arkets held firm amid swirling uncertainty surrounding Greece and the future of Europe. Global stocks posted gains for the week, though international stocks were flat for US investors due to a rising dollar. At a mostly non-eventful summit, European leaders simultaneously reaffirmed their desire for Greece to remain in the Euro, and suggested they are increasing contingency plans for an exit. US home prices posted the strongest results in years. Facebook\u2019s problematic IPO caused a media frenzy and its stock dropped sharply for the week. Treasuries and gold declined modestly.\r\nWeekly Returns\r\nS&P 500: 1,318 (+1.8%)\r\n\r\nMSCI EAFE: (-0.1%)\r\n\r\nU.S. 10-Year Treasury Yield: 1.74% (+0.03%)\r\n\r\nGold: $1,572 (-1.2%)\r\n\r\nUSD\/EUR: $1.251 (-2.0%)\r\nMajor Events\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\r\n\r\n \tMonday \u2013 Stocks rose as the Group of Eight leading industrialized nations affirmed a desire to keep Greece in the Euro and weekend polls showed strength for conservative pro-austerity parties in Greece.\r\n \tMonday \u2013 Facebook stock dropped 11 percent on its second day of trading.\r\n \tTuesday \u2013 Former Greek Prime Minister Lucas Papademos said it was unlikely Greece would leave the Euro, but acknowledged that it was a real risk.\r\n \tTuesday \u2013 Iran agreed to let nuclear inspectors into the country \u2013 a move seen merely as stalling by many.\r\n \tTuesday \u2013 Dell reported disappointing earnings and revenues as PC sales slumped.\r\n \tWednesday \u2013 The Spanish government announced it would provide 9 billion euros to cover Bankia\u2019s provisioning needs.\r\n \tWednesday \u2013 U.S. home sales for April rose 3.3 percent from March and 9.9 percent from a year ago, suggesting the U.S. housing recovery is gaining momentum.\r\n \tThursday \u2013 Italian Prime Minister Mario Monti said a majority of European leaders back the idea of joint euro-bonds and suggested they may be introduced \u201csoon\u201d. Germany continues to strongly oppose the idea.\r\n \tFriday \u2013 Standard and Poor\u2019s lowered the credit rating of Spain\u2019s four largest banks.\r\n \tFriday \u2013 The International Atomic Energy Agency said it found traces of uranium enriched to 27 percent in an underground Iranian bunker.\r\n\r\nOur Take\r\nStocks continue to rise whenever there is no particularly bad news out of Europe, indicating the rally earlier this year can continue under all but the worst outcomes in the Greek saga. However, uncertainty reigns and problems in Spain are accelerating.\r\n\r\nThis week\u2019s summit was uninspiring. A major subject was euro-bonds. For obvious reasons, nations paying higher interest rates favor them and nations paying lower interest rates strongly oppose them. It is hard to see how there can be agreement unless Germany and other stronger countries are given significant new powers in exchange. The European Union was born largely to prevent a repeat of the horrors of two world wars. Making Germany the de facto controller in a peaceful fashion is not an acceptable alternative for most Europeans. Germany may be persuaded into some form of joint debt, but it is difficult to see euro-bonds as a near-term viable solution to current problems.\u00a0 We hope that behind the scenes, Europe is preparing a \u201cBazooka\u201d capable of preventing contagion and convincing people bank deposits in Spain, and elsewhere, are safe. To be credible, it seems it must involve expanding the ECB\u2019s power.\r\n\r\nOvershadowed by Europe, the strong housing data in the U.S. is very bullish. It is hard to overestimate the benefits to the U.S. economy of increasing home prices and transaction volume.\r\n\r\nOn the other hand, it is concerning to see Iran making headlines again. Especially with the presidential election approaching, it seems likely the US will be forced to increase pressure. If the U.S. and\/or Israel choose a military option (impossible to know how likely this is), it probably has to happen this year or early next year. Talks resume in mid-June. Unless they are surprisingly fruitful, capital markets will likely become more tuned-in to this issue.