Can Mario Monti Rescue Friday's Market? - Analyst Blog

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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 fiscal prudence.

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 March.

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 Monday.
 
In corporate news today, shares of VeriFone Systems ( PAY ) 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 Facebook ( FB ) 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.
 
FACEBOOK INC-A (FB): Free Stock Analysis Report
 
VERIFONE HLDGS (PAY): Free Stock Analysis Report
 
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