The Week That Was: A Bang, Then a Whimper

What happened to the earth-shattering ka-boom that was supposed to erupt in the wake of Monday's follow-through to the downside?

Monday set us up for what seemed to be another bout of selling in the markets. After topping early last week, the market had fallen sharply on three of the five days between the FOMC's "disappointing" rate cut announcement and the beginning of this week.

Traders had been hunkered down for fireworks in this week of quadruple witching, with expirations for options, futures and assorted other derivatives expected to go off like fireworks on the fourth of July. But as the week drew toward a close, bad news seemed to have less of its sting, as a horrible quarter from Morgan Stanley and Bear Stearns' suffering its first quarter loss ever were met by investors with something oddly close to indifference. The balance of the week saw stocks ambling listlessly as recession talk in the financial media continued, but with less of the force and vigor we heard back in November. And a show of strength early on Friday might have been enough to convince the bulls that the fall correction season might have finally ended -- only a few trading days before Christmas.

The Sovereign Wealth Circle of Trust

Let me get this straight: we borrow money from banks. We spend the money on products made in China. China takes the money they get from the products they sell us, and invests that money in our banks.

Is that a virtuous circle or what?

Economic co-dependence is nothing new. But the growing relationship between Chinese workers, the Chinese government, Wall Street banks and Main Street consumers is far more fascinating than anything this side of the Japan, Inc. days of the late 1980s.

The key cog in this relationship is the sovereign wealth fund. Sovereign wealth funds exist to make it easier for governments to invest their money. These funds control in excess of $2 trillion dollars right now, and are expected to grow tremendously between now and 2010.

Sovereign wealth funds are increasingly the vehicle of choice by dollar-rich nations as different as Dubai and the People's Republic of China. And Wall Street has been more than eager to apply this healing capital to its aching mortgage debt-related losses. Bear Stearns has helped itself to this balm, as has Morgan Stanley and a host of others.

But of all the Wall Streeters, it may be the perennial smartest guys (and gals) in the room, Goldman Sachs, who benefits the most from the new age of the sovereign wealth fund. According to Jim Cramer, former Goldman alum and host of CNBC's Mad Money, Goldman is uniquely positioned to be what amounts to the broker of those wielding the massive amounts of cash sloshing around in those funds.

"Forget about private equity," says Cramer. The wave of the future is sovereign wealth funds. And Goldman's status as the pre-eminent prime brokers (and traders) on Wall Street helps make them the odds on favorite to be the best surfer of that wave.

Stocks in the News

Stocks in the news this week included not only the familiar names of the big financial stocks, but also a number of technology stocks like Research in Motion, Oracle and Adobe, who blew away analysts with their earnings reports this week.

Research in Motion (RIMM@RIMM | Quote | Chart | News | PowerRating) announced a doubling of its earnings per share as sales of its BlackBerry mobile device surge.

Bear Stearns (BSC@BSC | Quote | Chart | News | PowerRating) posted a larger than expected fourth quarter loss this week. Hedge fund manager Ralph Cioffi left the company amid a Federal investigation into fund withdrawals.

In another impressive performance from the technology sector, Adobe Systems (ADBE@ADBE | Quote | Chart | News | PowerRating) announced a profit increase of 21% for the fourth quarter.

Profit growth for the fourth quarter helped round out a record year for investment bank, Goldman Sachs (GS@GS | Quote | Chart | News | PowerRating).

Leading electronics retailer Best Buy (BBY@BBY | Quote | Chart | News | PowerRating) announced a third quarter profit increase of 52% thanks to strong holiday sales.

Oracle (ORCL@ORCL | Quote | Chart | News | PowerRating) blew analyst estimates out of the water as the company announced second quarter profit growth of 35%,

Ingersoll-Rand (IR | Quote | Chart | News | PowerRating) purchased Trane (TT@TT | Quote | Chart | News | PowerRating), manufacturer of air conditioners, for $10.1 billion.

Palm Inc. (PALM@PALM | Quote | Chart | News | PowerRating) disappointed investors continued product delays and a loss of more than $9 million in the second quarter to continue a disappointing year for the maker of the smartphone.

Revelations of more than $8 billion in collateralized debt obligation exposure, sent shares of MBIA, Inc. (MBI | Quote | Chart | News | PowerRating) plunging this week.

What to Look for Next Week

Monday: Chain, Retail Store Index / Richmond Fed / WaPo Consumer Confidence
Tuesday: None
Wednesday: None
Thursday: Jobless Claims
Friday: New Homes Sales / Help Wanted Index

Best Performing Stocks (PR 8-10) of Last Five Days

Here are some of the best performing, high PowerRatings (for Investors) stocks of the past five days. This week, all of the listed stocks have PowerRatings of 8 or 9.

Icon Plc Ads (ICLR@ICLR | Quote | Chart | News | PowerRating). PowerRating (for Investors): 8
Manor Care (HCR@HCR | Quote | Chart | News | PowerRating). PowerRating (for Investors): 9
Gannett Company (GCI@GCI | Quote | Chart | News | PowerRating). PowerRating (for Investors): 8
Verisign (VRSN@VRSN | Quote | Chart | News | PowerRating). PowerRating (for Investors): 8
Nike Inc. Cl B (NKE@NKE | Quote | Chart | News | PowerRating). PowerRating (for Investors): 8

Worst Performing Stocks (PR 1-3) of Last Five Days

Here are some of the worst performing, low PowerRatings (for Investors) stocks of the past five days. This week, all of the listed stocks have PowerRatings of 1 or 2.

iMergent (IIG@IIG | Quote | Chart | News | PowerRating). PowerRating (for Investors): 2
Nastech Pharmaceuticals (NSTK@NSTK | Quote | Chart | News | PowerRating). PowerRating (for Investors): 2
KBW, Inc. (KBW@KBW | Quote | Chart | News | PowerRating). PowerRating (for Investors): 2
General Cable Corporation (BGC@BGC | Quote | Chart | News | PowerRating). PowerRating (for Investors): 1
MBIA, Inc. (MBI@MBI | Quote | Chart | News | PowerRating). PowerRating (for Investors): 2

David Penn is Senior Editor at PowerRatings.net.