As Cincinnati conducted one of the most memorable MLB All Star Game weekends in memory, major markets rose.
Europe placed its Greek woes - if only temporarily - in the rearview mirror as Greece's long-suffering electorate accepted the EU/IMF austerity plan. The Chinese government continued to provide salve for its wounded equity markets. As the People's Government reported better-than-expected Q2 GDP growth. The U.S. housing market continued showing signs of strength. And early Q2 earnings reports surprised to the upside.
Sounds like this market's Putting on the Ritz, eh? If only. Three factors will adversely impact Q2 earnings.
First, a weak economy appears to be taking its tole on corporate profits. Though many leading indicators continue to grind higher, the overall economy has not achieved the velocity desired at this stage of a recovery.
Second, the strengthening dollar's adverse impact on overseas profits portends analysts' misgivings over Q2 earnings. Excluding Apple, technology earnings will likely be down by six percent year-over-year. What, everyone can't sell must-have electronic gismos to 1.4 billion Chinese? Fact is, the rising dollar's impact on exports has been the most commonly cited reason for recent earnings weakness.
Third, profit margins have been extended for some time. Companies have literally squeezed these lemons for all their worth. Accordingly, margins appear to be overdue for a reversion to normal levels.

Early reports on Q2 earnings season posts a 72 percent beat rate on earnings, and a 56 percent beat rate on revenues. Both below what investors have come to expect these last few years. Too bad, really. Our ownership society had forgiven many sins (most emanating from D.C.) these last few years as profit margins miraculously continued to expand. Things will get gritty if we can no longer have our cake (dull economy) and eat it too (rising asset values).
That said, most believe this will be a Q2 phenomenon. With Q3 returning to stasis. Of course, "most" have been wrong before.
 The Good
The Greek crisis abated with voters accepting the austerity program proffered by the EU and IMF... Chinese equity markets calmed last week... Building permits and housing starts were strong... Fed commentary remained positive... Industrial production and capacity utilization beat expectations....
 The Bad
Sea container shipments, which often serve as a global economic bellwether, were weak... Philly Fed Index missed expectations - though it remained positive... Michigan consumer sentiment declined and missed expectations - though it remains pretty positive... Retail sales disappointed...
The Ugly
Chattanooga Shootings. Terrorism in the homeland. Four marines dead. The killers were college grads with terrorist affiliations and anti-American inclinations.
 Bottom Line
Bulls and bears were in equilibrium entering the summer. They remain so today. Markets hit highs when it appeared that Greece would resolve itself positively. And that the Fed rate raises were on hold. Then, the eurozone began trembling like a cold, wet chihuahua. Followed by China's going on life support and the Fed stating that it was closer to raising rates. Bears temporarily gained the upper hand, but did not have the muster to send stocks much lower. Now, bulls have regained the advantage. Though they deserve no more credit than their meandering competitors. But, they may be facing their best chance yet to steer markets to new highs. And while the indices have fallen from their recent perches, bulls remain in striking distance. Some chance earnings or economic data may be all it takes. For now, expect a bit of extended weakness before bulls swing for the fences yet again.
 Thoughts on the Iranian Nuclear Deal
Secretary of State John Kerry concluded the long-sought nuclear arms deal with Iran. One that has left many in Congress and the foreign policy establishment with a sour taste.
Bare in mind: this is a "deal," not a "treaty." As the president knows - he did teach Constitutional Law - a treaty would entail its being submitted to the Senate for approval. A deal, on the other hand, can first be provided to the U.N. for review, and then be submitted to the Senate. As the president said last week, he looks forward to "a robust debate" in Congress. Though, he then said that he'd veto any legislation that might restrict his executive implementation of the pact.
So, we'll begin with a robust debate. After which we'll do it his way.
Truth be told, even leading foreign policy (FP) experts are questioning the proposed outcomes of the deal, not to mention the deal's complexity.
One senior administration official was quoted in the New York Times as saying, "This has been like a Rubik's Cube, and we have been waiting for the pieces to click into place."
Very reassuring. Because all effective, mutually beneficial, long-term diplomatic agreements should work like a Rubik's Cube, right? Fair to say that we have not likely witnessed one of those grand moments in U.S. diplomacy. As Iran will likely continue to quietly go about its nuclear development while Western politicians act like everything is under control.
While the world was led to believe that the administration was aiming for the right to conduct "snap inspections," that is, the right to visit suspect Iranian sites on an immediate and unannounced basis. The end result provides nothing near that. A piece from Yahoo Finance summed it up as such:
"The deal struck between Iran and world powers on Tuesday leaves big issues only semi-resolved. The compromise is "managed access," a mechanism that allows the international community to raise its concerns about individual sites and activities and then negotiate with Iran over the terms for investigating them."
By January, however, Iran will return to selling oil into global markets. It will rebuild its economy. Strengthen the positions of the ruling clerics. And return to funding proxy militias and purveyors of terror like Hezbollah.
The immediate impact will be a massive arms buildup throughout the Middle East. The Saudis, Israelis and Egyptians no longer trust our ability to ensure their safety in the region. So, if Iran has been given a pass to continue going about their business with the sanctimonious approval of Western governments, why shouldn't the rest of the Middle East do the same? Expect to see quiet nuclear efforts undertaken by those who don't have the bomb. Not to mention buildups in the conventional weapons systems. Missiles, radars, air craft, amid other weapons technologies. The real beneficiaries of this deal will be the global arms manufacturers. Lockheed Martin. Raytheon. General Dynamics. Among others. And if you thought the Middle East lacked stability before all this? Watch what happens next.
 Dispelling Rumors, Fear Mongering and Conspiracy Theories
Fabius Maximus, via his blog, econointersect.com, does yeoman's work day in and day out. Using economic analysis to dispel the half-truths and outright deceptions often perpetuated by the political class and main stream punditocracy. Check it out here.
 11 Trading Rules an Principles of a Market Wizard
Marty Schwartz, long featured in Jack Schwager's books, Market Wizards, provides 11 of his rules for professional traders. Interesting, as some of Schwartz's wisdom lay outside the mainstream advice oft provided on these lists. Article.
A Visual History of Market Crash Predictions
The 2008 recession drove a number of companies out of business, but it was a boon to a very specific corner of the financial media. The meltdown empowered the perma-bears who make a living scaring investors into sub-optimal asset allocation strategies recommended by their $49.99 monthly newsletter. Armed with marketing materials celebrating their brilliant recession calls, this group has spent the better part of the decade since terrorizing gullible and risk-averse investors with more recession predictions.More.
 Everyone But Kerry Expected "Anytime, Anywhere" Inspections
Following repeated cantons professing the need for immediate-access inspections of Iranian sites by Western governments, the end result provides a decidedly different approach. One that the Iranians could have only hoped for. Let alone have actually achieved. Article.
The Iran Deal's Most Important Paragraph
According to the deal struck last week,  each Western request for access can be met with up to 25 days of stalling by Iran. Only then can the West force a reply. That's a lot of time for Iran to clean up any evidence of wrongdoing. And still leaves open ended the West's response to Iranian obfuscation. Article.
 Chattanooga Shooter's Real and Online Lives Take Divergent Paths
While they appeared to be reasonably successful, assimilated youths, the killers' online affiliations and personal inclinations paint a divergent picture.Article.
 Weekly Results
Major markets finished mixed last week. The DJIA rose 1.84%, the S&P 500 lost 2.41%, and the Nasdaq jumped 4.25%.  Small cap stocks gained 1.20%.  And the 10-year Treasury bond yield fell 5 basis points to 2.35%. Gold lost $29.23 per ounce, or 2.51%.
Check out JP Morgan's weekly recap here.