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Economic reports in July subdued fears of a double-dip recession. The fi rst quarter’s gross domestic product (GDP) growth was revised upward from +2.7% to +3.7%, and second quarter estimates came in at an annualized +2.4% growth rate. The ISM Manufacturing Index fell during the month, but remained well above 50 (the threshold for expansion) for the twelfth straight month.
The Committee of European Banking Supervisors (CEBS) released the much-anticipated stress tests on European banks, with only 7 of 91 banks failing under adverse scenarios. Although the test results suggested that the European banking system is generally healthy, many experts have criticized the rigor of the
scenarios tested. The next step will be for national authorities to assist those faltering banks with as much as €3.5 billion to recapitalize their balance sheets. In other news, Goldman Sachs agreed to pay $550 million to settle a civil fraud suit brought by the Securities Exchange Commission (SEC). The SEC had accused Goldman Sachs of defrauding investors by failing to disclosing confl icts of interest in a synthetic collateralized debt obligation. British Petroleum appeared to have successfully capped the Macondo oil well and subsequently injected a “static kill” to permanently seal the leak.
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