Though a deal with Greece wasn't reached on Sunday, both sides of the debt overhaul debate appear committed to finding a solution. Top-level officials from around Europe met to put together a deal that would be acceptable to creditors as well as Greece's wary parliament. With Greek banks shut since June 28 and unlikely to reopen without additional funds, damage is already being done to the Greek economy. As of Monday morning, an "Agreement" was finally reached between the two sides; now, attention turns to Greece's parliament, which must ratify the deal.
China's stock market, which has been experiencing a bear market correction, stabilized last week. Is the free-fall over? Hard to say, but we're not worried. China's stock market and investing culture is immature, and the recent 30% drop in the Shanghai Composite Index came after a run-up of 150%. Many analysts felt that Chinese markets were frothy and overpriced, so the correction isn't unexpected. However, the stock meltdown does lower the expectation that China's economy will reignite global growth.
On the domestic side, the largest stock exchange in the U.S. experienced an outage last week that caused some to worry about the effects of software on markets. The technical fault that caused the New York Stock Exchange to halt trading for four hours on Wednesday gave investors pause but didn't result in too much disruption to U.S. equity markets because orders were routed through other exchanges. While rumors of a malicious attack flourished, NYSE officials claimed a software glitch was to blame.
In today's software-reliant world, technical faults can and do happen. While other institutional traders who measure positions in microseconds can suffer serious losses when orders don't go through in time, long-term investors aren't usually affected by small glitches. Why? When you're investing for long-term time horizons, the timing of individual trades doesn't matter as much, and little ripples in the market generally won't affect your long-term financial picture.
In the week ahead, Federal Reserve Chair Janet Yellen will be speaking about monetary policy to the House and Senate. Remarks that Yellen made on Friday suggest that she will probably reiterate the Fed's intention to raise rates later this year as long as economic activity continues apace. Earnings season will ramp up with many banks reporting this week as well. We'll have more for you on earnings next week.
Monday: Treasury Budget
Tuesday: Retail Sales, Business Inventories
Wednesday: PPI-FD, Empire State Mfg. Survey, Industrial Production, Janet Yellen Speaks 10:00 AM ET, EIA Petroleum Status Report, Beige Book
Thursday: Jobless Claims, Philadelphia Fed Business Outlook Survey, Housing Market Index, Janet Yellen Speaks 10:00 AM ET
Friday: Consumer Price Index, Housing Starts, Consumer Sentiment