Economic releases in Europe showed that the region's economy was improving in August. U.S. releases were also mostly positive. Yet, the prospect for U.S. involvement in the hostilities in Syria, put downward pressure on the equity markets and bond yields in a flight to safety. Not surprisingly, energy prices rose, but metals prices fell on the week.

Perspective:

Geopolitical events have overshadowed economic conditions for attention in the capital markets. The decision on what we should do in Syria has been tossed back to Congress. Historically, we have not been able to make good decision in our foreign policy in that part of the world and, one of the obstacles is that we, as an "educated voting population," have very little understanding of the historical, religious, and political forces in that region. For those interested in background for the challenges we face in the Mideast, I recommend Vali Reza Nasr's Dispensable Nation: American Foreign Policy In Retreat. Nasr was a senior adviser to Ambassador Richard Holbrooke, the Obama Administrations' special representative to Pakistan and Afghanistan. [Dean of the Johns Hopkins School of Advanced International Studies in Washington, D.C., senior fellow in Foreign Policy at Brookings Institution, and contributor to Bloomberg View.]

On a personal note, I submit these Comments a day later than usual so I could join with my family in celebrating the wedding of our son and our new daughter in-law. Whenever we get together, I am inspired by the decisions that our kids and their significant others are making. They are serving others as ministers, teachers and social workers; they are serving in their country's military. They are bettering our businesses as actuaries, engineers and marketing specialists. They are preparing themselves by pursuing graduate degrees. Whatever the outcome in the coming days and weeks, I have faith that this next generation will serve our nation well.

Economic Releases:

The weekly Initial Jobless Claims showed positive momentum the week of Aug. 23. Claims dropped to 331,000. The four-week average of Claims (blue in the chart) inched higher to 331,250. Continuing Claims (red in the chart) declined to 2.989 million. The chart shows that Claims data moved closer to the pre-Great-Recession territory.

U.S. Housing releases also showed improvement. The Case Shiller Home Price Index (blue in the chart) rose +0.9% (seasonally adjusted) or +2.2% (NSA) in the month of June. The Index increased 12.1% from a year ago. In other housing news, in July, Pending Home Sales fell -1.3%, having been negatively affected by higher mortgage rates and higher home prices.

Other Economic Releases

U.S. second-quarter GDP was revised almost a point higher to 2.5%, mainly due to a revision in net exports. Personal Income and Consumer Spending each rose +0.1% in July, matching the increases in the PCE Price Index. Also on the soft side, New Orders for Durable Goods fell -7.3%; ex-transportation Durable Goods fell -0.6%; both numbers were on the low end of the range of expectations. The Conference Board's Consumer Confidence rose a point to 81.5 in August. Similarly, the University of Michigan's Consumer Sentiment Index rose 2 points to 82.1; both were on the high end of the range of expectations. As a precursor to next week's PMI reports, Chicago's PMI rose to 53.0.

In Canada, flooding and industrial unrest held back secondquarter growth to +0.4%, 1.4% YOY.

In the Euro-zone, Economic, Industrial and Consumer Sentiment all increased in August. EU Unemployment remained at 12.1% in July. Germany's Ifo Surveys of Economic Sentiment, Current Conditions and Business Expectations all increased in August. Germany's Retail Sales fell -1.4% in July and its Unemployment Rate remained at 6.8% in August. France's Business Climate Indicator rose in August. Home prices in the UK rose +0.6% in August.

China's Markit PMI crossed into the expansion territory at 50.1. The CFLP PMI index also rose to 51.0.

Equities Markets:

Equity markets fell across the globe in a flight to safety from the crisis in Syria. Falling yields produced positive returns for the credit markets in spite of the widening emerging market and high yield spreads on the week.

Bond Markets:

Long bond yields fell in the U.S., Canada, Germany and Switzerland in a flight to safety. Credit spreads widened, especially in the emerging markets countries that are likely to be affected by a step up of hostilities in Syria.

Currencies & Commodities:

The U.S. dollar rose against the European currencies and the Looney. Energy prices rose, but metals commodity prices fell on the week.

Who is John Davidson?

John W. Davidson, CFA, started writing these Comments more than a decade ago as a personal discipline when he was promoted to from portfolio manager to chief investment officer and CEO.

Most recently, he was the president of PartnerRe Asset Management Corporation, responsible for the management of PartnerRe's invested assets, which grew from $4 billion to $12 billion during his tenure. After joining PartnerRe in the fall of 2001, he hired the staff, built the trading floor and created the infrastructure to manage both fixed income and equity assets internally. He retired from PartnerRe at the end of 2008 and moved to Maine, where he focused on board work.

He has more than 35 years of industry experience, including positions with investment management responsibility for separate institutional accounts, mutual funds, trusts and insurance assets. Prior to joining PartnerRe, he served as president and chief executive officer of two other investment management companies. For various companies he has held positions as chief investment officer, chief economist, head of fixed income and portfolio manager. As a portfolio manager, Davidson managed and traded U.S. Government Securities as well as futures and options on fixed income instruments.

His real world experience is backed by a strong academic foundation, which includes earning a Master of Business Administration in finance and a Master of Arts in mathematics from Boston College, as well as a Bachelor of Arts, cum laude, in economics from Amherst College. He holds the professional designation of chartered financial analyst.

His experiences and credentials have brought him to the public as a television commentator and conference speaker. In addition to his frequent past appearances on CNBC, CNNfn, Bloomberg TV and Yahoo FinanceVision, he appeared as a special guest on Wall $treet Week with Louis Rukeyser. Reuters, Bloomberg and other business press services have quoted his views on the market. He has taught CFA preparation programs, as well as other courses offered by the Stamford and Boston CFA Societies, and the National Graduate Trust Officers' School.

Davidson is a natural leader in both his professional and personal life, having developed those skills early in his career as a naval officer. He spent three years on active duty, which included a year on the rivers of Vietnam, and 24 years in the Naval Reserve, from which he retired as a captain in 1994.

Davidson is treasurer and board member of the Camden Conference. He is also on the investment committee of the Pen Bay Health Foundation. He serves as an independent trustee for mutual funds.

In his leisure time, he is an active sailor, tennis player and skier. With his wife, Barbara, he renovated a 100+-year-old home in Camden, where they enjoy spending time with their two golden retrievers and having visits from their five children. He can be reached at jwdbond@me.com.