Thanks to ongoing and escalating international tensions, Argentina debt default and the possibility of a Federal Reserve interest rate hike sooner-than-later, the markets went reeling for the week and the volatility index – or VIX – jumped 30% signaling some fear. GDP rebounded sharply in the second quarter growing 4%, making up for both the harsh winter’s negative 2.1% first quarter figure and a building up of inventory levels. Job growth is slowly improving, but housing numbers are lackluster thus making Fed watching the name of the game. With any good economic news being interpreted as bad news for equities, the Dow Jones Industrials fell over 467 points or 2.75% for the week, and now in negative territory for the year by 0.5% and broke through its ten-month moving average. The broader S&P 500 and the tech-heavy NASDAQ, however, are still managing a reasonable year-to-date gain of about 4.2%, not including dividends which can add anywhere from another 1.5% – 3% to a portfolio’s performance. The other major market averages fell around 2.5% for the week, and every industry sector took a hit, especially energy, industrials and even safe-haven consumer goods. Earnings and revenue growth for the second quarter has been spotty and guidance was disappointing for many of the companies reporting over the past few weeks, including a number of thebuttonwoodproject candidates. At this point I do not see any catalysts in place to move the markets higher from here, but I am not in the “panic” camp either. The market may continue to trend lower as valuations will come in line with revised forecasts and all the political unrest in the world is doing no favors for investor sentiment. But the significant wild card is still the Fed, which has kept rates low for so long providing liquidity, easy credit and few alternatives to stocks. Once that changes – or even the perception of a change – markets will react negatively and sharply. However, notwithstanding the usual to-and-fro and inherent risks in a still frothy market, I still maintain that for the long-term investor a basket of high-quality equities along with an allocation of other investments to round out a well-balanced and diversified portfolio of cash equivalents, fixed income and stocks will pay off over time. Dividend yields have moved lower on higher share prices, but the absolute dollar value of a stream of rising dividend income will help mitigate the distress of a market correction. This week we will get second quarter earnings from CVS Caremark, which analysts have pegged at $1.10 vs. last year’s $0.97 and on target to a full-year $4.46 and possible $4.95 next year. Dividend growth should outpace cash flow with the company’s payout ratio of only 24% of earnings and the shares remain a worthwhile conservative holding.