7 Things You Need To Know About Finance This Week (June 12th, 2015)

Making financial news easy to understand.
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In a 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.) Is the climax of the Greek tragedy about to be reached?

  • Greece must pay a large debt owed to the IMF by the end of June, which means it needs a deal with its lenders (the Eurozone, led by Germany, and the IMF) in place ASAP. On Thursday, the IMF walked away from talks, which increased the likelihood of a Greek default.

2.) Bonds aren’t the safe investment that everybody made them out to be.

  • Bonds continued a sharp sell-off that began in mid-April; analysts are split on whether the move is largely done for now or if there is more to come.

3.) China is no longer growing at hyperspeed.

  • China lowered its expected economic growth rate for this year; the slowdown in China is causing a huge ripple effect across the world.

4.) Emerging market growth is also slowing.

  • Case in point: the World Bank warned that emerging market economies are also slowing, partly due to China. 

5.) Japan growing more quickly than thought.

  • One of the bright spots this week was news from Japan that its economy grew much more in the first quarter this year than people initially thought.  

6.) The Deutsche Bank co-CEOs resigned.

  • In a further sign of the challenges facing large banks, the co-CEOs of Deutsche Bank said they were stepping down from their posts. 

7.) Apple launches music service to rival Spotify.

  • Early this week, Apple launched its own online music streaming service, which will operate similarly to the current market leader, Spotify. Partly in response, Spotify raised $500 million to protect its market position.

Why should I care?

The main takeaways from this week are that:

  • Greece could cause a serious short-term problem for stocks if it defaults on its debt due at the end of June.
  • Global growth is slowing more than expected, led by weakness in China and other emerging markets; this is bad for emerging market stocks in particular but could cause weakness in stocks in the US and Europe too.
  • Bonds are losing money. An investment that used to provide income with little risk now provides only a little income and a lot of risk; many people misunderstand how riskier the bond market is right now.

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