Market Digest \u2013 Week Ending 10\/26\r\n\r\nEarnings season continued to disappoint. Apple, Caterpillar, DuPont and 3M led the list of companies failing to match estimates. Stocks fell. So far, about 70% of S&P 500 companies reporting have beat earnings estimates, but an alarming 60% have missed sales projections. GDP growth for the third quarter was reported at 2.0%, modestly ahead of most expectations. Treasuries rose. Oil prices fell nearly 5%.\r\n\r\nWeekly Returns\r\n\r\nS&P 500: 1,412 (-1.5%)\r\n\r\nMSCI EAFE: (-0.9%)\r\n\r\nUS 10 Year Treasury Yield: 1.75% (-0.1%)\r\n\r\nGold: $1,711 (-0.6%)\r\n\r\nUSD\/EUR: $1.294 (-0.7%)\r\n\r\nMajor Events\r\n\r\n \tMonday \u2013 Caterpillar reported a 49% profit increase but lowered expectations for full year sales and profits.\r\n \tMonday \u2013 Japan reported a 10.3% drop in September exports, compared to last year. A strong Yen and a dispute with China over islands in the East China Sea were cited.\r\n \tTuesday \u2013 Apple unveiled the iPad mini, priced starting at $329, above rival products from Google and Amazon.\r\n \tTuesday \u2013 DuPont and 3M each reported earnings below expectations and guided down future outlook.\r\n \tWednesday \u2013 Facebook shares rose 19% after reporting strong revenue and progress on making money with mobile ads.\r\n \tWednesday \u2013 The Fed made a statement reiterating its belief that the US economy is growing slowly and that its current stimulus plans remain appropriate.\r\n \tThursday \u2013 Apple reported earnings per share up 24%, but below most expectations. iPhone results were strong while iPad sales disappointed.\r\n \tFriday \u2013 US GDP growth for Q3 was reported at 2.0%. The number was higher than expected, driven by consumer and government spending.\r\n \tFriday \u2013 Spain\u2019s jobless rate tops 25%.\r\n \tFriday \u2013 Microsoft released its Surface tablet and Windows 8 operating software.\r\n\r\nOur Take\r\n\r\nUnfortunately, last week\u2019s soft patch in tech earnings carried on this week at some of the major industrial companies. Companies like Caterpillar and DuPont are better indicators of the general economy than the tech sector, so the reduced outlook from their respective CEO\u2019s is significant.\r\n\r\nThe first estimate of Q3 GDP was released this week at 2%, an uninspiring number but better than was expected. Obama is claiming it a victory while Romney is, unsurprisingly, calling it an indication of failure. In reality, it is neither.\r\n\r\nGlobally, the news was worse. A sharp drop in Japanese exports means the country is more than likely headed back to shallow recession territory. It\u2019s also an indication that China will struggle to maneuver a \u201csoft landing\u201d.\u00a0 Things in Spain continue to deteriorate, with unemployment passing 25%. The good news for Spain and Greece is things should start to improve relatively soon. They can\u2019t get much worse. The bad news is the initial improvement from such an undesirable scenario still leaves them in a bad place. Meanwhile a huge portion of their labor pools sit idle, watching their skills deteriorate.\r\n\r\nAt some point, we still believe economic growth globally should start to accelerate in impressive fashion. But it doesn\u2019t look like it will be in 2012.