headlines

Here is the latest installment in the tragicomedic drama that just. won't. end

• PAPANDREOU TO STEP ASIDE AS PRIME MINISTER; NEW PREMIER MONDAY
• GREEK PRESIDENCY STATEMENT SAYS PAPANDREOU WON'T LEAD GOVT
• GREEK PARTIES AGREE TO FORM UNITY GOVERNMENT, PRESIDENT SAYS

Lastly, why decide today, what you can put off until indefinitely:

• GREEK PRESIDENT TO CHAIR MEETING OF PARTY LEADERS TOMORROW

Most likely the outcome will be that predicted by To Vima hours ago, with PASOK's L-Pap in charge, and a New Democracy vice premier. In other words: meet the new boss - same as the old boss, only this time with the Fed's blessing.

Starting to feel lost in what is an interminable and constant barrage of rumors, lies, insinuations, speculation, and just broadly, headlines? Fear not: here is Reuters with what may be the most useful invention of the EMU collapse era: the intraday visual headline tracker.

While as usual only headlines will be market moving, today we get the always completely irrelevant and very much worthless October ADP report, followed by the FOMC statement and press conference this afternoon.

Nothing really new per se, just G-Pap reiterating, now that his meeting is finally over at about 2 am local, that the referendum will proceed as noted earlier, probably some time in January, and Europe will like it or leave it.

• GREEKS TO VOTE ON EURO MEMBERSHIP IN REFERENDUM: PAPANDREOU - BBG
• GREEK PM SAYS PARTNERS WILL RESPECT AND SUPPORT GREECE'S EFFORTS -RTRS

What? Or Else? And how does this mesh with the following headline from Bloomberg:

• Netherlands Will Try to Get Greek Referendum Canceled, PM Says

At what point do the crazy pills run out already?

It begins:

• EURO ZONE PLANS TO LEVERAGE EFSF BAILOUT FUND "SEVERAL FOLD", FINANCE MINISTERS TO DECIDE DETAILS IN NOVEMBER -- DRAFT EURO ZONE SUMMIT STATEMENT
• DRAFT EURO ZONE STATEMENT MAKES NO MENTION AT THIS STAGE OF ITALY'S REQUIRED BUDGET STEPS
• NO AMOUNTS SET FOR BANK RECAPITALIZATIONS

In other news, there will be absolutely nothing actionable following today's "ground-breaking" summit. There will also be nothing at all after the Cannes statement. Or any time after. Why? Simple - there is nothing that Europe can propose in a universe in which 2+2=4 that resolves its problems.

The market is shocked, shocked, that the "groundbreaking" resolution (in Barroso's words) due for today is now nothing but a mirage:

• EU Official Says Bank Heads Won’t Be at Summit Table Tonight
  
• EU leaders may frame agenda for more bank talks on bondholder losses in 2nd bailout
  pkg for Greece.                     
  
• Says IIF doesn’t entirely represent private banks

And the kicker:

• Says Greek debt swap would take several weeks

EURUSD now at the lows; its second derivative - stocks - will soon likely follow.

Over the next 24 hours expect many post of this nature:

• DE JAGER SAYS ITALY NEEDS TO TAKE EXTRA GOVERNANCE MEASURES
  
• GREEK BONDHOLDER LOSS WILL BE 60%, ANA CITES VERHOFSTADT SAYING

Liesman spin on how 60% losses is not a CDS trigger event coming in 10 minutes.

Time for European headlines. Because we haven't had any in about 3 minutes or so. Courtesy of Bloomberg, here is Angela Merkel doing her best channeling of Hank Paulson.

• MERKEL SPEAKS AT TRICHET FAREWELL IN FRANKFURT
  
• MERKEL SAYS EURO IS STABLE, HAS PROVED ITSELF IN TURBULENT TIME
• MERKEL SAYS IF THE EURO FAILS, EUROPE FAILS
• MERKEL SAYS 'WE SHALL NOT ALLOW' EURO TO FAIL
• MERKEL SAYS NEXT EU SUMMIT IS `NOT THE END POINT' FOR CRISIS

And most importantly...

• MERKEL SAYS NO 'MAGIC WAND' TO SOLVE EURO DEBT CRISIS
• MERKEL SAYS PAST ERRORS WILL NOT BE SOLVED IN ONE STROKE

True, many, many strokes will be needed. But what about the market which has already priced in not only the Magic Wand but the Quidditch match victory over Slitherin. What now?

Key this week will be the final missing EFSF votes, in particular Slovakia. The latest headlines over the weekend suggest the governing coalition has still not found a compromise and will meet on Monday again. The votes of 22 MPs for the SaS party in the 150-member Slovakian government are now the main stumbling block to bringing the effective EFSF lending capacity to EUR440bn and to increase the EFSF’s flexibility. The parliamentary EFSF vote is scheduled for Tuesday. On Monday, the second-to-last vote on the EFSF will be held in Malta. Still linked to the Eurozone crisis, President Sarkozy and Chancellor Merkel agreed over the weekend on the need for bank recapitalisations and the need to find a “durable” solution for Greece. There has also been talk about a “vision” for the Eurozone and a promise for a plan by the November 3 G20 summit. Markets will likely focus on any additional details regarding the bank recapitalisation plan. Of course, Greek issues will remain important as well, in particular after Troika officials have been quoted in the media as criticizing the Greek Government’s determination to implement structural reforms. The results from the Italian bond auction on Thursday may increase the pressure on the Italian government to undertake more growth-enhancing structural reforms, as again demanded over the weekend from the next ECB President Draghi.

While the deranged, schizophrenic market could not care less about actual facts and data, and continues to trade purely on month end liquidations, and the now traditional bailout rumors, here is what to expect in terms of scheduled releases today: Personal income and spending, Chicago NAPM and consumer sentiment indexes. Also today the Fed will announce the first Operation Twist schedule which will consists of 13 bond purchases in October, as well as 6 sales.

Now that the French banks have pretty done exactly what we anticipated due to Italy and Greece who pretty much did what we anticipated, what's next?  Look towards those banking stalwarts, but don't mention the US or shhhh!!! Gemany... Oh yeah, it's too late!

In an emailed statement from the Greek finance ministry, we are told not to expect to hear anything from anyone about anything. Sounds like they have it all under control then...*GREECE SAYS NO OFFICIAL ANNOUNCEMENT EXPECTED AFTER TROIKA CALL. The market's initial reaction is to sell-off on this no news as ES moves towards the day's lows and EUR inches lower.

UPDATE:

• GREEK CALL WITH TROIKA MAY CONTINUE TOMORROW OR LATER: MINISTRY :-Are they all on hold for Bernanke?
• GREEK FINANCE MINISTRY SAYS NO CABINET MEETING PLANNED SEPT. 20 :-  Deny, Deny, Deny, or simply Lie, because this contrasts with earlier reports that G-Pap would convene a cabinet meeting after the call.

There are no notable economic events today so just like Noda, we will be watching, watching, watching those headlines and pretending to intervene if the world does not go our way. If that fails, we will spread rumors and demand that the US assist us in weakening reality whose moves have become too one-sided.

As if the global liquidity crunch was not bad enough (as we enter a vacation sleepy week, the key report on Monday will be the ECB's bond purchase update for last week - we estimate another E30 billion in secondary market monetizations, in addition to how many banks pulled dollars from the ECB in the 7 day liquidity providing operation on Wednesday as occurred first last week), geopolitical risk is back after headlines from both Libya and Israel indicate that the Levant region is on the verge of systemic instability once again. The first two stories put Israel smack in the middle of the Middle East action. First is Egypt, which earlier "said Saturday it would withdraw its ambassador from Israel, insisting the killing of five Egyptian security personnel while Israeli forces pursued gunmen across the border was a breach of its 1979 peace treaty with the Jewish state." Complicating matters is the announcement out of Iran, via AP, that "two American men arrested more than two years ago while hiking along the Iraq-Iran border have been sentenced to eight years in prison on charges that include espionage, state TV reported Saturday, a sharp blow to hopes their release was imminent. The announcement seemed to send a hard-line message from Iran's judiciary — which answers directly to the ruling clerics — weeks after the country's foreign minister suggested that the trial of Shane Bauer and Josh Fattal could clear the way for their freedom. It also was likely to raise speculation about Iran using the Americans as political bargaining chips and could bring added tensions to Iranian President Mahmoud Ahmadinejad's expected visit to New York next month." The cherry on top is late news out of Libya that the local rebel movement may be making headway (since denied by the government) in taking over Tripoli. Net result will be even more instability in the crude market which has been expected to drop courtesy of the recent spike in deflationary expectations. Alas, when geopolitics enters the equation, the only certain thing is a surge in uncertainty. That this will likely not benefit global equity markets goes without question.

Just two economic datapoints today, jobless claims and pending home sales, which will continue confirming deteriorating macro trends, to be largely lost in the headline barrage as today is D-Day on the Boehner plan. The last of this week's bond auction trifecta comes to a close with an auction of 7 Year bonds. Unless there is an imminent debt ceiling hike this could be the last bond auction for a long, long time.