Greece Holds Euro Deal Hostage

A number of people had problems withbuying into last week's Euro-zone deal as a panecea for the problems ailing the common currency. Their concerns were mostly centered on the lack of details about how the bank recapitalizations would take place andhow therescue fund (EFSF) would get strengthened.

But those objections now seem almost trivial following the surprise announcement by the Greekgovernmentto hold a referendum on the issue. This announcement has overtaken last week's deal and effectively ensures that global markets will remain hostage to electioneering in Greece at least through January, which is the earliest that a referendum could take place.

I would love to read the immediate (private) reactions to the Greek announcementof the German chancellor Angela Merkel andFrench president Nikolas Sarkozy -- aka "Merkozy." I am not sure how colorful theFrench and German languages are. But Ican bet that their immediate reactions would make for interesting reading if ever made public.

With the Euro-zone deal turning out to be no more enduring than Kim Kardashian's wedding, we are back to square one on theEuropean question. Everything else takes a backseat.

We will likely need an impressive showing from the October manufacturing ISM report coming out a little later to get our minds offthe Greek shock. But that is unlikely given Monday's relatively soft Chicago PMI reading. The Fed starts its two-day meeting today as well, but few surprises are expected on that front.Other than Bernanke's press conference Wednesday afternoon, the Fedmeeting maybe a non-event.

Onthe earnings front, we had a solid earnings and revenue beat and positive guidance from Pfizer (PFE - Analyst Report). Archer Daniels Midland (ADM - Analyst Report) came short of expectations as high feedstock costsweighed on margins. Baker Hughes (BHI - Analyst Report) alsocame modestly short of earnings expectations on in-line revenue.

if the market's behavior over the last few months is any guide, then wecan say with a lot of confidence that the Greek news supersedes everything else. Reading "Merkozy's" reaction to theGreek announcementwould have provided some relief, but unfortunately we may never see those choice words.