Personally, I’m making an effort to remain alert as we go into the 2 millionth Summit [slight exaggeration] to discuss the euro-zone crisis.

No matter how monotonous this newsflow has become though, it can still spring surprises – including for the market of course.
 
Here are the main focus points to keep a close eye on, in my view:
 
Overall, the Summit is expected to focus on finalizing the ESM. [Replacement for EFSF]
 

• Whether to top up the mechanism to EUR500B-EUR750B is in the balance.
• Probably a bit less than half of the amount decided on would be available for new commitments, if needed in the future.
• [Recall there was talk of matching involvement by the IMF, broadly speaking.]
• Nobody expects all of the above to be resolved tonight.
• However, progress is likely.

Still, 2Q could be another nervous, largely sidelined month!
 
 
The ECB isn’t responsible for any of the following…
 
Tacitly, and at times not so tacitly at all, European officials have steered opinion  [that’s as strong a phrase as we can use without shattering the ‘treaty’ notion I think] toward the idea that this new fiscal compact and policies to stimulate economic growth and employment might be thought of as consequentially linked to expanded central bank policy.
 
 

And what do you know, the ECB has indeed complained explicity of late that fiscal compact plans have been watered down compared to original proposals in December.
 
This is the ECB just concerned about fiscal rectitude, mind. There’s no suggestion of contingency here. None at all.
 
 
All the same, the market will pry over details of the proposed treaty changes with a fine toothcomb. 
 
 
Markets of course hope that the agreement will give the ECB more room to maneuver, given that stricter rules and further budgetary oversight are likely to limit moral hazard concerns.
 
 At the same time, it’s also hoped a new fiscal compact will help stabilize markets and reduce the fiscal risk premium in the euro zone.
 
Meanwhile, Greece’s PSI dicusssions limp on.
 
Perhaps most saliently, we can note word out of Greece in the last 24 hours rejecting calls for a budgetary commissioner to oversee the Greek budget as part of a new bailout package. And officials in Berlin consequently turned that new mood music down a bit in response to Greece’s rejection signals.
 

Expect attention during this latest, not-so-greatest Summit, to pivot on developments on those two broad fronts – conditions for a new bailout injection and yes, Greece’s PSI negotiations.

Naturally, neither are near the top of the agenda in line with the generally upside down way we in Europe deal with sovereign debt crises.
 
ThSM