A shakeup in European politics

We asked AIMCo CEO Leo de Bever last Friday whether he thought financial markets would be as volatile this summer as they were last year (over the course of four days last August, the Dow Jones Industrial Average plunged 630 points -- its sharpest slide since December 2008, then rallied 430 points the next day, then fell 500 points the following day and soared 425 points the next). "Yes," he said. "Absolutely." He might have mentioned that by "summer" he meant Monday.

• Asian stocks tumbled, most European markets are lower and U.S. stock index futures are pointing to early losses after angry Greek voters rejected the austerity-for-aid policies of the long-ruling New Democracy and PASOK parties in favour of the unknown. In France, voters expressed a certain, I don't know what, by electing Francois Hollande to the presidency, the first Socialist to hold the position in 17 years. "Austerity isn't inevitable," he said last night. Maybe not, but Frau Merkel's response was inevitable. A few moments ago, she stated that countries in the euro-zone that have negotiated for aid can't suddenly renegotiate terms. The fiscal pact, she said, is not up for fresh debate. Reluctant to appear standoff-ish, however, Merkel added that Germany "will receive Hollande with open arms."

• In the near-term, stock, bond, currency and commodity markets will react to the renewed uncertainty in Europe. The election in Greece has created a muddle in parliament rather than a mandate and French parliamentary elections will take place on June 10 and June 17, which means a month of coalition building, flag-waving, cigarette-smoking and rhetoric. The big questions revolve around the stability of Greece and whether the likelihood of its exit from the euro-zone just increased with the election. Will the Greek parliament agree to implement the austerity measures the last government promised to impose in exchange for billions in bailout in money? Will vultures stop their circling over Madrid and wing their way back to Athens?

• Our challenge will be to make the European situation and its impact on North American markets clear. Any threat to austerity measures abroad puts bailout funds at risk, which in turn puts longer-term economic recovery in the region at risk. A slower-for-longer economic outlook for Europe will weigh on sentiment towards the still-fragile U.S. recovery, which could mean less demand for Canadian stuff, no matter how awesome. Falling commodity prices will also undermine Canadian stocks.

• Who would have thought that Vlad (the lad) Putin would one day rise as a beacon of constancy and consistency for Europe?

• Speaking of commodities, they have just about erased all their gains for the year. Goldman Sachs and others have held on to their bullish calls up to now, arguing that improving global economies should continue to stoke demand through 2012. I'd like to know whether that remains the case today. Let's talk to some of the more bullish strategists out there to see if their confidence has been dented.

• The earnings scorecard is light today with numbers from the likes of Electronic Arts, Uranium One, Cargojet, Tyson Foods and Absolute Software.

• Also up for debate today is a new handle for the French/German political relationship that has gone by the name of Merkozy for the past few years. Options include Ho-rkel or Mer-lande. Your call.

Every morning Managing Editor Marty Cej writes a "chase note" to BNN's editorial staff listing the stories and events that will be in the spotlight that day. Click here to have it delivered to your inbox before the trading day begins.