Hopes are fading for some large-scale announcement from the European Union summit.
German officials said the meeting was "a steppingstone to the June meeting."
German Chancellor Angela Merkel has already said no to Eurobonds. The Dutch and the Finns are supporting her. But we are heading in that direction: There will likely be some agreement on starting a "roadmap" to Eurobonds.
One proposal that is moving ahead is "project bonds," which will finance infrastructure projects. But the money will likely be modest: There's a proposal to provide an additional 10 billion euros to the European Investment Bank, the main conduit for those infrastructure projects.
The big debate is how to rescue European banks. They need to be recapitalized. Many want the European bailout fund — the European Stability Mechanism (ESM) — to be able to lend directly to banks. Right now, the money has to go through national governments, so the loans are on their balance sheets.
Speaking of banks: While Spain and Greece are trying to figure out how to recapitalize, Germany's Commerzbank may start paying a dividend, according to its CEO, beginning in 2013. The bank is talking about a "solid operating profit" for 2012. The German government owns 25 percent of Commerzbank.
Elsewhere:
1) Toll Brothers, one of the last home builders to report, ends earnings season with a bang: second-quarter earnings per share of $0.10, higher than analysts’ $0.04 estimate. Orders increased 47 percent year-over-year — that's about twice analysts’ estimates. Cancellations dropped to 2.4 percent. Guidance for deliveries was raised at the low end (to 2,700 to 3,200 homes from 2,600 to 3,200 homes), with a higher average price.
Most importantly: Strength continued into the first three weeks of May. Deposits are 39 percent ahead of last year. "It appears that the housing market has moved into a new and stronger phase of recovery, as we have experienced broad-based improvement across most of our regions over the past six months," CEO Douglas Yearley Jr. said. "The spring selling season has been the most robust and sustained since the downturn began."
2) Did somebody hit a switch that said, "Fiscal Cliff Is Coming?" We've known for months that a "fiscal cliff" was coming at the end of the year, involving an expiration of the Bush-era tax cuts, along with additional government spending cuts. Suddenly, though, talk of it is everywhere: From the Congressional Budget Office, from analysts, from pundits, from the Financial Times. Concern that the political paralysis in Washington will prevent decisive action is one of the reasons why U.S. government Treasurys still have a bid, according to many.
—By CNBC’s Bob Pisani
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