Greek coalition talks fail
An effort by Greek President Karolos Papoulias to broker a deal between multiple political parties failed on Sunday, according to the Associated Press. The radical left wing party, Syriza, will not attend any of the talks, which calls the validity of any negotiations into question. Syriza campaigned on a platform of pulling out of all of the international bailout commitments. If no solution can be found, Greece will have to hold new elections next month postponing the political uncertainty and putting the country’s membership in the Eurozone at risk. Fears regarding Greece are pushing the European markets down today. Dow futures are negative after closing down 34 points on Friday to end at 12,820.
Three JP Morgan Executives to Leave
Three high ranking executives with direct connections to the $2 billion loss will leave JP Morgan Chase this week, according to the Wall Street Journal. The Chief Investment Officer, the highest paid woman on Wall Street, is one of the executives who will step down. The trader known as the “London Whale” because of the big positions he took in the credit market on behalf of the risk management unit is likely to leave as well. The announcement of the loss caused the shares of JP Morgan to fall 9 percent on Friday, costing $14 billion in market capitalization.
China’s banks ease capital requirements due to slow growth
On Saturday, the People’s Bank of China cut the amount of cash that banks must hold in reserve freeing 400 billion yuan ($63.5 billion) for lending. This will be added to the roughly 800 billion injected in two previous cuts since the government tilted its policy towards growth in October. CNBC reports that the move came after data on Friday showed the Chinese economy was weakening and not recovering from its lowest level in nearly a decade. The cuts led to positive results in most of the Asian markets early on Monday but by the end of the day, most markets were down.
Commodity markets fall
Commodities fell to nearly two year lows last week causing investors to wonder if the rally that began in 1999 is over, according to the Wall Street Journal. Crude oil and gold prices have slumped by double digits in comparison to the 2012 highs. Copper has also fallen by 8 percent. The economies in Europe and China are impacting the commodities markets. While experts aren’t predicting a prolonged decline in prices, the belief is that a slower growth phase is beginning.
More Small Banks offering Floating Rate Loans
Lenders at small banks are removing floors on existing loans and offering new floating rates to compete against quotes from bigger banks that are dipping below 2 percent, according to the American Banker. The smaller banks are doing this to hold onto key customers. In mid-February the average loan rate for a commercial and industrial loan from a small bank was 4.73 percent. In contrast, large banks offered an average rate of 3.34 percent. While floating rates may allow a small bank to compete more effectively today, there is greater interest rate risk in the future.
Consumers don’t believe the recession is over
In a study released today by Boston Consulting Group, four in ten consumers don’t believe the economy will improve over the next few years and almost half plan to rein in spending, as reported by USAToday. Only one in five believe their children will have a better life. This is very consistent with Millionaire Corner research that indicates even households with more wealth are not optimistic about the future.
Catherine S. McBreen is President of Millionaire Corner. McBreen plans and develops content for Millionaire Corner. Catherine balances editorial content to meet the informational needs of both new and seasoned investors. She designs special monthly surveys on topical issues affecting the economic environment.
McBreen has a B.S. in speech communications from Northwestern University and a J.D. from DePail University College of Law. She is a member of the American Bar Association, the Illinois Bar Association, and the Chicago Bar Association.
Well-known for her expertise in the affluent and retirement arenas, McBreen is a frequent speaker at industry conferences. She has been quoted widely by the financial media, including The Financial Times, The Wall Street Journal, Research, Private Asset Management, On Wall Street, Reuters, Bloomberg News, The Dow Jones Newswires and Worth. Cathy has appeared as a guest on CNBC Closing Bell, First Business Morning News, Neal Cavuto at Fox Business News, ABC and CBS radio.
McBreen is co-author with Spectrem President George H. Walper, Jr. of the book "Get Rich, Stay Rich, Pass It On: The Wealth-Accumulation Secrets of America's Richest Families" (Portfolio, January 2008)
Catherine is the mother of four and is involved in many school and community events.