Video Reports

Embed this video

Copy Code

Link to this video

Get LinkEmbedLicenseRecommend (-)Print
Bookmark and Share

By Jason Stipp and Jeremy Glaser | 06-19-2015 09:00 AM

Friday Five: A Different Kind of Greek Tragedy

The global stakes surrounding the latest Greek flareup are different than they were a few years ago. Plus, the Fed seeks to soothe, a court raises questions on bailouts, and more.

Jason Stipp: I'm Jason Stipp for Morningstar. Welcome to The Friday Five, Morningstar's take on five stories in the market this week. Joining me with The Friday Five is Morningstar markets editor Jeremy Glaser.

Jeremy, thanks for being here.

Jeremy Glaser: Glad to be here, Jason.

Stipp: The Fed said this week they are on track to raise rates this year. But they also took some steps to soothe the market, which has been wringing its hands over the rate increase for quite a while. What's your take on the situation?

Glaser: This meeting was the first that you could call "a live meeting," where there was a possibility that they could raise rates. And although no one expected them to--and they didn't--we did get some information about how they are thinking about rate increases later this year.

As you mentioned, they did confirm that yes, they are on track and that the economic data is looking better, and that the slowdown we saw in the first part of the year was transitory. Due to those transitory factors and the fact that things are starting to look better, [they said] it would be appropriate to raise rates.

But they also said that the rate of those increases is actually going to be much slower than people might have expected. Instead of two increases in 2015, there is probably only going to be one. And then it's going to be years and years until we get back to a normalized interest rate environment.

I think that Yellen was really trying to calm investors down. Yes, they are on the path of normalizing monetary policy, but this is a very long road, and they are not going to pull away the punch bowl too quickly. They are going to continue to look at the data and make sure that they support the economy. It's not going to be this cataclysmic event.

The market seemed to be quite soothed by that, and I think we are going to see very gradual moves from the Fed in the years to come.

Stipp: Talks over the Greek situation have been breaking down, which is creating quite a tight situation for them. What's the latest?

Glaser: Last weekend we saw the talks basically collapse, and there wasn't a lot of progress this week, either. All eyes are looking to next week when there is a number of meetings of eurozone leaders, and there is hope that some deal will come out of that.

We've seen some volatility around this, but I think investors need to keep the entire Greek situation in perspective when they are reading these headlines and are thinking about if they need to make any portfolio moves.

Read Full Transcript

{1}
{1}
{2}
{0}-{1} of {2} Comments
{0}-{1} of {2} Comment
{1}
{5}
  • This post has been reported.
  • Comment removed for violation of Terms of Use ({0})
    Please create a username to comment on this article
    Username: