Turmoil in Greece beginning to fray market
The elections in Greece this week left the country without a legitimate government. According to the Wall Street Journal, because the traditional party system has broken into 9 different parties, no single party has been able to gain enough votes to be in charge. This means there will be another election in June. The fear is that a new government may fail to support the bailout plan approved by the former government nor will it enact the required austerity measures. Many experts believe that the European Union will at that point kick Greece out of its exclusive club. The market has not reacted dramatically to this news, perhaps because the outcome is still unclear. The Dow fell on Tuesday for a fifth straight day, falling 76 points to close at 12,932. Asian markets closed down on Wednesday and European markets are mixed.
Gold gives up gains for the year and could go lower
Gold is back to even for the year and experts predict it could go lower, as reported by CNBC. The decline of the euro has fueled the slide of gold because it causes the value of the US dollar to increase. Gold’s initial break even point was $1,625 per ounce. Additionally, Warren Buffett has commented that gold is an unproductive asset. Many investment firms believe that gold may fall to a mid to low $1500 per ounce range, possibly as soon as June.
New French President disagrees with many of the Eurozone austerity measures
According to the Financial Times, France’s new President, Francois Hollande, does not necessarily support many of the initiatives agreed to by his predecessor, Nicolas Sarkozy. His belief is that Europe should shift its focus from austerity to growth and that the government should be behind the growth initiatives. A big supporter of union labor and public workers, Francois has already reversed the decision to move the retirement age in France back to 60, after Sarkozy raised it to 62. Expect Hollande to go head to head with Germany’s Angela Merkel in future months. This will increase European uncertainty but may also lead to less influence by France overall. France currently has a 10 percent unemployment rate and its export market share fell 20 percent in recent years.
US home prices could rise 4 percent a year
A forecast by Fiserv sees home prices stabilizing by summer and then beginning to grow at an average rate of 4 percent per year. When the prices stop falling they will be at an average 35 percent lower than the 2006 peak, as reported by USAToday. The Fiserv forecast, done in conjunction with Moody’s Analytics, assumes steady economic growth with no major shocks. Today the average mortgage represents only 12 percent of household income instead of the traditional 20 percent. Phoenix, Miami and Orlando are predicted to be the top turnaround cities.
Walt Disney shares thrive
Walt Disney had impressive second quarter results with its profit growing 21 percent, as report by Fox Business News. While the success of “The Avengers” was certainly positive, overall attendance at theme parks and other properties also increased. Consumer products and interactive products also grew. One of the negatives was the failure of its “John Carter” movie. Analysts had predicted growth to equal 55 cents per share but Disney’s net income rose to $1.14 billion resulting in 63 cents per share. The stock was up 2.5 percent in after hours trading.
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.