Market Digest \u2013 Week Ending 2\/12\r\n\r\nA Friday rally partially salvaged an ugly week, but stocks still lost ground. The S&P 500 finished down 0.8%, but international stocks were off 2.8% and the global stock market entered official bear market territory (down more than 20% from the high last May). Reminiscent of periods of stress in 2011 and 2014, weaker nations in Europe began to see rates rise even as German bond yields fell. Gold and Treasuries rose.\r\n\r\nWeekly Returns:\r\n\r\nS&P 500: 1,865 (-0.8%)\r\nFTSE All-World ex-US: (-2.8%)\r\nUS 10 Year Treasury Yield: 1.75% (-0.09%)\r\nGold: $1,237 (+5.5%)\r\nUSD\/EUR: $1.126 (+0.9%)\r\n\r\nMajor Events:\r\n\r\n\u2022 Monday \u2013 Yelp announced a Q4 loss but higher revenue. Its CFO stepped down.\r\n\u2022 Monday \u2013 US Bank stocks were hit hard on declining expectations for rate increases.\r\n\u2022 Monday \u2013 The Labor Department proposed a rule that would require sellers of variable annuities to adhere to a fiduciary standard, which could radically change the industry.\r\n\u2022 Wednesday \u2013 Fed Chairwoman Yellen said she does not expect to have to cut rates and does expect to continue the plan to slowly increase them. She acknowledged that market or economic weakness could delay or scuttle planned hikes.\r\n\u2022 Wednesday \u2013 Asahi offered $2.9 billion to Anheuser-Busch InBev for Peroni and Grolsch.\r\n\u2022 Thursday \u2013 The number of Americans filing for unemployment fell more than expected, suggesting the labor market remains strong amid stock market weakness.\r\n\u2022 Friday \u2013 Oil prices rose 12% on hopes of production cuts.\r\n\r\nOur take:\r\n\r\nThere are plenty of reasons to be scared of stocks, but there are always plenty of reasons to be scared of stocks. In our view, one of the main concerns has been high valuations, especially in the US. The S&P 500 began the year trading at 23 times trailing earnings. Now it is at 21. That is still higher than historical averages, but considering interest rates are hovering around record lows it isn\u2019t extreme \u2013 lower rates make stocks more attractive by comparison.\r\n\r\nWe\u2019d rather buy at 21 times earnings than 23. Meanwhile, the dividend yield has crept up to 2.4%, which isn\u2019t exciting, but is higher than it has been in a long time. If there is a good part about declining stock prices it is that it makes them more attractive when looking forward.\r\n\r\nThere are also always plenty of reasons to be bullish on stocks. Our favorite \u2013 they go up more than they go down. It will be an interesting year, but it is almost always an interesting year.