Things Are Calmer, but Far From Settled

It was never about the G word, nor was it about the C word or even the I word. If you guessed the three words from those letters, a tip of the hat to you.

Let's start with Greece. There was so much noise and fearmongering about Greece and how the end of the world was imminent that it was impossible to ignore. Media were ringing joyously about how a collapse of Greece and a Grexit would lead to the Great Depression all over again. One big difference would be that, this time around, it would be a global phenomenon and not just limited to our shores.

So, is Greece sorted out? Yes, to an extent. The agreements have been reached in principle. The initial funding should shortly be released and Greece will be able to make its overdue or past-due payments. However, are we completely in the clear on that front? Far from it. The issues regarding Greece have not been solved. Greece is not suddenly a vibrant member of the eurozone. It is still a sickly and severely hobbled member country within the EC.

So, now let's move on to China. Is everything coming up roses in China now that the markets seem to have stabilized there? Not by a long shot. There are around 650 companies that are still suspended from trading on the Chinese exchanges. IPOs are still banned for now and no one has an idea when those companies that are waiting in the wings will be allowed to come to market.

Has the property bubble been sorted out in China? Not by a long shot. I am sure all of you have heard the horror stories of the overzealous buildout of mammoth office towers and residential complexes in cities like Shanghai and Shenzhen that are ghost buildings right now. By some estimates, most commercial construction undertaken in the last three years is unoccupied or with minimal rates of occupancy or, even worse, incomplete as the sources of funding dried up. Is China shining? Maybe still is, but the sheen has definitely been tarnished a bit.

Finally, we have the interest rate situation, which the Rebel Yellen Fed has been holding over the world like the sword of Damocles for more than a year. In my opinion, if the Fed is going to raise, it should just do it and get it over with once and for all. I don't think the U.S., to say nothing of the global economy, is ready for rising rates at all. However, if they are going to do it, then just do it.

So after all is said and done, the end of days did not come despite all the hand wringing, which is what I have been saying all along. One great thing did come of that noise; a terrific buying opportunity, the results of which we've enjoyed the last few days, including today.

Great weekend, everyone, and as always, thanks for reading.

Original Link
http://realmoney.thestreet.com/articles/07/17/2015/things-are-calmer-far-settled