Earnings season kicks off

Happy Monday!

- European finance ministers will try to command centre-stage though they are likely to end up forming the backdrop for market action this week. The ministers, who meet in Brussels today, are tasked by their masters to show enough agreement and contribute sufficient new substance to the broad crisis-fighting measures adopted a few weeks ago to convince the markets that there is enough political will to keep the eurozone together. The bulk of the discussions will be directed at fleshing out details of the plan agreed to on June 29 to establish a joint banking supervisor for the 17 countries that make up the eurozone. The proposal was a small first step towards a banking union that could eventually feature a joint deposit guarantee and a bank resolution fund that would hopefully prevent bank runs. The Wall Street Journal reports this morning that the new agency would report to the European Central Bank and supervise the biggest 25 or so banks, leaving the smaller banks under the supervision of national regulators. Unfortunately, that ticking sound you hear is not the clock but basis points being piled on to yields in Spain and Italy.

- U.S. earnings will fight for the spotlight this week as well with Alcoa kicking off the second-quarter earnings season after the bell tonight. Analysts polled by Thomson Reuters expect earnings to grow 5.8 percent for the S&P 500 from the same quarter a year ago, but there is a Great Big Caveat (GBC) to consider: the financials sector is benefiting from a very easy comparison due to the Bank of America mortgage lawsuit settlement last year. Exclude the impact of BofA and S&P 500 earnings rose 0.7 percent from last year; exclude the financials altogether and earnings are expected to drop 0.3 percent. So far, 95 companies have warned that second-quarter profit will fall short of analysts' average expectations compared with 29 companies that said earnings will top forecasts. That results in a negative-to-positive ration of 3.3, the weakest showing since the fourth quarter of 2008, according to Thomson Reuters data.

- It's interesting to note that while overall earnings - excluding the financials - are expected to fall for the first time since 2009, stock analysts are still more bullish than ever on U.S. equities. According to data compiled by Bloomberg, a total of 247 companies in the S&P 500 have more buy ratings than sells and holds, a record in Bloomberg data going back to 2000. The value is there already, analysts argue; the question is whether investors can stomach the volatility driven by the macro headwinds.

- If investors aren't willing to put their cash to work in the markets, some companies certainly are. Health insurer WellPoint agreed to buy Amerigroup for $92 a share, or $4.46 billion. The price was a 92-percent premium to Amerigroup's closing share price Friday. A few moments ago, Campbell Soup Co. said it would buy packaged fresh food company Bolthouse for $1.55 billion in cash from Madison Dearborn Partners. Thomson Reuters, meanwhile, agreed to purchase electronic forex trading platform FX Alliance for about $625 million in cash, a 40-percent premium.

- Deals are also being struck at the Farnborough Air Show in the U.K. Bombardier said yesterday it won a conditional order valued at $1 billion for 15 CSeries jets, though the company declined to identify the buyer. Boeing said this morning that it had finalized a deal with Air Lease Corp. for 60 737 Max 8 airplanes and 15 737 Max 9 planes, and "reconfirmation rights" for 25 additional 737s. In all, the order is valued at $7.2 billion.

- Bank of England Deputy Governor Paul Tucker will testify today in front of British lawmakers over his role in the widening Libor probe. Tucker will answer questions about a conversation he had with former Barclays CEO Bob Diamond in 2008 that led Diamond to write a memo that suggested Tucker might have, ummm, hinted, that Barclays should lowball its Libor submissions.

- We are also watching Research In Motion today ahead of its AGM tomorrow. BNN will have special coverage of the event beginning at 8:30 am Eastern with Kim Parlee and Andrew McCreath reporting live from the event.