The PPT Weighs In

The Fed and the ECB Support 50% of the Equation
In a joint announcement, The Federal Reserve and the ECB basically announced the "massive force" measure needed to protect liquidity problems striking European banks.  3 month liquidity, all at one price, for basically as much as you need, is their offer.  More than the largest, well-known stories, Societe Generale and BNP, this helps those that have no other alternative sources of liquidity.

Now For the Hard Part
The question, of course, is solvency.  The question is still bank balance sheets, and what losses can be taken, if moved from unrealized to realized.  This presumes that not all unrealized losses are properly marked to market, which is almost certainly a problem.

Until Then, It's Safe
Don't fight the Fed, etc: apply all of the rules here.  Get outta the way, ride the longs, which mean: DB, CS, ING, STD if you must.  These are swings, but for now, it will be fine.  XLF?  No, except that shorts will have to cover but that will be secondary to the European bank ADRs mentioned here.

More News From Europe (Hint: None Good)

It's Sunday, Markets Will Open Soon
Unlike 2008, when the Fed actually tried to do something, the silence of their European counterparts in 2011 is deafening and troubling.

Bloomberg: Greek ‘Orderly’ Default Can’t Be Ruled Out, Roesler Tells Welt
Reuters:  Euro seen under pressure on lack of G7 support

Are Gold-backed EUR bonds Inevitable?
Perhaps the only answer is to require the PIIGs to sell their family silver gold or use it to partially collateralize EUR-denominated bonds (and no tranching, please).  Is there any other solution that actually works?  Stabilize the EUR, keeps the unity, and thereby stabilizing global equity markets.  Not sure why this hasn't been floated more strongly.  Guess we will see. 

Drumbeat Against the Euro Banging Loudly

The populist popular press is out early today
FT:  The worst of the euro crisis is yet to come
Reuters: Euro bond would get member's weakest rating (S&P)

Of course, bloggers/FX advisory sites are out, en masse
FX Daily:  EURUSD: Hold short as selling accelerates
Zero Hedge:  Merkel Loses Big, See Ya (ok, so i summarize)

3-day weekends have not been good for global equity markets (Federal Reserve Bank announced emergency liquidity measures, Soc Gen, October 1987, all occurred on a Tuesday following a long weekend).

S&P Futures down only 5, gold up (of course).  Just a bunch of screen jockeys playing poker with each other, and some irrelevant babble about a lower Aussie Dollar can be ignored for now.  We will see when Europe opens.  More as it comes in.