• Stocks saw a positive week despite geopolitical risks that sparked volatility. Back and forth news on Russian aggression, growing US involvement against ISIS in Iraq and an end to a cease fire between Hamas and Israel weren’t enough for equities to rise. As earnings season winds down in the US over 70% of firms have reported results that beat estimates.
• European economies continue to report feeble fundamentals. Germany contracted in July sending Bund yields below 1% while France has stagnated. This comes on the heels of Italy entering a triple-dip recession. Nevertheless stocks in Europe were flat or slightly improved on the week.
• US yields continue to marvel analysts and commentators. Increased hostilities between Ukraine and Russia on Friday sent the 10yr to its lowest level since May of 2013, crossing and closing below 2.40%.
• Japan reported Q2 GDP growth of -6.8%. The severe contraction was in line with expectations as the implementation of a new sales tax starting in April dampened consumption. China data revealed that credit growth slowed in July to the dismay of onlookers. China continues to keep credit conditions lax in hopes of supporting the economy.
• Energy prices continue to fall as the bad data out of Europe and Asia is being interpreted as meager demand for crude. In addition, one of Libya’s largest export terminals is said to be coming back online with a capacity of 300,000 bpd. Natural gas prices in the U.S. are maintaining low levels despite storage reports that come in lower than expected.
• Other pertinent US data published supports the theme of a mixed recovery effort rather than a boom. Retail sales disappointed while Capacity Utilization showed increases.
• Kinder Morgan made big news with a corporate restructuring that will see the MLP reorganize as a C corporation. The firm should see tax savings and an improved cost of capital as a result. Analysts believe the reform is not something that will become a trend with other MLPs.

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