Much of the NEWS this week centered around Greece, as investors grew anxious that insecurities in Southern Europe could spread throughout the euro zone, dragging down the euro in the process. Although Greece s debt crisis has been simmering for months, the issue came to a boil this week. Stock markets world-wide dropped early in the week thanks to mounting doubts about the public finances of not only Greece, but also Portugal and Spain. While some currency speculators have pounced on the opportunity to short the euro, those efforts could soon be dashed. On Tuesday, Germany signaled that it would consider bailing out Greece and other troubled euro-zone members -- a move that it hopes would quell fears of a government default and stabilize the euro. Despite this drama, some brokers remain bullish on the markets. Here s why two brokers even raised their 2010 and 2011 profit estimates this week.

Who s Talking:
Ed Yardeni, President and Chief Investment Strategist, Yardeni Research

The Gist:
Earnings bulls like Yardeni think the issues that have troubled investors during the past couple of weeks will be resolved benignly and that the global economy will continue to grow at a solid pace in 2010 and 2011.

Many investors attributed last year s profit gains to corporate cost-cutting measures. As a result, most have also been waiting for the effects of those measures -- surprise earnings jolts and outpacing analysts forecasts -- to wear off considering that earnings growth is generally a product of rising sales. Although many smaller companies continue to struggle, the collective sales of companies in the Standard & Poor s 500 index during the fourth quarter of 2009 gained 4.8% year-over-year, according to Joe Abbott, Yardeni Research s chief quantitative strategist. Much of those gains were led by information technology and financial firms.

Still, it s time to choose sides, says Yardeni. Either the 8.1% drop in the S&P 500 since Jan. 19 is a correction in a bull market or the 56.2% rally since March 9, 2009 was a rally in a bear market, he says. For those in the first camp, forward earnings -- the time-weighted average of the two estimates -- shouldn t be ignored. During the first week of February -- for the 39th consecutive week forward earnings estimates rose to $80.51 a share, the highest since Dec. 12, 2008, says Yardeni. In turn, he is raising the company s forecasts for S&P 500 earnings for this year and next year closer to the consensus estimates of analysts -- $78.93 for 2010 and $95.37 for 2011.

Who s Talking:
David Bianco, Chief U.S. Equity Strategist, Bank of America Merrill Lynch Global Research

The Gist:
The euro, which dipped below $1.37 on Wednesday, has lost value against the U.S. dollar in recent months. But that s not Bianco s worry; volatility in the markets is.

Investors have retreated to their caves in recent weeks as contagion fears regarding a wider European debt crisis have spread, says Bianco. The value of the euro has fallen vs. the dollar, while oil prices, flat to falling in dollar terms, have risen in euros.

But the euro and price of oil isn t what worries Bianco. We currently see little indication of the sovereign risk issues facing southern Europe spreading to other areas of the global economy or financial system, he says. Instead, Bianco s concern revolves around a recent jump in volatility, as investors have abandoned riskier investments like stocks. The Chicago Board Options Exchange Volatility Index, or VIX, is an oft-used measure of the implied volatility of S&P 500 index options. Recently, the VIX has risen to 26 from a low of 18. Although that figure is lower than the 2008 average of 32, the recent uptick suggests higher uncertainty in the markets is creeping in. Still, Bianco is hopeful that volatility and uncertainty will subside as long as other risk indicators such as the TED and credit spreads don t flare up. (The TED spread refers to the difference between the interest rates on interbank loans and short-term U.S. government debt, also known as T-bills.)