Commentary

George Chamberlin

GEORGE CHAMBERLIN has been associated with The Daily Transcript at SDDT.com since 1998 and became Executive Editor in 2006. He is responsible for the development of editorial strategies for the newspaper and website. He has introduced video and audio into the editorial products and is the public face of the company at many community events. George regularly chairs industry roundtables and conducts video interviews of participants for use on the San Diego Source. He writes two daily columns, "Money in the Morning" and a daily stock market wrap-up.

George, a long time resident of North County, lives in Vista with his wife Terry.

From the Executive Editor

Geez, I take a week off and the stock market tanks! I pretty much ignored financial news last week and was a bit surprised to see a 3 percent drop in the Dow industrials and other market indexes. Seems the tension has shifted away from Greece -- tourism there is booming -- and the attention has shifted to the worsening situation in China. The problems there continued this morning with the major Chinese stock market indexes dropping an additional 8.5 percent.

George Chamberlin will return Monday, July 27.

Stocks continued their steady move higher yesterday. The Dow industrials tacked on an additional 70 points to the already impressive gains ever since the Greek government caved in to pressure from the EU to accept the conditions of an economic bailout. The Dow has been up in five of the last six sessions. The gains were even bigger at the Nasdaq, which closed yesterday at a new all-time high. That index is moving even higher today after Google and Netflix reported better-than-expected Q2 results.

Well, it had to end sometime. After a substantial rally over the past four trading sessions that saw the Dow industrials gain more than 500 points, investors decided to step in yesterday and take some profits. Yes, the Dow gave back 4 points in active trading. Actually, it was 3.41 points. Expressed as a percentage, it was a decline of 0.002 percent. But, a loss is a loss and it creates the opportunity to start another streak of winning sessions.

Four in a row. Yesterday's 76-point gain in the Dow industrials represented the fourth session in a row the index has moved higher. How impressive is that? It is the first time the Dow has gone up four days in a row since January, evidence of the volatility marking the first half of 2015. The move above the 18K level came at a time when most analysts were suggesting the ducks were in a row for a sharp correction in stock prices. Unfortunately for the permabears, there doesn’t seem to be many people willing to get rid of their stocks, especially when there are few attractive alternatives.

Conventional wisdom suggests most baby boomers who work during their retirement do so to makes ends meet, the consequence of insufficient savings and investments.

What do Nike, Walt Disney and Starbucks have in common? Those three companies, and many others, closed yesterday at all-time record high prices thanks to a three-day rally lifting the Dow industrials by nearly 500 points. Think back to a week ago and it looked like we were on the brink of a massive correction in the stock market. The EU was in disarray over the Greece situation, the nuclear negotiations with Iran were stalling, the Fed had its finger on the interest rate-hike button, and the U.S. economy seemed ready to slip into another recession. It brings to mind the old expression, "Stocks climb a wall of worry."

Greece is the word. I've wanted to use that line for weeks and finally feel it is appropriate. After marathon talks over the weekend, an agreement was reached between Greek officials and members of the ECU on a third bailout package. The deal includes obvious items such as tax increases and pension reform but also includes a plan to privatize "valuable Greek assets" to the tune of about 50 billion euros. Half the money would be used to pay down existing debt and the other half will serve as collateral against future loans. The people of Greece will likely protest the agreement but, for the time being, it appears to be a done deal. Banks in Greece are expected to reopen on Thursday.

The end is near -- and that's a good thing. Hope against hope, there appears to be a resolution to the festering crisis in Greece. The prime minister has submitted a 13-page letter to the European Central Bank and other creditors outlining budget cuts and other steps the country is willing to take to restructure outstanding debt by lowering interest rates and forgiving some obligations. It is possible an agreement could be reached as early as today or over the weekend. Keep your fingers crossed so we can put this nightmare behind us.

The monthly parade of employment reports continues to provide evidence of an economy ready to take growth to the next level.

It looks like most of the world was in a really bad mood yesterday. From computer glitches at the NYSE, United Airlines and the Wall Street Journal to more insanity in Greece, things were just out of whack. And, of course, that was all traders needed to drag the stock market down again. The Dow industrials fell 262 points to the lowest level in four months. The decline had nothing to do with the nearly four-hour shutdown of trading at the exchange, which proved to be the result of problems during a software upgrade. Despite efforts to suggest it was a cyberattack, there was no evidence it was anything more than just a glitch.

Forget Greece, China is cause to freak out. Yes, the folks at MarketWatch.com are really piling on this morning, seizing the opportunity to raise the fear level by throwing out headlines suggesting it is time to freak out. Add to that another report saying, "The crash in Chinese stocks is just beginning." You have to wonder the motivation that prompts these guys and others to make such emotional statements. For instance, MSNBC this morning had a guest who made two completely erroneous statements about the situation in China. One said most middle-class people in the country have their money invested in stocks. Yet, in truth, only 15 percent of household wealth in China is linked to stocks. And the same guy said the Chinese stock exchange has stopped trading in stocks that have been trading sharply lower. In fact, the vast majority of such actions came at the request of the companies themselves. Get it right.

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