Although the week started off slowly, markets experienced a couple of volatile t rading sessions on Thursday and Friday

with the Dow dropping more than 180 point s on Thursday before surging more than 200 points on Friday with the release of some upbeat domestic economic reports. Overall, markets finished flat or slightl y up with the S&P picking up 0.36%, the Dow edging just 0.16%, and the Nasdaq ga ining 0.33%.[1] Thursdays downturn in equities was driven largely by Wall Streets realization that European Central Bank emperor Mario Draghi has no clothes. Markets spun in reve rse after Draghi failed to announce any measures to back up last weeks bold talk about saving the Euro at all costs. As we mentioned in the last update, there si mply isnt enough money in the European economy to bail out every periphery countr y. Until Eurozone leaders are willing to support EU-wide underwriting of bond pu rchases by the ECB, there isnt much Draghi can do to back up his words.[2] Domestically, traders reacted very positively to Fridays jobs report, which showe d 163,000 new nonfarm jobs in July, beating expectations of 100,000 meaning weve potentially avoided a double-dip recession so far. However, markets may be showi ng some irrational exuberance as the report held plenty of bad news as well. The labor force participation rate shrank, and small businesses continued cutting j obs last month; two factors which led to the rise in unemployment. For July, the unemployment rate ticked upward a notch to 8.3% from 8.2%.[3] A mediocre jobs report combined with a struggling manufacturing sector and slow business revenues means that the U.S. economy still has a long way to go before we can call it healthy. Add in the tax and regulatory threats coming down the pi ke in the form of Bush tax cut expiration and mandatory spending cuts, and weve g ot a recipe for trouble in the New Year. We hope Congress enjoys its five-week v acation and comes back refreshed and ready to deal with some serious issues befo re the November elections.