles, pricks often lead to pops. By last Wednesday morning, the index had tumbled by over 32 percent. Before everyone goes too nutty, it’s important to note that even at the mid-week lows, the Shanghai Composite was up 70 percent from a year ago.

Although the US markets had not been affected by the drop, when Chinese officials halted trading in over half of all listed securities there, US investors got spooked and sold off US companies. (That the rotten day occurred when the NYSE shut down for three and a half hours was pure coincidence.) The quick reasoning went like this: roughly a third of global growth comes from China; if their markets plunge, the Chinese economy will take a hit (that’s why copper dropped to six-year lows); if China slows, then it will be bad for the US exporters; and maybe Greece IS going to be a big deal; so SELL MORTIMER, SELL! The Chinese selling reversed course by the end of the week, allowing all three US indexes to also gain ground on the week…crisis averted!

Federal Reserve: The situation in Greece and the gyrating Chinese market may come up during Federal Reserve Chair Janet Yellen’s semi-annual testimony before Congress this week. Will the central bank stay on course for a September lift off amid international uncertainty?

MARKETS: Existential question: What if the NYSE halted trading and nobody cared? The outage was attributed to a technical glitch and despite being off line; traders had plenty of opportunity to execute orders of NYSE-listed stocks on other electronic platforms, like the NASDAQ.

• DJIA: 17,760 up 0.2% on week, down 0.35% YTD
• S&P 500: 2076, down 0.2% on week, up 0.9% YTD
• NASDAQ: 4,997 down 0.2% on week, up 5.5% YTD
• Russell 2000: 1248, up 0.3% on week, up 3.9% YTD
• 10-Year Treasury yield: 2.41% (from 2.38% a week ago)
• August Crude: $52.74, down 7.3% on week
• August Gold: $1,157.90, down 0.8% on week
• AAA Nat'l avg. for gallon of reg. gas: $2.76 (from $2.77 wk ago, $3.63 a year ago)

THE WEEK AHEAD: As if the news cycle isn’t keeping investors busy enough, we are starting second quarter earnings season. According to FactSet, year-over-year earnings for the S&P 500 are projected to decline by 4.4 percent. The last time the index reported a year-over-year decrease in earnings was Q3 2012.

Sun 7/12 Greek Deadline

Mon 7/13:

Tues 7/14:

J&J, JP Morgan Chase, Wells Fargo, Yum! Brands

8:30 Retail Sales

8:30 Import/Export Prices

10:00 Business Inventories

Weds 7/15:

Delta, Intel, Netflix

8:30 PPI

8:30 Empire State Manufacturing Index

9:15 Industrial Production

10:00 Fed’s Yellen Semi-Annual Testimony to House

2:00 Federal Reserve Beige Book

Thurs 7/16:

Citigroup, eBay, Goldman Sachs, Google

10:00 Philadelphia Fed Activity Index

10:00 Housing Market Index

Fri 7/17:

GE

8:30 CPI

8:30 Housing Starts

10:00 Consumer Sentiment

#227 Summer Travel with Peter Greenberg

Just in time for summer vacation, Emmy-winning investigative reporter and producer, Peter Greenberg joins the show to provide great travel tips. Peter is the travel editor for CBS News and also hosts his own television show, “The Travel Detective with Peter Greenberg,” on public television.

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Peter covered a lot of ground, including: Tricks for navigating the consolidating airline industry (conduct research on line but don't give up on the phone yet); why travel agents are on the rise again; why now is a great time to book a cruise; what you need to know about traveling to Cuba; why you should NOT cancel your trip to Greece; and what you need to know about trip cancellation insurance.

We also covered a great question from Jessica, who is looking to make a career change from medicine to financial services. The financial planning industry is poised to grow, so she should check out the CFP Career Center!

Kris wanted to know the basics on Social Security for married couples and Carol weighed in on the Windfall Elimination Provision and the Government Pension Offset.

Thanks to everyone who participated this week, especially Mark, the Best Producer in the World. Here's how to contact us:

• Call 855-411-JILL and we'll schedule time to get you on the show LIVE 

• Send an email: askjill@jillonmoney.com 

• Tweet us: @jillonmoney and @MTalercio

Greece Votes No: Here’s What Investors Should Do

In the hours after Greek citizens voted NO to more austerity, the two most frequently asked questions that I fielded were: (1) What’s next? (2) What should investors do? Five years ago, the European Central Bank (ECB), the European Commission (EC) and the International Monetary Fund (IMF) funneled billions into Greece not out of the kindness of their hearts, but to provide a backdoor bailout to its own financial institutions, which had lent Greece gobs of money over the previous decade. If Greece had defaulted then, it could have taken down the entire European banking system.

Five years later, with banks back on their feet and the European economy strengthening, Euro group leaders assumed a tougher negotiation stance on the restructuring of Greek debt. In order to unlock about $8B of much needed rescue funds, Europeans said that Greece must agree to more taxes and an increase in employee pension contributions (“austerity”).

Greece’s Prime Minister Alexis Tsipras called for a national referendum, where Greek citizens voted on the euro group’s demands, which he believed were draconian. The ECB subsequently turned off the spigots, leaving Greece without a lifeline and forced the closure of banks and the imposition of capital controls, limiting Greek citizens to withdrawals of $67 per day. Not surprisingly, the country missed a $1.73B payment to the IMF, putting it into a dubious club that includes Cuba, Zimbabwe and Somalia.

When Greeks overwhelming voted NO on the referendum (61.3%), it armed Tsipiris with a mandate, which essentially said, “austerity has hurt the Greek economy (GDP has contracted by 25% in the past five years) and caused widespread suffering (25% unemployment overall and 50% for the youth population). We want to stay in the euro zone, but we want a more humane deal.”

Now both sides return to the drawing board, trying to regain lost trust. The first step may have been the resignation of controversial finance minister Yanis Varoufakis, after Europeans indicated “a preference for his absence” when new negotiations begin.

But the hard work lies ahead. The Euro group’s total outstanding loan balance to Greece is $270B, a large chunk of which is keeping the Greek banking system afloat and the rest is in the form of longer-term Greek bonds, which require a $3.9B installment on July 20th.

If Greece misses that deadline, it would be in full-fledged default and the ECB would be hamstrung by its own rules: it can only lend to banks that are solvent and it’s hard to say that Greek banks are solvent if the government is not paying its bills. Without access to more money, Greece would have to issue temporary IOU’s to its creditors. Ultimately, it may be forced to create a new currency, which would mean a widespread devaluation of whatever money is left in the Greek banking system and a lot more suffering for Greeks.

While a deal between Greece and its creditors may finally emerge, it would likely just kick the can down the road. Economists say the real solution is simple, but not easy: the Europeans must admit that they will never get all of their money back and write down the loans by half. Doing so will allow Greece to emerge from the crisis on firmer footing. The alternative would be a Greek exit from the euro zone and a 100 percent write down.

Now to the second question: What should investors do?

Sit still and do nothing. Be disciplined and stick to your game plan and don’t try to guess the next move up or down in the markets. In fact, if you are still contributing to your retirement account, you should be rooting for a further sell-off so you can buy shares at lower levels! If you are retired, you were hopefully wise enough to create a balanced portfolio that limits market volatility.

Greek Referendum: Oxi or Nai?

In the “Beware what you wish for” category, Greek Prime Minister Alexis Tsipiris’ hastily called referendum on whether or not (“Oxi” is "No", “Nai” is "Yes") the country would be willing to accept European demands of more pension cuts, a reduction in government jobs and higher taxes, had clear results: a hefty 60 percent of Greek citizens -- especially younger ones -- voted no, meaning that they simply could not abide more austerity. (Greece's youth unemployment rate has remained at about 50 percent.) [If you need a primer on Greece, check out this 60 second video!] If the referendum was meant to show that Greece was serious and as a result, the European officials would ease up on their demands, Tsipiras was thwarted. If anything, the vote seemed to steel Europeans, who were undeterred by the closure of Greek banks; the imposition of capital controls; a missed IMF payment; and the expiration of the existing bailout.

With the results in, Greece's Finance Minister Yanis Varoufakis said that officials would be heading to Brussels ASAP to restart negotiations, but there's one wrinkly: Eurozone finance ministers are not planning on an emergency meeting tomorrow. German Chancellor Angela Merkel will travel to Paris for talks with France's President Francois Hollande on Monday evening, presumably so that the two largest economies of the euro zone can hash out a game plan.

If/when they do talk, the big question is: Will the Euro group be willing to cede ground and agree to the last deal that Tsipras offered on June 30th? Chances are looking dim for a quick resolution. The BBC reported that German Chancellor Angela Merkel privately told MPs that, as far as she is concerned, Alexis Tsipras has simply driven his country into the wall. Additionally, Senior German Conservative MP Hans Michelbach said "now one has to question whether Greece would not be better off outside the euro-zone." That doesn't sound like the parties will be strumming Kumbaya any time soon.

Yet with little cash on hand, the Greek government is running out of options. Varoufakis told The Telegraph, "Luckily we have six months stocks of oil and four months stocks of pharmaceuticals," but the country still need the European's cash and time is crucial, because Greece must make a $3.9 billion bond payment to the ECB on July 20^th.

If not, the country would no longer be in technical default, it would be in full-fledged default. At that point, the ECB would be hamstrung by its own rules: it can only lend to banks that are solvent and it's hard to say that Greek banks are solvent if the government is not paying its bills. If the NO vote starts a downward spiral towards leaving the Euro zone, Greece will have to create a new currency, which would mean a widespread devaluation of whatever money is left in the Greek banking system and a lot more suffering for the Greek people.

EXPECT A ROCKY START TO TRADING ON MONDAY!!! Almost every large investor that I spoke to over the past week, assured me that a NO vote was "not gonna' happen" and sure it was a risk, "but a very, very long shot risk," against which they would not be trading...

Besides action in Greece and the euro zone, investors return from a long holiday weekend, looking to the release of minutes from the Fed’s last policy meeting. Will the Fed take into account events across the pond? Are they seeing broad-based signs of economic advancement in the U.S.? The last FOMC meeting occurred before the June employment report, which provided a mixed view on the labor market’s progress.

The economy added 223,000 new jobs, making June the 15^th month of the last 16 when the economy has added more than 200,000 jobs. The unemployment rate edged down by two tenths of a percent to 5.3 percent, the lowest level in seven years (April 2008). Unfortunately, the rate dropped for the wrong reason: 432,000 people dropped out of the labor force, which pushed down the labor-force participation rate to 62.6 percent, the lowest reading since October 1977.

It seems that every time there is a good employment report, it is followed by a so-so one. Maybe these kinds of inconsistent results occur when the economy only grows by 2.2 to 2.4 percent for three consecutive years (2012, 2013 and 2014) and is on track for a fourth year of the same. For investors, the negative parts of the labor report might be seen as good news: with a shrinking labor force and wages rising by just 2 percent from a year ago, the Fed may rethink a September rate increase and instead opt for December or even early 2016.

MARKETS: Global markets slid last week, but given events in Greece, there were no apparent signs of contagion—US stocks had one bad day and European stocks are still up 15 percent on the year. Lost in all of the hoopla surrounding Greece was the second-quarter results: The S&P 500 fell 4.8 percent, snapping a nine-quarter winning streak, though that doesn't seem too bad compared to Chinese stock indexes, which have plunged a whopping 30 percent in the past three weeks.

• DJIA: 17,730 down 1.2% on week, down 0.5% YTD
• S&P 500: 2076, down 1.2% on week, up 0.9% YTD
• NASDAQ: 5,009 down 1.4% on week, up 5.8% YTD
• Russell 2000: 1248, down 2.9% on week, up 3.6% YTD
• 10-Year Treasury yield: 2.38% (from 2.47% a week ago)
• August Crude: $56.58, down 4.5% on week
• August Gold: $1,167.60, down 0.8% on week
• AAA Nat'l avg. for gallon of reg. gas: $2.77 (from $2.78 wk ago, $3.66 a year ago)

THE WEEK AHEAD:

Sun 7/5 Greece Referendum

Mon 7/6:

9:45 PMI Services Index

10:00 ISM Non-Mfg Index

Tues 7/7:

8:30 S&P International Trade

10:00 Job Openings and Labor Turnover Survey (JOLTS)

3:00 Consumer Credit

Weds 7/8:

2:00 Federal Reserve Minutes

Thurs 7/9:

Fri 7/10:

12:00 Janet Yellen speaks in Cleveland

#226 Financial Independence Day

Ready to grab hold of your financial life and take control? Level Money's co-founder Jake Fuentes joins the show to tell you! Jake launched the award-winning personal finance app in order to help people spend with confidence, save more and achieve financial balance. The app is a simple tool to automatically analyze your financial picture.

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Rich and his wife are getting ready to retire and will have a little more than $1 million. A fiduciary advisor is recommending a fixed annuity, but we're not so sure.

David asked about tapping home equity to purchase another rental property; Jeff had questions about SS, Medicare and retirement planning; and Sarah asked about funneling money into a 529 plan versus a general investment account. Here is an education cost calculator to determine how much to save today in order to cover future tuition bills.

Thanks to everyone who participated this week, especially Mark, the Best Producer in the World. Here's how to contact us:

• Call 855-411-JILL and we'll schedule time to get you on the show LIVE 

• Send an email: askjill@jillonmoney.com 

• Tweet us: @jillonmoney and @MTalercio

2015 Economic Intermission

Every January, I outline the big issues and economic predictions for the year ahead. With six months down, the Independence Day weekend is a perfect intermission, where we can review the highs and lows of Act I, and look ahead to Act II. US Economy: There were great hopes coming into the year, but a trio of events conspired to dash them. For the third time in five years, the US economy contracted in the first quarter of the year (2011, 2014 and now 2015). The combination of bad winter weather, the West Coast port shutdown and shrinking investment in the energy sector due to lower oil prices, caused Q1 GDP to shrink by 0.2 percent. There are a number of encouraging signs that growth has snapped back in the second quarter and beyond: Despite a weak reading in March, job growth is accelerating and wages are edging up; new and existing home sales have reached six to seven hear highs; personal income and spending have jumped; and consumer sentiment is at a five-month high.

Federal Reserve Rate Hikes: Back in January, I predicted that “the first rate hike will occur in the third quarter of the year.” I’m sticking to my guesstimate that the Fed will increase rates for the first time in over nine years at the September meeting, especially after Fed Chair Janet Yellen said that she expects “the economic data to strengthen.”

Oil: Oil prices bounced up from the $40-lows to $60 per barrel and have settled into a trading range. While drivers may miss those sub-$2/gallon prices at the pumps, they can take solace in the fact that prices are down about 90 cents from a year ago.

Housing: The improving economy and labor market, combined with still-low mortgage rates and loosening credit conditions, should help housing in the second half of the year.

Markets: Stocks have bounced around a bit more this year than last, but the story is the same: Investors are laser-focused on Fed rate hikes and the bond yields appear to have started the long-anticipated drop in price and rise in yields.

Greece: I didn’t specifically mention Greece back in January, but I would put this under the category of “geopolitical”. After a five-month standoff, Euro group leaders and Greece officials came to a major impasse at the end of June. At issue was €7.2 of European rescue funds, which Greece needs to make loan repayments throughout this summer. In order to get the lifeline from the Euro group, Greece must agree to more taxes and an increase in employee pension contributions. Greece’s Prime Minister Alexis Tsipras called for a surprise referendum for July 5^th, where Greek citizens will have the opportunity to vote on the euro group’s demands and essentially determine whether or not the country remains in the euro zone.

As always, these big picture events are out of your hands, but during the economic intermission here are some actions you can take in your financial life to gain control!

Investments: Review your investment accounts and be sure to rebalance them so that your asset allocations remain in check. Make sure that your allocation remains at your desired levels. If you don’t know what’s the right allocation for you, there are plenty of resources on line that help incorporate your risk tolerance and your investment time horizon. Remember that rebalancing a diversified portfolio is not meant to time the market, but it should help you sell high and buy low, when your emotions might otherwise prevent you from doing so.

If you have any big expenses coming up within the next 12 months, like a college tuition or a home down payment, it’s time to free up cash. You don’t want to risk having to sell an asset if it happens to be down at the wrong moment. Finally, if you work with a financial advisor or broker, schedule an appointment to review your progress. Ask a lot of questions and clarify how you pay for the services.

Retirement: Use EBRI’s “Choose to Save Ballpark E$timate” (www.choosetosave.org/ballpark/) to calculate where you stand. If your cash flow has improved, bump up your retirement plan contribution, even if it's just by one percent!

Homeowners and Renters insurance: Make sure that your property insurance is up to date, especially with the summer tornado, fire and hurricane season upon us. It’s important to review your policy before an event occurs, to make sure that it is adequate. The three biggest mistakes that people make with their homeowners or renters insurance are: 1) under-insuring; 2) shopping for price only and not comparing apples to apples; and 3) not reading policy details before a loss occurs. If you have questions, give your sales agent a jingle and he or she can walk you through some of the fine print.

Estate Planning: Hire a qualified estate attorney to prepare a will, power of attorney and health care proxy/living will. Those with larger estates, or who want more control over the disposition of their assets, may want to consider a revocable or changeable trust. In 2015, the estate tax exemptions are $5.43 million for individuals and $10.86 million for couples.

Greek Fatigue

Greek Fatigue: Condition affecting investors and news junkies, caused by five years of reporting on the exact same topic. Symptoms include weariness, eyes glazing over and sleepwalking through broadcasts/columns/blogs predicting doom and gloom. (See: “US Debt Ceiling” and “The Boy Who Cried Wolf”.) I know you don’t want to hear about Greece again, but we’re getting down to it. Euro group leaders (the European Central Bank (ECB), the European Commission (EC) and the International Monetary Fund (IMF)) were banking on weekend progress to restructure outstanding loans to Greece, which would unlock €7.2B of the total €15.3 billion in rescue funds. Without that money, Greece will not be able to make a €1.54 billion ($1.73B) payment due to the IMF on Tuesday. In order to get the lifeline from the Euro group, Greece must agree to more taxes and an increase in employee pension contributions.

THEN, in a twist worthy of a Broadway “11 o'clock number” (“Rose's Turn” from Gypsy being hands-down the best, ever!), in the wee hours of Saturday morning, Greece’s Prime Minister Alexis Tsipras went on television and called for a surprise referendum for July 5^th, where Greek citizens will have the opportunity to vote on the euro group’s demands. Tsipras called on Greeks to vote “no to the ultimatum” and at the same time, sent his Finance Minister Yanis Varoufakis into the Euro group meeting to ask for a one-month extension on the talks to allow time for the vote. European officials quickly rejected the request, saying there was “no support for that.”

Over the weekend, Greek Prime Minister Alexis Tsipiris stunned the world with an announcement of a surprise referendum next weekend, where citizens will have the opportunity to vote on the euro group’s demands for an increase in taxes and pension contributions. Concurrently, Greece asked the euro group for a one-month extension to the negotiations, which officials quickly dismissed.

Then the European Central Bank announced that it would not increase short term funding which has allowed Greek banks to meet withdrawal demands. Without the lifeline, Greece had no choice but to announce that banks would be closed for a week and to impose capital controls, which limit how much money citizens can withdraw from the banks (€60/day, though no limit if drawing from a non Greek bank card, so foreign tourists are not affected) and transfer out of the country.

Barring a last minute-effort, Greece is now likely to fall into technical default on the IMF loans, though not necessarily on other debts. That puts the country in a dubious club that includes Cuba, Zimbabwe and Somalia, but it would not immediately lead to cascading problems. That is, unless Greek bank depositors make a more fervent dash out of the banks and investors get antsy, during the week leading up to the vote.

The total outstanding amount extended to Greece is nearly $270B, of which the European Central Bank’s exposure stands at about $170 billion. About 80 percent of the ECB’s money is keeping the Greek banking system afloat and the rest is in the form of longer-term Greek bonds, which require a $3.9B installment on July 20^th and the remainder must be paid by the end of August.

I know that it’s easy to paint Greece as the screw up, prodigal son in this story, but Irish economist Karl Whelan wants to set the record straight. Whelan cited the EC’s report on Greece from last year, which found that total public sector employment declined over 25 percent from 2009 to 2014. During the same time, Greece reduced its fiscal deficit from 15.6 percent of GDP to 2.5 percent, according to the OECD.

Perhaps because Euro group members are not willing to discuss the progress that Greece has made or the pain that ordinary Greeks have endured, Tsipiras and many within Greece’s ruling Syriza party are balking at even more austerity, which the party had promised to bring to an end when it successfully won seats in parliament in January.

The defiant Greek posture only inflames emotions more, leading many in Europe to posit that a default and exit from the euro zone, combined with a new (and much devalued) currency and structural reforms, would be best for Greece in the long run. The Financial Times Martin Wolf is not so sure: “Far more likely is a period of chaos and, at worst, emergence of a failed state…Neither side should underestimate the risks.”

While a deal between Greece and its creditors may finally emerge, “it still looks unlikely to include the substantial debt relief needed to end the crisis and eliminate the risk of Grexit”, according to Capital Economics. That’s a shame, because the answer seems so clear: European financiers pushed the ultimate drug into Greece—cash. Now that the addicted country is coming off the stuff, it would be foolhardy to go cold turkey.

US Jobs Report in a holiday-shortened week: Here in the US, there continues to be evidence of economic improvement. New and existing home sales reached 6 to 7 hear highs; personal income and spending jumped in May; and sentiment came in at a 5-month high. The better than expected results overall is prompting some economists to increase their projections for the June employment report from 215,000 to closer to 250,000. And there may be even more progress on wages: “Adjusting for inflation, disposable income for the first five months of the year is up a strong 3.6 percent compared to the same period last year,” according to Joel Naroff. Just a reminder, the report will be released on THURSDAY at 8:30ET, due to the Friday observance of Independence Day.

MARKETS:

• DJIA: 17,946 down 0.4% on week, up 0.7% YTD
• S&P 500: 2101, down 0.4% on week, up 2.1% YTD
• NASDAQ: 5,080 down 0.7% on week, up 7.3% YTD
• Russell 2000: 1279, down 0.4% on week, up 6.2% YTD
• 10-Year Treasury yield: 2.47% (from 2.27% a week ago, highest yield in 9 mos)
• August Crude: $59.63, down 0.6% on week
• August Gold: $1,173.20, down 2.4% on week
• AAA Nat'l avg. for gallon of reg. gas: $2.78 (from $2.80 wk ago, $3.68 a year ago. AAA predicts that 35.5 million people will drive over Independence Day weekend, the most since 2007 and they will pay the lowest price at the pump since at least 2010)

THE WEEK AHEAD:

Mon 6/29:

10:00 Pending Home Sales

10:30 Dallas Fed

Tues 6/30:

GREECE PAYMENT DUE TO IMF

9:00 S&P Case Shiller Home Price Index

9:45 Chicago PMI

10:00 Consumer Confidence

Weds 7/1:

Motor Vehicle Sales

8:15 ADP Private Sector Jobs Report

9:45 PMI Manufacturing

10:00 ISM Manufacturing

10:00 Construction Spending

Thurs 7/2:

8:30 June Employment Report

Fri 7/3: MARKETS CLOSED IN OBSERVANCE OF INDEPENDENCE DAY