U.S. equity averages finished slightly lower last Thursday, ending an Independence Day shortened week as an uninspiring June payrolls report gave investors pause ahead of a key Greek referendum vote. The economy added 223,000 jobs last month, shy of economists' consensus projection for 230,000, while government revisions to April and May subtracted 60,000 jobs. A decline in the labor force participation rate, falling to a 1977 low, contributed toward driving the unemployment rate to a seven-year low at 5.3%.
On Sunday, more than 60% of Greeks voted "no" to further austerity measures, increasing the likelihood of the country's exit from the Eurozone. This would push Europe to uncharted territory, as no country has left the single currency since its inception.
For the week, the S&P 500 fell -1.14%, the Dow Jones Industrial Average lost -1.15%, and the MSCI EAFE (developed international) dropped -2.64%.
Here are the 3 stories this week that rose above the noise:
Slowest, "No Respect," US Recovery may become longest ever -- Bloomberg
"It may not seem like much of a recovery to most Americans, but the current economic expansion has many of the makings to become the longest in more than 150 years.
Low inflation, healthy consumer finances and pent-up demand for housing all argue that the recovery is well-positioned to withstand any fallout from the Greek crisis and has room to run as it enters its seventh year on Wednesday."
Greece Defies Europe on Austerity Overwhelmingly Votes "No" -- Reuters
"Greeks overwhelmingly rejected conditions of a rescue package from creditors on Sunday, throwing the future of the country's euro zone membership into further doubt and deepening a standoff with lenders.
Stunned European leaders called a summit for Tuesday to discuss their next move after the surprisingly strong victory by the 'No' camp defied opinion polls that had predicted a tight contest."
Why Congress Should Allow Puerto Rico Bankruptcy -- The New Yorker
"It hasn’t exactly been a quiet week in the world’s debt markets. Not only has Greece defaulted on a loan from the International Monetary Fund but on Monday Puerto Rico’s governor, Alejandro Padilla, announced that the island’s seventy-two-billion-dollar debt load was, on its current terms, “not payable,” and warned that, in the absence of debt relief, Puerto Rico could enter a “death spiral.” Padilla was essentially calling on Puerto Rico’s creditors—which include not only hedge funds but also municipal-bond funds that have been busy buying up the island’s debt—to restructure its obligations.
It was a reasonable and, in terms of what’s best for the Puerto Rican economy, eminently sensible request. But it’s still unclear if it will have any effect. Puerto Rico’s dilemma boils down to a couple of simple facts: its debt is enormous relative to the size of its economy, and that economy has been stuck in recession for almost a decade."
Articles chosen and summarized by the Tower Square Investment Management team. Tower Square Investment Management provides investment management and advisory services to a number of programs sponsored by First Allied Securities and First Allied Advisory Services. Tower Square Investment Management individuals who provide investment management services are not associated persons with any broker-dealer.
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