What is the deal with Europe?  That is literally the question and there is no clear answer at the moment.  The on again-off again reports of an agreement between EU leaders are so frequent now that they are starting to resemble the ragtag reports on the latest relationship status of Brad Pitt and Angelina Jolie (who, by the way, are reported to be very much in love this week).

And so it happened yesterday that the equity market rolled over in the afternoon, pressured by headlines that France and Germany were at odds over the structure and use of an expanded European Financial Stability Facility.  Some will blame the Beige Book for the weakness, but there was nothing truly surprising in the Fed's assessment of economic conditions.

Concerns were heightened by reports that Monsieur Sarkozy was leaving his wife in the maternity ward to board a plane to meet Angela Merkel in Germany for continued discussions on the matter.  The only thing we know for certain right now is that Carla Bruni had a baby girl and that she and Mr. Sarkozy won't be naming their daughter Angela.

We digress.  The point is that the market is going to continue to be whipsawed by the ongoing reports out of Europe that detail what are deemed to be breaking developments.  

On that note, Reuters is reporting today that it has seen a guideline document that allows the EFSF to buy bonds on the secondary market.  This news has been interpreted as a positive development, evidenced by European bourses coming back from session lows in the wake of the report and the S&P futures showing a positive bias.

Specifically, the S&P futures are up five points and trading 0.6% above fair value. 

It would be remiss not to add that there are also reports that Moammar Gaddafi (who, by the way, has more spellings of his name than any other world figurehead) has died of wounds suffered in his capture by rebel troops.  The U.S. has not been able to confirm reports of either his capture or death, but this headline is getting some added attention today.

Lost in the shuffle it seems is another batch of mostly better-than-expected earnings news.  American Express (AXP), Nokia (NOK), Eli Lilly (LLY), Danaher (DHR), Union Pacific (UNP), Philip Morris International (PM), Southwest Airlines (LUV), and Diamond Offshore (DO) are among the headliners who delivered earnings results ahead of the Capital IQ consensus estimates. 

The latest initial claims report did not produce any surprises.  Claims for the week ending October 15 declined by 6,000 to 403,000, which was in-line with the Briefing.com consensus estimate.  There were no special factors affecting the claims tabulation either.

This is not a great number, but it is not a woeful number either.  At the current level, nonfarm payroll growth in excess of the 100,000 that is needed to support normal labor force growth is expected.  The caveat is that the labor force growth is not expected to produce a meaningful change in the unemployment rate.

Continuing claims for the week ending October 8 increased by 25,000 to 3.719 mln (Briefing.com consensus 3.690 mln).

The Existing Home Sales report for September (Briefing.com consensus 4.92 mln; prior 5.03 mln), the Philadelphia Fed Index (Briefing.com consensus -8.8; prior -17.5), and the Leading Indicators report for September (Briefing.com consensus 0.3%; prior 0.3%) will all be released at 10:00 a.m. ET.

What happens between now and then, and between 10:00 a.m. ET and the close, is truly anyone's guess at this juncture.  We know that the cash market should open the day higher.  How it closes will likely be determined by the latest headline from Star Magazine -- er, we mean the financial press, which seems as intent on getting the latest scoop on this weekend's EU Summit as Brad Pitt is on getting back together with Jennifer Anniston.

--Patrick J. O'Hare, Briefing.com

Patrick J. O'Hare is Chief Market Analyst for Briefing Research, Briefing.com's institutional research service.  To request a free trial, please email researchsales@briefing.com.