- It looks like there is going to be some kind of deal to avoid the “Grexit”
- Greek’s exit would be great for Europe, but it would not be politically attractive for either side
- As long as Greece stays in the Eurozone, the Greek government can continue to blame Germany or Brussels for their problems
- So-called austerity will continue without any haircut to the debt
- The same is true for cuts to government spending
- The Greek government may increase taxes and/or adjust the retirement age for pension, but no government spending cuts are on the table
- Tax increases will provide more incentive for tax evasion or avoidance by leaving the country
- All talks are re-arranging deck chairs on the Titanic – extend and pretend
- The markets are higher – the euro down big
- The market is anticipating more cheap money, which would be threatened by a Grexit
- In an ideal world, if Greece were to leave the Eurozone and set themselves up as a bastion of free market capitalism, then they could come back strong
- Given the electorate, this move is unlikely
- Socialism only works in Greece as long as they have another country’s money
- The sell-off in gold based on the Fed’s dovish statements last week
- The Fed will only raise interest rates nominally in order to keep the market from balance sheet expansion stimulus into its calculations
- Good news from housing numbers – a surge in the Northeast
- Mortgage rates have been rising, although still low. Some buyers are worried about higher rates
- Higher rates, however would price buyers out of the market
- Monday Chicago Fed National Activity Index came in at -.17, continuing a downtrend consistent with a recession
- May Durable Goods down 1.8% three times lower than expectations
- X transportation met recently reduced expectations
- Durable goods has missed for 5 out of the last 7 moths
- Chicago PMI Manufacturing weaker than expected decrease to 53.4 – now at the lowest level since October 2013
- Manufacturing and production data sis weak – housing numbers are getting a boost from interest rate expectations
- Home ownership rate continues to fall
- Rents are rising
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