Greetings all:

The Fourth of July has come and gone and summer is officially here, although the weather man hasn’t quite figured that out in Southern California. Market dynamics are slow, the economy continues to be wobbly and uncertainty remains the real cloud in the weather picture. 

The old patriotic song “Over There…Over There” hit it on the head, in terms of what has been driving the market action lately…news from overseas.  In the absence of US economic reports last week, Stocks received some help from the headlines “over there.” The European Central Bank left interest rates at a record low and in a separate briefing an Executive Board member stated that “the worst of the sovereign debt crisis seems to be over.  There was also considerable talk overseas last week about bank stress tests-and the positive buzz helped Stocks around the globe move higher.  These stress tests may provide some transparency and help differentiate which financial institutions are strong-so they’re not lumped in with some of the troubled ones.  When stress tests were conducted on the US Banks, the positive results helped boost financial Stocks nearly 40% over the following several months. It is possible that favorable results from the European stress test could bolster confidence in the Euro zone. If the money coming from Europe to purchase our debt securities and Bond instruments starts to reverse, home loan rates will worsen… and it could happen quickly. 

Although the uncertainty remains, we all long both for summer’s start and for renewed prosperity. Both are inevitable, even though our patience is being taxed.

Patricia Leone
Broker
Centre City Properties

DRE License # 01076944 

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