Last Week in Brief: June 13

June 13, 2014

Stocks finished lower last week as the market's calm was shattered by events in the Middle East. Energy prices soared amid the gruesome images on western media outlets. An independent Sunni extremist militia calling itself the Islamic State in Iraq and the Levant (ISIS) took over Mosul and Tikrit. Much blood was shed, as the group claimed to have executed over 1,000 Iraqi soldiers.
ISIS is being described as a hybrid organization, somewhere between a terrorism outfit and a rogue nation, with the flexibility and resources of both.
ISIS took $450 million from the Bank of Mosul, and now claims to be the wealthiest independent militia in the world. This liberates them of the need to cater to state sponsors and other wealthy patrons. Frees them to continue in their efforts to build a "medieval-style caliphate," stretching from southern Syria through northern Iraq.
The Good
Jobs increased. Small business optimism is rising. Railway shipments surged.
The Bad
World Bank cut global growth forecast to 2.8% from 3.2%. Retail sales stunk. Oil prices spiked. Bullish market sentiment is rising (no!).
The Ugly
Iraq. More than 1,000 Iraqi soldiers killed. Mosul and Tikrit fall to jihadists. Just a couple years removed from a successful, democratic election, it seems ridiculous that this should again look like Pandora's Box. Simply underscores the idea that radical Islamic fundamentalists are constantly looking for the next battleground. For now, that is Iraq.
The Bottom Line
Markets continue to rest just below record highs. And while the violence in Iraq merits watching, we must keep in mind that, as of now, it does not appear that it will spill over into a larger, sectarian conflict. The effect on energy prices may be negative for investors. So we will monitor that. However, we need continue to make cool, unemotional decisions about our investments. Markets have digested and survived world wars, epidemics, terrorism, depressions and natural disasters. Stay focused on your goals and objectives. Work your plan. And live your life as fully as possible.
Weekly Results
Major markets finished lower last week. The DJIA fell 0.88%, the S&P 500 dropped 0.68%, and the Nasdaq declined 0.25%. Small cap stocks fell 0.22%. And the 10-year Treasury bond yield rose 2 basis points, finishing at 2.61%. Gold gained $23.64 per ounce, or 1.89%.

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