Markets are headed for disappointment on Wed: HSBC Pvt Bank

The US markets had a fantastic time last week. The Dow and S&P 500 clocked more than a percent gain. European markets too closed higher on optimism about progress in resolving Europe's debt crisis. 

However, according to Arjuna Mahendran of HSBC Private Bank, markets are headed for a disappointment on Wednesday. European leaders had suggested that concrete decisions would not be taken before the meeting on Wednesday. How to leverage the EFSF seems to be the main sticking point, with France pushing for ECB involvement, something Germany strongly opposes. Mahendran feels markets are really back to square one in terms of how we are going to see this potential haircut for the larger debtors in Europe, the haircut on the holders of their bonds, being applied without impairing the credit quality of bonds in their possession.