Greece is hours away from defaulting on its debt obligations to creditors, threatening a global stock market crash and possible eurozone economic collapse in 2015.
European Union authorities are scrambling to patch together a last-minute deal to prevent a Greek debt default and keep the over-indebted country in the eurozone. Greece is due to pay billions of dollars to the International Monetary Fund (IMF) at midnight. But if no agreement .
The savings of 500 million individuals living in the European Union are on the line.
Let me explain:
We all know Cyprus, one of the smallest countries in the eurozone and part of the European Union, went through what many feared. To save itself from default and pay down its out-of-control national debt, the government imposed a one-off capital levy on the bank accounts of individuals in that country. If .
What no politician has the guts to do:
Step 1: stop printing more fiat currency; Step 2: have all fiat currencies backed by gold.
It wasn’t too long ago that the global economy had the gold standard—only a certain amount of money was printed and that printing was based on the holdings of gold bullion a country had.
Now, after a few decades of running away from the gold standard .
While debt-infested countries in the eurozone are struggling to decrease their budget deficits, the U.S. government is reporting an increase in its deficit. For the fiscal year of 2012, the federal government budget deficit was $1.09 trillion, slightly below 2011’s deficit of $1.29 trillion. (Source: U.S. Department of the Treasury, October 12, 2012.) As a percentage of gross domestic product (GDP), the U.S. government’s budget deficit for the year 2012 .
Following a weak second quarter, the Dow Jones Industrial and S&P 500 indices are now in positive territory for the first time since the end of the first quarter on the backs of a positive July and August.
So far, August has proven strong for technology, growth, and small-cap stocks, with the NASDAQ and Russell 2000 up 4.2% and 3.4%, respectively, as of the close of Thursday. The S&P 500 .
Italy’s economic contraction deepened, as its GDP fell 0.7% in the second quarter of this year. What is more disconcerting is that, year-over-year, in the first quarter of 2012, GDP contracted 1.4%; while, in the second quarter, the economic contraction worsened, as GDP shrunk by 2.5%.
Italy’s Retail Confederation predicted last week that consumer spending would fall by the most in 2012 since WWII!
In Spain, the economic contraction continues .
I wrote a couple of months ago in these pages about the fact that the British economy officially entered a recession as of the first quarter of 2012, when the country released its GDP growth numbers. While Britain expected its third consecutive quarter of negative GDP growth in the second quarter of 2012, the economic contraction is worse than first thought, because GDP growth contracted by 0.7%!
This was the .
Apple Inc. (NASDAQ/AAPL) will report its fiscal third quarter on July 24, but the real excitement for the company will be the second half, when Apple releases the highly anticipated “iPhone 5,” an “iPad” mini (to challenge smaller tablets), and the next version of “Apple TV.” I recently played around with Apple TV, and I can tell you it is quite impressive. The ability to wirelessly stream pictures and video .
Hope springs eternal; many believe consumer spending will resume in 2012 as the jobs market improves, preventing the U.S. economy from entering a recession. But the hard evidence shows otherwise.
As the U.S. Senate and Congress are split between democrats and republicans, there are at least 15 job bills that have not been passed or that are still stalled, as the jobs market continues to deteriorate. (Source: LA Times, .
The eurozone is on shaky ground.
European Union leaders will be meeting on Thursday to begin an emergency two-day summit as the region’s leaders attempt to localize and corral the European debt crisis.
Spain has formally requested emergency funds to help save its fragile banking system. It is unknown how much cash Spain is asking for, but about USD$130 billion is available. The overriding concern is if Spain collapses, it .
Immediate term outlook:
The bear market rally in stocks that started in March 2009, extended because of unprecedented central bank money printing, is coming to an end. Gold bullion is up $1,000 an ounce since we first recommended it in 2002 and we are still bullish on the physical metal.
Short-to-medium term outlook:
World economies are entering their slowest growth period since 2009. The Chinese economy grew last year at its slowest pace in 24 years. Japan is in recession. The eurozone is in depression. With almost half the S&P 500 companies deriving revenue outside the U.S., slower world economic growth will negatively impact revenue and earnings growth of American companies. Domestically, America’s gross domestic product grew by only a meager 2.3% in the second quarter, which will negatively impact an already overpriced equity market.
Estimates Aug. 29, 2015
Trailing 12-month EPS for Dow Jones companies (Most Recent Quarter)