Mario Monti, who replaced the flamboyant Silvio Berlusconi as
prime minister of Italy and has been working diligently to put his
country's finances in order, appears to believe that Greece will
remain in the Euro-zone and that Germany can be persuaded to back
the Euro-bonds idea. The markets are desperately in need of hearing
something reassuring on the the Euro-zone questions. And Mr.
Monti's words may do just that today, particularly given the
absence of any other headlines ahead of the Memorial Day weekend.
There are some indications from political discussions within
Germany that the idea of Euro-bonds may be getting another look in
a roundabout kind of way. Angela Merkel, the German Chancellor,
remained opposed to issuance of Euro-bonds in Wednesday's summit in
Brussels. But according to Bloomberg, she agreed on her return back
home with her domestic political opposition to evaluate the
viability of a so-called European redemption fund that could be
used to assume the liability of Euro-zone member's debts beyond
certain thresholds in return for constitutional guarantees of
The idea was reportedly floated by the chancellor's economic
advisors some time back and involves the pooling of member
countries' gold reserves that will back the redemption fund. The
governing coalition of Chancellor Merkel and the opposition Social
Democrats will reportedly discuss the idea in a meeting on June
12th. Next month is shaping up to be a material one for Europe,
with the all-important Greek election on June 17th. With the French
holding parliamentary elections in June as well, it will mostly be
headlines out of Europe that will be driving the markets.
On the home front, we have a number of major economic reports on
the docket in the coming days that will help answer some of the
questions about the U.S. economic outlook. The most important of
these will be the May non-farm payroll report coming out next
Friday, which could potentially resolve the labor market questions
raised by the disappointing monthly jobs reports in April and
The Manufacturing ISM report, which typically comes out before the
jobs report, will be coming out a little after the jobs report on
Friday this time. Other major reports coming out next week include
the second read on first quarter 2012 GDP on Thursday, the Personal
Income & Outlays and Construction Spending reports on Friday. A
lot of market-moving reports are coming out on the last two days of
the week, which has been shortened by the Memorial Day holiday on
In corporate news today, shares of
) will be in focus after the company provided weak guidance as part
of its quarterly results after the close on Thursday. It will be
interesting to see if
) shares can continue to claw-back some of their post-IPO losses.
The stock was up the last two trading sessions, but still remains
below its IPO price.
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