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IPOs Aren’t Cool Anymore? – the technology community doesn’t seem to think so. Evidence exists in the sheer amount of private capital being raised as Silicon Valley CEOs shun the equity markets and the shareholder scrutiny that accompanies them.

The evidence is fairly tangible – the last year has seen massive private raisings from some of the biggest rising stars like Uber and Airbnb. Just this week, social messaging app Snapchat raised some $200 million to put its valuation at a sky-high $22.7 billion. Why IPO if getting operational cash from private investors is so easy and you can maintain more autonomy? That’s probably why in a recent survey, only 17% of Silicon Valley companies indicated that an IPO was a goal, while 42% of them said IPOs had no chance.

Economic Check-in: Europe – Europe’s economies, as a whole, continue to move in-line with our long held expectations of slow and steady growth. Investors won’t find much inspiration in the economic data, but we don’t see bears lurking either. After opening the year with three consecutive months of improvement, the May Composite PMI (indicator of manufacturing health) ticked down one basis point to 52.9, from 53.0 in April. This still marks expansion, but bucked the trend of accelerating activity. Expect fixed investment to be weak in May as well. With the “Brexit” referendum looming (June 23), we expect many businesses to delay making any big moves or investments as they await the outcome, and whatever consequence to labor and capital movement the decision may entail. Germans seem to be the most nervous, as confidence in the country slid to a low in May falling to 6.4 from 11.2 points last month – well below the long-term average of 24.4 points.

The Latest on European Banks – some hysteria broke out early this year, in the midst of the correction, when rumors circulated that some of the big European banks were not adequately capitalized. Deutsche Bank was the subject of much of the negative outlook, as you might recall. In April, it was rumored that the bank wouldn’t be able to pay interest on debt coming due, which eerily sounded like a Lehman moment. But, Deutsche Bank quelled fears by offering to buy back some of its debt which it simply could not do if it was not adequately liquid. Also, it supported a report by Moody’s stating it would be able to make payments on its riskiest debt this year and that only a “major, unforeseen event” would cause it to miss a debt payment. False alarm. Most banks turned out to be capitalized just fine, and the group has seen a bounce off the mid-February lows. Where some concern does exist, however, is that perhaps too much bank capital is being used to pay legal fees associated with compliance and pending lawsuits. Bank lenders set aside $160B in provisions for legal costs between 2008 and 2015, with an estimated $50B for litigation fees in the last year. Big players like Deutsche Bank and UBS actually set aside more for legal considerations than they made in profit. That’s not a great business model.

Oil Story Fading – remember recently when each day brought a fresh oil headline? There was even a stretch then when many traders were convinced the stock market’s single influence was the price of oil. That can happen with “center stage stories” most of which take a few months to slip into the background. That’s what appears to be happening now that the price per barrel is hovering around $50, up some 75% or so from February lows. Demand is firming up in China and India as supply pressures are easing from companies filing for bankruptcy and re-calibrated production cycles are taking hold. The unfortunate wildfires in Alberta have also given bottom support to prices.

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Steady Investor’s Week

Is China Spawning Global Deflation? Maybe not intentionally, but some of China’s recent actions are putting deflationary pressures on global prices. A weaker yuan is allowing China to offload excess output in steel aluminum, refined petro-products and will likely spread to basic materials and manufacturing goods. Additionally, China has been shrinking cash reserves at a fairly rapid pace, with January’s drop alone tallying $99.5B to bring their foreign currency reserves to $3.23T – the lowest level since 2012.

The Fed Doesn’t Want the Blame for Market Volatility – In a statement Wednesday, Janet Yellen seemed to concede that the economy is feeling the strain of late cycle growth pressures. She said that "financial conditions in the United States have recently become less supportive of growth." She’s likely referencing widening credit spreads, which can put a squeeze on bank lending, and the market volatility which generally makes everyone a bit uneasy. The Fed has made a habit of seemingly ‘responding’ to market volatility as though it is tied perfectly to their actions. Liquidity certainly plays a role in investment cycles, but it’s not the end all. Yellen wanted to make that message even clearer to markets by stating that market volatility is a product of a shift in global growth expectations, not necessarily U.S. interest rate policy.

European Banks Getting Slaughtered – Europe’s bank situation is much different than the U.S.’s when it comes to the Energy and oil story. Banks in Europe generally have around the same exposure to Energy and resource-sensitive loans as the U.S., but the difference is that Europe was much slower to recapitalize following the financial crisis. Since European banks generally have fewer assets than their U.S. counterparts, the Energy hit is harder on a relative basis. Even so, we don’t see the impact as being enough to spur a credit crisis in Europe (which would be devastating now given the recovery is still very fragile), but we do understand the crisis in confidence that has emerged. As the commodities story continues to play out, these banks could continue to feel the sting. Most investors should be protected from the impact on banks – a well-diversified investment portfolio shouldn’t have much European financial exposure at all.

Crude Oil May Have Further to Fall – in a meeting over the weekend, ministers from Saudi Arabia and Venezuela discussed crude oil prices, but didn’t talk too much about what everyone was hoping for: ways to provide price support. Their message appears to be to maintain the status quo for production, with no potential cuts in the works. It may help matters that Iran has stated they are willing to cooperate with OPEC when it comes to production, but that doesn’t mean a whole lot given that Iran just came online and will likely be reluctant to back off producing and selling. Supply is the big culprit in the price drop, and it doesn’t appear as though measures will be taken to reduce it in the near future.

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Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. Zacks Investment Management, Inc. is a wholly-owned subsidiary of Zacks Investment Research. Zacks Investment Management is an independent Registered Investment Advisory firm and acts an investment manager for individuals and institutions. Zacks Investment Research is a provider of earnings data and other financial data to institutions and to individuals.

The Beacon of Light for Emerging Markets: India – India reported a 7% rise in GDP during the April-June period (year-over-year), which is at pace with China and scores ahead of the other EM stalwarts: Brazil (recession), Russia (recession) and South Africa (slowing). Prime Minister Narendra Modi has pushed forward some reforms to open India’s markets to foreign investment and to expand trade, and just recently scrapped what would have been an ill-advised tax on foreign investment. India still has issues that could be easily resolved—ending high tariffs on some food imports, for instance—so there is a long way to go. But that can be construed as a good thing. Should the Transpacific Partnership be approved soon, and should Modi push forward with more open market reforms, it could open several more doors for India’s economy.

Meanwhile Brazil Continues to Fizzle – On balance, however, the Emerging Markets are still being weighed down by the commodities-sensitive countries like Brazil. Their economy fell into recession in the three months to June, with GDP falling by 1.9% quarter-on-quarter. In Brazil, it’s also a matter of stagflation—inflation is close to double digits while the benchmark interest rate is over 14%. Tightening monetary policy, in an effort to stem inflation, would also mean choking off an ailing economy further. Brazil is between a rock and a hard place policy-wise. To make matters more difficult, China is a big consumer of Brazilian exports and slowing growth there could hurt trade even further.

Mixed Signals from Global Purchasing Manager’s Indices – Manufacturing is either growing, contracting, or stagnating depending on where you look. For Europe the final manufacturing Purchasing Managers' Index came in at 52.3 in August, marking two years of expansion. That would be great news if only China’s PMI wasn’t signaling contraction—China’s official Purchasing Managers' Index fell to 49.7 in August from the previous month's reading of 50.0 - the weakest reading in three years. The sluggish data underscores the anxieties investors have about a slowing China, and the potential effects it can have on the global economy and potential stock sell-offs. Meanwhile, in Japan the PMI expanded at the fastest pace in almost two years in August, reaching 53.7 from 51.2 in July, and marking its highest point since October 2013.

Battered Hedge Funds – Hedge funds have largely taken it on the chin over the last month or so, in light of increased market volatility. Several noteworthy hedge fund managers reported deep losses for August as global equities sold off rather erratically. Bill Ackman’s fund, Pershing Square Holdings, dropped 9.2% on month and is now down 0.1% since January. Other hedge fund losses for August: Greenlight Capital -5.3%; Third Point -5.2%; Jana Partners -4.3%; Viking Global -2.1%; Omega Advisors -6%; Andor Capital -4.5%.

Global Stocks Dip After Inconclusive Jobs Report – all eyes were on the U.S. Nonfarm payrolls number Friday, given it was the last real piece of data the Fed might consider when deciding whether to raise rates on September 17. Prognosticators and economists are increasingly ironic in their desires when it comes to data. Weak numbers are somehow a good thing, since that implies the Fed might delay raising rates for another few months. But, at the same time, weak numbers are a bad thing because it means the economy is more fragile than most anticipated. It’s a lose-lose for U.S. economic data, seemingly. Nonfarm payrolls rose 173,000 in August which, while less than estimates, still brought the unemployment number down to 5.1%. The Labor Department also said revisions showed more jobs were added in June and July than previously estimated.  My read: the job numbers are just fine and the Fed should proceed with getting this market used to gradual rate increases from here.

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Past performance is no guarantee of future results. Inherent in any investment is the potential for loss.

Zacks Investment Management, Inc. is a wholly-owned subsidiary of Zacks Investment Research. Zacks Investment Management is an independent Registered Investment Advisory firm and acts an investment manager for individuals and institutions. Zacks Investment Research is a provider of earnings data and other financial data to institutions and to individuals.