• The Dow has effectively erased its YTD gains as of this week as concerns over the potential for accelerated Fed action for interest rates, the stabilitiy of the European banking system as illustrated by Espirito Santo, the Israeli/Hamas conflict and the technical bond default by Argentina gained traction and fueled a global selloff in risk assets while ignoring the earnings growth reported most companies. Headline risk continues to have a large impact on global markets
• The majority (70%) of US corporate earnings have come in above expectations. Tesla Motors for example earned $0.11 per share compared to analyst estimates of $0.04 per share. UPS was the largest company to report disappointing earnings this week combined with lower future guidance.
• Crude was under pressure this week as demand declined amidst tensions in the middle-east. Shares of oil producers were under pressure this week as the weakening demand translated into lower margins for investors.
• Q2 GDP realized a healthy rebound due to a reversal in exports and fixed investments. This gain added fuel to the speculation of an accelerated Fed action with interest rates.
• CAPE (cyclically adjusted price earnings) ratio reflected that markets were fairly valued before a 300 plus point sell off on Thursday. Historical measures adjusted for dividends and inflation continue to show that equities are not overvalued.
• Cash was king as bonds were not their usual safehaven as risk assets were sold. Additionally, investors favored the USD over the EUR with concerns over the European banking system.
• Social media giant LinkdIn handily exceeded its earnings expectations and stockholders were rewarded with a gain of almost 12% following the release. Social media companies continue to be able to monetize their subscriber bases.

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