EmailToday is only Monday and the opening bell has yet to ring, but we can already summarize this week's epilogue in the following words: what a week!
There is the U.S. Presidential Election on Tuesday. Some polls indicate it is a dead heat between Mr. Obama and Mr. Romney. Let's hope for the sake of hanging chads everywhere that it is not a contested election.
(In this week's Big Picture, we look at the connection between the election outcome and the fiscal cliff debate.)
On Wednesday, the Greek parliament holds a key vote on structural reforms. The outcome of that vote and a vote on the 2013 austerity budget on Sunday will help determine if Greece receives its next bailout tranche. 'No' votes from the Greek parliament would stir the breakup tempest in the eurozone teapot again.
On a related note, Spain (-1.8%) is under pressure today amid reports that the ECB is reviewing its own rules to determine if it broke them in lending to Spain's banks on such generous terms. The main issue revolves around the quality of the collateral used in granting the loans.
Most European markets are on the defensive right now as the aforementioned news, along with Wall Street's weak Friday showing and reports that German Chancellor Merkel said she thinks the euro crisis could still be five years from resolution, have weighed on sentiment.
The ECB and the Bank of England will be holding policy meetings on Thursday. Both banks are expected to stay on their current policy course.
Thursday also marks the start of the 18th Congress in China, which is a prelude to installing new Communist party leadership the following week.
Separately, there will be approximately 70 S&P 500 companies reporting their quarterly results throughout the week.
The latest earnings intelligence from FactSet indicates third quarter blended earnings will decline 0.5% while revenue will be down 0.9%.
The earnings growth projection marks an improvement from the start of the reporting period (-3.0%) as better-than-expected results from the financial and energy companies have helped move the needle.
Still, the prevailing message in the overall results is that the earnings environment is weak right now. Fourth quarter growth estimates continue to be revised lower and now stand at 6.4% versus 9.5% at the end of the third quarter.
The S&P futures are little changed at the moment, but are trading 0.2% below fair value, which is an indication that the cash market might start the day on a slightly lower note.
The election uncertainty could hold things in check today. Nonetheless, what a week this promises to be.
