Market Action

  • Stocks rallied in the U.S. on Friday to squeeze out small gains for the week after having erased YTD gain last Friday. Elsewhere around the globe however the results for the week remain depressing. European markets have compounded weakness demonstrated over the past month while Japan lost nearly 5% during the last five days.
  • Europe saw signals of weakness in a broad spectrum of areas this week. Germany’s DAX index has now fallen over 10% over the past month, the Euro continued to slide, Portugal’s banking sector fragmented further and Italy entered a triple-dip recession,
  • Japan lowered their forecasts for export growth for the rest of 2014. The news adds credence to opinions that Japan lacks fundamental improvement in its ability to produce or consume its way towards growth.
  • The Federal Reserve issued a stunning rebuke of the “Living Wills” from eleven of the biggest banks in the US. The plans are designed to specify how the firms could wind down in a case of market turmoil without public assistance. All eleven will need to revise their plans or face additional regulatory scrutiny from the Fed and other institutions.
  • Energy assets continued their recent downturn during this week’s trading. In light of poor economic data and lackluster performance in the markets concerns about global demand have grown. Crude did pick up on Friday as President Obama twice executed airstrikes in Iraq to combat ISIS.
  • Treasury yields continue to bewilder investors and traders as the US 10yr traded below 2.40% on Friday before closing just under 2.50%. Yields further along the curve also continue to cast doubt on a sudden rise on both inflation and growth.
  • Some headline M&A deals fell through this week, such as Sprint and T-Mobile and Fox’s pursuit of Time Warner. Regardless, a survey released by Bloomberg on Thursday showed widespread belief that M&A activity will continue throughout 2014 in light of low rates and tax advantages from inversion.

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