This is the time to be proactive and not reactive Don't buy into the fear in the news! Many of these fears are being misconstrued and may actually result in a positive impact on the U.S. economy over the upcoming months. Anxiety about Greece's debt is causing many investors to make quick decisions based on fear. However, this Euro zone crisis could actually have a positive effect on the U.S. dollar. The fear that oil prices could plummet like they did at the end of 2014 is causing many investors to panic. The reality is that a repeat of last year's oil price drops in September would be more devastating to Russia, the Middle East, and the South American countries. This would ultimately provide further support for the U.S. economy. Investors need to wake up! The Federal Reserve is looking to possibly raise Short Term Interest Rates this fall which means they believe the economy is improving. You can wait, watch, and hope you can react fast enough to these changes to cut your losses - or you can do something beforehand. Do your research and get out ahead of what is coming. Let me provide some perspective on these two current crises to give you a direction so you can do further research to protect yourself. Let's start with Greece. Everyone looks at a Greece default/exit and thinks this will crush European economies and by extension the U.S. economy. Let's break this down a little further to understand what could happen. If Greece defaults and exits the Euro Zone what can we expect? Remember Greece would only exit the Euro Zone not the European Union. This means that the 17 countries in the Euro Zone would take the largest initial hit to the markets. The other 10 countries in the European Union would take a smaller hit. However, in the long run Europe needs to move toward fiscal responsibility to have a chance for a solid recovery. The U.S. markets could experience some short term volatility but ultimately should not be affected in the long run because of the low exposure the U.S. economy has on these markets. The big short and long term loser will probably be China. We are already seeing some signs in the Chinese markets. China exports over 30% of its GDP and half of that goes to Europe. Greece's exit could be the straw that brings down a heavily debt ridden Chinese economy. In contrast the U.S. economy is growing and is only 1/6th of China's exports. The economic debt problems in Greece, Europe, and China, far exceed that of the U.S. While U.S. markets will see some short term volatility, the entire U.S. economy will keep recovering with the big winner of course being the U.S. dollar. Will a repeat of last fall's oil price drop, greatly affect the U.S. economy? Here is what you need to look for. Winter oil blends, politics, market share and innovation are setting a déjà vu moment for oil. The biggest global profit time for oil is when the U.S. is on its summer oil blends. If anyone is going to drop oil prices it would be when the U.S. moves to its winter oil blends on September 1st. Watch for a high level government official like Secretary of State Kerry to visit Saudi Arabia like he did last year on September 7, 2014. Three days after this meeting, oil started dropping until it went to the low $40's by January which had multiple effects. Russia's incursions into the Ukraine and its supply of weapons to ISIS took a serious hit as Russia had enough U.S. cash reserves to get through 2014, as 50% of Russia's economy is oil based. Other middle-east countries except Saudi Arabia would also take major hits along with several Central and South American countries such as Mexico, Venezuela, Brazil, Argentina, etc. Saudi Arabia can go lower in price as they have more U.S. cash reserves than anyone else. Saudi Arabia can grab other countries oil market shares, cut off funds and weapons to ISIS and slow U.S. oil production. The U.S., Europe, and China take small market hits but basically they are all getting oil cheaper which is a benefit to their economies. Again, like the Greece crisis this crisis has a greater effect on other countries which ultimately provides positive results for the U.S. The Elephant in the world economy is the Federal Reserve and its pending short-term interest rate hikes. The question is when. There are two things holding back the U.S. economy; shortage of investment capital liquidity to U.S. private sector and Government anti-business regulations. The majority of U.S. states are busting anti-business state regulations but don't expect much from the Federal Government until January 2017. The big thing now is U.S. banks are sitting on 11 trillion in cash. With short term interest rates at basically zero, banks have no incentive to lend money for housing, start-up companies, or expanding companies. The question is whether the U.S. economy and Federal Government can take the lag in time between raising rates and the benefits that will follow. If they go too fast, too soon, or too much, the Fed could do more harm than good. September 17, 2015 could be a defining moment in the U.S. economy. This is the date that the Federal Reserve may change its zero interest-rate policy that it has had since December 2008. This would be a major shift in the economic recovery policy and would signify that the FED believes the U.S. economy is strong enough to handle such a change. When they raise the interest rate, expect market hits around the world and short term volatility in the U.S. market. The big loser is everyone who does not jump on the U.S. economy coat tails and ride it up as the U.S. moves from a slow to a medium recovery. This is the time to be proactive and not reactive. Personally I think the Federal Reserve should have started raising rates a year ago to help the average person in the U.S. and the private sector. Instead they kept rates low and helped the rich, the markets, Europe, and the rest of the world. There is however, a point of diminishing returns to low rates. Europe hit that point in January and went into negative rates. The Federal Reserve does not want to get to that point because it leads to stagflation which Japan has experienced since the 1990's, Europe now, and China about to enter into it. It could be late in Q3 or Q4 of 2015, or in Q1 of 2016, but it is coming. I hope that you have gained some other perspectives on these issues. Remember, don't buy into the doom and gloom articles and critics. Instead, take the time to do your research. To filter through the propaganda, misinformation, and agendas, research the author of the article on Wikipedia and look at the last paragraph which normally lists who the author's associations are. This will help you see if they have a bias or agenda. Red Flag articles have dozens of unsubstantiated facts that no one has time to verify. They are trying to overwhelm you with data. Completely ignore opinion articles that give no facts. This will leave you articles with only a couple of facts to verify. If you have any specific questions feel free to give me a call.One final thought... Most of the doom and gloom authors and speakers have made millions of dollars doing this for over 20 years. So when coming across an article, it's always important to trust but verify.
