The G20/IMF meeting over the weekend made headlines for a variety of reasons, not the least of which is the understanding that the participants who gathered there are largely responsible for maintaining global economic order.  That's no easy task these days.  Unfortunately, the capital markets have not been convinced that these leaders (and others) are up to the task of maintaining order.

Still, there is a bid in the futures market this morning that reflects a sense of hope that the conversation on how to preserve order is moving in the right direction. 

That's the spin right now anyway -- and it is easy to put such a spin on things with the quarter coming to an end and the market coming off a week in which it declined nearly 7.0%.

In other words, before getting too caught up in the idea that the G20 "has seen the light," remember that the G20 didn't produce a concrete agreement on anything -- at least nothing of consequence.

There was talk that the EFSF could be expanded up to 3 tln euro.  That is nice for the market to hear after last week, but does it really mean anything given the various political objections that have been raised around the eurozone to increasing the size of the first EFSF to 780 bln euro?

There was talk the ECB might cut interest rates as much as 50 basis points.  That is nice for market participants to hear after last week, but it is hard to believe the ECB would swallow its inflation pride and give back all 50 basis points of tightening it imposed in April and July.

There was talk that European leaders are preparing for a "managed" Greek default and that they are working feverishly now to buy time to craft a plan that will ring fence other eurozone countries in the event of such a default.  That is nice for market participants to hear after last week, but a "managed default" sure sounds like an oxymoron to us if the experience of how European leaders have dealt with things so far is any indication.

In brief, this is still a market where seeing is believing and where actions are going to have to speak louder than words.

That's another way of saying, "enjoy what the market gives you today, but know that it can still be taken away tomorrow or the next day if leaders fall back on fluff, instead of aggressive action, to placate the market."

What we are seeing in the futures market this morning frankly -- S&P futures trading 1.2% above fair value -- might have more to do with end-of-quarter activity than anything else.  Notably, we do not see much flight from safety despite the positive open indicated for the equity market.  The 10-year Treasury note is basically unchanged.

There are a lot of beaten-down stocks out there that are priced to do relatively well on a long-term basis, especially against Treasuries.  After a week like last week, it would make sense for money managers to add to core positions on the aforementioned basis.

Still, volatility will remain the buzzword for the market since everything and nothing has reportedly been solved over the weekend.

--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.