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The market is addled by Ukraine. Meanwhile, over in Europe...

Thursday's U.S.jobless claims report showed a strengthening labor market. At 289,000, the jobless queue was at the lowest levels since July 19, when it was 279,000; prior to that, you have to go back to 2006. The four-week moving average is also at its lowest levels since 2006.

Over across the Atlantic, however, the picture is different. With everyone distracted by Ukraine and Russia, Europe is becoming a dicier proposition by the day.

European Central Bank (ECB) head Mario Draghi left interest rates unchanged. This is a delicate time for Draghi: Europe is clearly being influenced by events in Ukraine; the German economy —the euro zone's largest—appears to be slowing; and Italy has slipped into a technical recession (defined as two consecutive quarters of economic contraction).

During the press conference, he acknowledged that that geopolitical risks could hurt the economy.

Hannelore Foerster | Getty Images

Not surprisingly, he is insisting that key rates will stay at present levels for an extended period. However, he also reiterated that the ECB would consider "unconventional instruments," meaning purchase of asset backed securities (ABS) and purchases of corporate bonds and sovereign debt. The idea is to get these loans off the books to free up more capital.

That's nice, except Draghi also acknowledged that lending remains weak. Partly, this is due to weak demand but there are also credit quality concerns: banks don't want to lend to any small or medium size company that may be deemed risky, so they jack up rates to levels that are not affordable.

For his part, Draghi is blaming a lack of structural reforms, which, he says, is creating uncertainty and discouraging investment.

It's a circular problem. That's why the ECB has a negative deposit rate for banks: de-incentivize the idea of just parking money. They have to figure out a way to get money into the real economy, even if no one wants it right now.

Elsewhere

July retail sales were about as expected. Better than expected: Buckle, Zumiez, LBrands all reported encouraging results.

The standout is LBrands; they raised their earnings guidance to the high end of the previous range of 62–64 cents, with a consensus of 61 cents. Comparable store sales were up 6 percent, well above 1.8 perecent expected. Victoria Secret was up 5 percent, Bath and Body Works up 7 percent. Both improved margins: that's encouraging!

Costco sales up 5 percent, a bit lighter than expected. Ann (ANN) released preliminary results for the second quarter; comparable store sales were down 2.3 percent (Loft was the primary driver). Sales were decent through June, but then seemed to tail off. But, Fred's guided lower for the second quarter.

Overall, not bad for a clearance month. One positive trend is that negative preannouncements are not nearly as great in the last few quarters.

The problem: expectations are still coming down, with companies like Target still warning.

We will start get earnings again next week. All the department stores will be in: Macys, Kohls, Nordstrom, JC Penney.

--By CNBC's Bob Pisani

  • A CNBC reporter since 1990, Bob Pisani covers Wall Street from the floor of the New York Stock Exchange.

Wall Street