Market Action

• An upward revision to Q2 GDP growth from 3.7% to 3.9% couldn’t lift markets this past week. The downfall this week hit the Nasdaq especially hard as concerns over drug prices and potential political action impacted the Biotech industry specifically and Healthcare sector in general. The Consumer Discretionary now remains the only sector with gains for 2015.
• While GDP growth for Q2 came in higher, Citi lowered its expectations this week for future growth for the U.S. economy. The new estimate comes after the projections for future interest rates and economic growth by the Federal Reserve came in sharply lower than past publications.
• President Xi Jinping began his first state visit to the U.S. in Seattle to meet with the country’s leaders in the tech industry. The future of business expansion for American businesses was among the topics explored as was the Chinese government’s cyber activities.
• The Eurozone continues to report strong growth in its money supply. While the August figures were slightly below expectation the growth rates in M3 money supply imply a considerable improvement in the Continent’s credit growth.
• Volkswagen, the German automaker, found itself in a corporate crisis this week. The firm admitted to cheating on emissions tests on half a million cars. VW’s CEO resigned this week as fines are expected to total multiple billions of dollars.
• New Home Sales came in strong once again this week. Consumer deleveraging and low rates have helped the market recover after the Financial Crisis.
• Global banking regulators reached agreement this week on the use of bail-in bonds as a qualified form of capital for new global standards. The rules will affect 30 of the globe’s largest banks. Critics argue that the use of hybrid-instruments are an inadequate form of capital and will not truly offer cushions in the even of a credit downturn.

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