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7 Things You Need To Know About Finance This Week (June 19th, 2015)

Making financial news easy to understand.

In the second edition of our new weekly series, we'll be breaking down seven different things every person needs to know from the world of finance news. We're taking complicated stories and making them simple, easy to understand, and quick to read. Perfect for the man who wants to be in the know, but doesn't have the time to obsess over global markets.

7 Things You Need To Know

1.) There's An Increasing Likelihood That Greece Will Go Bankrupt

  • There has yet to be a deal between Greece and its creditors that would allow it to pay a large IMF loan due at the end of June. 
  • As rhetoric between the various parties hardens, chances of a Greek default have increased substantially.
  • As a large payment to the International Monetary Fund at the end of the month looms, there is now a high likelihood that Greece will go bankrupt. 
  • As a result, Greek stocks sold off almost 20% this week and the risk weighed on stock markets around the world.

2.) U.S. Federal Reserve Likely To Raise Rates This Year…But Will Do It Slowly

  • “The Fed” sets the target interest rate in the U.S. on which many financial products, like mortgages and business loans, are based. 
  • The Fed suggested this week that it will likely raise rates at some point this year, but it will do so in a gradual manner.

3.) Wearable Tech Had A Good Week

  • Fitbit became a public company – which means its stock started trading on an exchange – at a valuation of roughly $4 billion. 
  • It was also reported that Apple watch sales have beaten expectations.

4.) Airbnb Valued At $24 Billion

In another sign of how companies can come to be worth a lot of money without having to "go public," reports said that Airbnb was raising $1 billion from investors that valued the company at $24 billion.

5.) The Netflix Of China

  • Alibaba said that it would launch a Netflix-like subscription based, video-streaming service in China. 
  • In a country where over 600 million use the internet (twice the population of the U.S.), the potential for online distribution of content is huge.

6.) A Bad Week For Non-US Stocks

  • Stock markets outside of the U.S. had a bad week as concerns over Greece caused worries in Europe and investors continued to fret over a Chinese economic slowdown. 
  • For the week, Shanghai stocks are -7% and the Eurostoxx 50 (Europe’s biggest companies) is off almost 3%. 
  •  The S&P 500 in the U.S. was marginally higher on the week. 

7.) Chinese Go Big On U.S. Real Estate

  • The Chinese have become the biggest foreign buyers of U.S residential real estate.
  • From March 2014-March 2015, $28.6 billion of property was bought by Chinese buyers, which is 30% more than the previous year.
  • If you live in one of the most affected jurisdictions (which in the U.S. appear to be parts of California, Washington and New York), your cost of housing could be significantly higher as a result.

The Biggest Takeaways

  • Greece could be a serious problem. If Greece does go bankrupt, it is unclear how bad this will be for the global financial system. Uncertainty, in the short term at least, will likely cause further sell off in stocks.
  • The Fed will only raise rates slowly. A slow raising of rates is probably moderately good for stocks and bonds, especially in the US and emerging markets.

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