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The week just passed was marked by Iran's continued defiance against the will of the world community, as it missed a key deadline to halt nuclear fuel efforts. As a consequence, it was a week in which oil blasted past the $61 mark, gold soared and stocks declined. It was a week in which investors were reminded of the unsure footing global stability stands upon. Therefore, the Wall Street Greek Award for leading actor in an antagonist's role goes to Iran. Iran is unable to accept this award due to new U.N. restrictions on its travel, so here to accept the award for Iran is its closest ally, Syria. Oh, they're not here either. How about Venezuela? No? Okay, let's move on...

Markets in mainland China and in Taiwan were closed all last week, so Chinese investors have a lot to swallow when shares begin trading again on Monday. During their week off, as investors in high flying Chinese shares celebrated their good fortunes from lunar 2006, the Core CPI index in the United States, China's favorite export market, exceeded growth estimates. This reminded global investors of the Fed's top concern, inflation, and the possibility of a Fed rate hike to control it. This is not a cure for a post new year's party hangover my friends. But that wasn't all that happened while the party rocked on.

As we alluded to earlier, Iran defied the world, and its stubborn hardline rhetoric that seems to insure war's likelihood persisted as well. Iran is kind of critical to China. America does not buy any oil from Iran, but Iranian oil flows heavily to India and China. Last week, Russian, Indian and Chinese officials met to discuss a new alliance to balance against the power of America. So, what reason does India have to position itself opposite America? Well, there is the obvious American support of Musharraf's Pakistan? Yes, but India and Pakistan signed a nice treaty this past week, and we all know that America's support of Pakistan is just an Islamic radical fundamentalist's bullet in Musharraf's head away from nonexistence. (Whew! Take a breath here) So there must be another pretty important reason for India right? The energy resource provided from Iran is so important to both India and China, that conflict with Iran could send the valuation rich emerging markets into a steep downward spiral, in our view. Therefore, Wall Street Greek is presenting the award for markets most unlikely to repeat their stellar performances of 2006 to China and India.

Besides headlining the meeting with its giant Asian neighbors, Russia has increasingly taken a position against the United States, throwing into question just what soul did George Bush see in Putin that foggy day when they first met. Maybe he was possessed that particular day by the souls of Russian reformists of the past. Just this past week, Russia blasted the U.S. for plans to position its missile shield in Eastern Europe. The U.S. made nice though, and the U.K. now seems like a good place to plant the defense shield. This week, when new U.N. meetings begin on what to do next about Iran, Russia is likely to stand strongly against harsh action, as is China. So, Wall Street Greek presents the award for best film to Russia, for its tragic love story, Soul Mates.

The point of all this drama is that we believe the sirens of globalization are drawing the unsuspecting sailors of global investment into a rocky shore. For all the progress of civilization since World War II, it seems mankind will have to take a step backward, before moving forward again. It may not happen with the impending Iranian conflict that threatens us now, but as global powers, Russia and China find themselves increasingly opposite the United States on so many issues, the flint is in place for the fire of world war. Thus, high flying emerging markets seem destined for a tragic setback. Iran's oil is just as important to China as impeding Iran's nuclear progress is to the United States.

Monday's London meeting of United Nations Security Council members will shed first light on just how determined Russia and China are in avoiding an Iranian conflict. In Washington, globalization and trade will be the key topics under discussion at the National Governors Association meeting. In Asia, the Bank of Japan will publish the minutes from its January meeting. On the corporate scene, Bank of America and Honeywell will hold investor conferences, while Nordstrom and DTE Energy Co. report fourth quarter earnings.

Tuesday starts the week's economic calendar off with a bang. Durable goods orders for January will be posted at 8:30 a.m. EST. The consensus view of economists compiled by Bloomberg sees durable goods orders declining 3.0%, compared to a rise of 3.1% in December. It will be important to study the details closely, as heavy defense and aircraft orders could skew the data. February consumer confidence will be reported at 10:00 a.m., and Bloomberg's consensus expects confidence to decrease to 108.7, from a reading of 110.3 in January. Also at 10:00, January existing home sales are scheduled for report, with a consensus view for 6.24 million, versus 6.22 million in December. We agree with expectations for a rise in sales in January, based on our previously outlined sales logic theory, where we expect mortgage brokers and real estate agents alike applied the "things will be better next year" sales pitch to push stubborn sales, temporarily lifting them.

A sort of off-Wall Street show could move the market Tuesday, with the report of the S&P/Case-Shiller home-price index for December. We expect home prices to slip further in 2007, but December's reading could still reflect the stubbornness of home sellers. Eventually, if you are looking to sell your house you have to swallow the market price, and we suspect financial needs will eventually overcome stubborn price seekers, leading to a lagging decline in prices.

On the geopolitical scene, North and South Korea are set to resume ministerial level talks on Tuesday. The corporate earnings schedule for Tuesday is heavy. Reports are expected from Target Corp., TXU, Federated Department Stores, CBS Corp., Vornado Realty Trust, Harrah's Entertainment, HJ Heinz, Public Storage, El Paso Corp., Autodesk, Autozone, RR Donnelley & Sons, Citizens Communications, Tenet Healthcare, Rowan Co. and Dynegy.

Tuesday's housing data will be followed up by Wednesday's new home sales report for January. Bloomberg's consensus sees January sales at 1.08 million, versus 1.12 million in December. Preceding the home sales data, a critical first revision to fourth quarter GDP will hit the news wires at 8:30 a.m. EST. This portends to be the most important news driver of the week. The consensus expects the first reported result, which showed growth of 3.5%, to be adjusted lower to 2.3%. A reading below the consensus view could spook the market, especially since recent consumer price data surprised on the high side. Considering the early a.m. data releases, it will be interesting to hear what New York Fed President Timothy Geithner might say on the day he is scheduled to speak about liquidity and financial markets. Also on Wednesday, the National Association of Purchasing Management - Chicago is scheduled to post its index measuring business conditions in the Chicagoland area. The consensus view provided by Bloomberg sees a reading of 50.0.

On the corporate scene, a House Judiciary subcommittee will hold a hearing about the proposed merger of XM Satellite Radio (XMSR) and Sirius (NASDAQ:SIRI). There are significant regulatory barriers to overcome before this deal can occur, and there may be opportunity on the short side of the two while the deal obstacles take the media limelight in the near term. United Technologies and Home Depot are holding investor meetings on Wednesday, while Novellus will provide a mid-first quarter update. Reporting earnings on this day, look for Sprint Nextel, Edison International, Limited Brands, Barr Pharmaceuticals, Hospira, Centerpont Energy, Interpublic Group, Liz Claiborne, King Pharma and Dollar Tree Stores.

Thursday will be a busy day, full of data and news. With numerous articles published recently concerning Toyota's fear of the retribution it might receive from American car buyers should it surpass GM as the world's most important producer, Thursday provides the timely domestic vehicle sales report for February. Individual producers typically report their results at the beginning of the month, but this reading along with durable goods orders might provide signs of consumer strength.

January personal income and consumption are scheduled for release at 8:30 a.m. EST. Personal income is expected to rise 0.3%, compared to a 0.5% increase in December. Personal consumption is expected to increase 0.4% in January, versus a rise of 0.7% in December. Challenger, Gray & Christmas will report layoff announcements for February on Thursday, and we anticipate that the housing industry's weakness could start to show up in employment data soon, and within this report. January construction spending will certainly provide a good idea of how construction activity is fairing. Bloomberg's consensus is looking for a decrease of 0.5%, compared to a decrease of 0.4% in December.

The Institute for Supply Management will report its index on national manufacturing activity. The consensus view is for a February reading of 49.7, according to Bloomberg, versus a reading of 49.3 in January. A reading below 50.0 signifies contraction within the factory sector.

On the corporate scene, Capital One Financial is expected to address analysts and investors, while Dell, Viacom, Kohls, Staples, Gap, Fluor and Pall Corp. report earnings.

After a busy week, Friday should provide investors with an opportunity to digest the information. Still, the University of Michigan will provide its consumer sentiment reading for February at 10:00 a.m. Expectations are for a result of 93.5, versus 93.3 in January. Ben Bernanke is scheduled to speak in the evening at an economic conference held at Stanford University. American International Group will upset a handful of analysts by reporting its earnings on a Friday, forcing them to work hard rather than focus on their weekend plans. For those of you who have perhaps been misled by a few AIG analysts, maybe you can take solace in their suffering. Finally, the award for the most patience shown on a Sunday while her husband sits at the computer goes to my wife. Thank you dear.

Source: The Week Ahead: Emerging Markets Glamour