The EU has slowly leaked its agreement, which will come as little surprise when it is officially released tomorrow. It is a positive that the EU countries are seeing eye to eye on the need to leverage the EFSF. It is also positive that the numbers they are discussing are north of a trillion Euros, which is likely enough to stem the crisis. The problem is that there is no way this thing will get funded as it is designed.
The EU is planning to fund the leveraging of the EFSF through private investors. They refuse to allow the ECB to help in the funding. There is no way on Earth that private investors will put up a trillion Euros to fund this thing. There is a deleveraging occurring across the World, which is a large reason for the crisis in the first place. Funding the EFSF through private investors is a Catch-22.
The most likely outcome is that once EU leaders realize that the EFSF will not get funded they will find a way, which will likely include the ECB. This makes taking a stance on the market tougher. The market can be 10% higher by the time the EU figures out that the EFSF wont get funded. At which point they will likely use the ECB anyway. That said, I would feel much better if a proper mechanism was already in place. Overall, the agreement makes me slightly less bullish and I will likely reduce positions more aggressively than I was planning to.