EmailEuropean officials are once again talking the talk on bank recapitalization plans, and that has led to a strong bid in U.S. futures Monday morning.
U.S. equity markets are looking to return to the black after failing to hold Friday's early gains, which followed the release of the September employment report. A bout of profit-taking was not surprising after such a strong intraweek rebound.
Over the weekend, French President Sarkozy met German Chancellor Merkel in Berlin for a bilateral summit. The two leaders set themselves a deadline at the end of October to reach an agreement on a comprehensive package of measures to stabilize the eurozone.
The package would include the recapitalization of European banks if they need it.
These headlines have led to a strong bid in the U.S., but a somewhat weaker rally in Europe. Greece (ASE -2%) is also firmly in the red as the market seems to be pricing in the country's inevitable default.
Once again, we feel compelled to remind readers that talk is rich in an oversold market until it is proven cheap by a lack of actual action. This morning's headlines have more of an "official" feel about them, but the two leaders have differed on many ideas surrounding the bailout to this point, including a possible increase to the European Financial Stability Facility, so an agreement is not a given.
Europe should remain in focus during today's session due to a lack of catalysts in the U.S.
The Treasury market is closed for the Columbus Day holiday while participants are looking ahead to Alcoa's (AA) third quarter earnings release Tuesday after the close. That will kick of the earnings reporting season, which will continue this week with names like PepsiCo (PEP), JPMorgan Chase (JPM) and Google (GOOG).
This week also brings the next round of longer-term Treasury auctions, which will include $66 bln in 3- and 10-year Notes and 30-year Bonds.
On a final note, all of us at Briefing would like to congratulate our Chief Market Strategist and prolific writer of Page One, Pat O'Hare, on running the Chicago marathon once again this weekend. Best of luck in Boston!
--David M. Campione, CFA
Dave is an analyst for Briefing Research, Briefing.com's institutional research service. To request a free trial, please email researchsales@briefing.com.
