Wall Street Week in Review

By "The Greek"

With little economic catalyst last week, the market wandered until two disturbing potential catastrophic catalysts came to the fore.

The first was Iran. The former Persia tested more than a few missiles, and of all sorts. The tests included disturbing land-to-sea rocket launches over the Persian Gulf and missile firings with range enough to reach Israel. The United States then warned Iran that it should not underestimate the resolve nor capability of the Red, White and Blue to defend its ally. Finally, the Jerusalem Post reported that Israel had been staging practice flights over Iraqi territory, in preparation for an attack on Iran.

Needless to say, oil, which had given up sharp ground to start the week, recovered more than enough ground to actually enter into record territory on Friday before settling back. Last week, we discussed oil, the dollar and the central banks in an interesting article entitled ECB and Fed Manipulate the Dollar and Oil.

Finally, we would be remiss if we failed to mention the panic that occurred in the financial sector, specifically in Fannie Mae (NYSE: FNM) and Freddie Mac (NYSE: FRE) shares on Thursday and Friday. Concerns arose that the two might not be adequately capitalized, and might require government bailout. That sounds like salvation right? So why did the shares tank on Thursday and Friday then? That question shamefully befuddled more than a few talking heads.

Well, let’s simply look back to Bear Stearns (now under JP Morgan Chase (NYSE: JPM), and how shareholders made out when that financial stalwart was “bailed out.” Bail out, you see, preserves the interrelated financial system, not the shareholders of the distressed firm. Needless to say, with all the disturbing news flow, the Dow Jones Industrials, which entered bear market territory (marked by 20% decline from peak) the prior week, shed another 1.7% last week.

Week Ahead in Brief (The Greek's Week Ahead is pending)

The coming week offers June Retail Sales, important inflation data in the Consumer Price Index (CPI), FOMC Meeting Minutes that might offer insight into the Fed’s mindset and finally regional manufacturing reports. Also, earnings season gets a little heavier, with news originating from many companies, including: Tuesday – Intel (Nasdaq: INTC), U.S. Bancorp (NYSE: USB); Wednesday – Wells Fargo (NYSE: WFC), Yum! Brands (NYSE: YUM); Thursday – Google (Nasdaq: GOOG), Merrill Lynch (NYSE: MER); Friday – Citigroup (NYSE: C) and Honeywell (NYSE: HON).

Article interests AMEX: DIA, AMEX: SPY, AMEX: QLD, NYSE: NYX, AMEX: DOG, AMEX: SDS, Nasdaq: QQQQ. Please see our disclosure at the Wall Street Greek website.