Greece rediscovers democracy, markets sent into chaos. Global markets are tumbling after yesterday's shock announcement that Greece would hold a referendum on the severe austerity measures it would have to take in return for last week's EU-IMF bailout proposal. While polls show Greeks having a negative view of the package, surveys also indicate that they want to stay in the eurozone, which may be nigh-on impossible if the answer is "no." Another major consequence is that it brings the prospect of a Greek default ever closer, and now that the country has crossed the Rubicon, it also opens the door for other nations to do the same. Midday in Europe, U.S. futures and blue-chip EU indexes were uniformly down, with banks taking a predictable battering. Yields on at-risk EU sovereign debt were up, with Italian ten-year bonds in particularly dangerous territory.
MF Global probed over missing cash after going bankrupt. Regulators are investigating whether MF Global (MF) diverted up to $700M from segregated customer accounts to support its trades as it teetered on bankruptcy, according to widespread reports. With the probe at an early stage, it isn't clear if the money is missing or can't be located because of sloppy internal controls. Either way, the problem is most likely the cause of the collapse of a last-minute deal to sell MF's assets to Interactive Brokers (NASDAQ:IBKR), leading to MF filing for bankruptcy yesterday.
Symantec reports major cyber attack from China. Symantec (NASDAQ:SYMC) has said that at least 48 chemical and defense firms were hit by a coordinated cyber attack from hackers traced to China. The breaches - dubbed the "Nitro" attacks in a white paper - allowed the intruders to steal information, formulas, and details on manufacturing processes. "The purpose of the attacks appears to be industrial espionage, collecting intellectual property for competitive advantage," Symantec said.
G4S abandons $8.4B acquisition of ISS. As expected, U.K.-based G4S (OTCPK:GFSZF) has pulled out of its planned £5.2B ($8.4B) purchase of Denmark's ISS, whose owners include Goldman Sachs Capital Partners (NYSE:GS). G4S, the world's largest security firm, made the move after failing to gain the backing of shareholders due to their concerns about the scale and complexity of the deal. G4S has also scrapped a £2B planned rights issue to finance the acquisition.
Credit Suisse, Nomura to make further cuts. Credit Suisse (NYSE:CS) and Nomura (NYSE:NMR) announced further cost reductions today, with the Swiss bank saying it will cut a further 1,500 jobs in addition to 2,000 it has already announced. It now hopes to save 2B Swiss francs by 2013 instead of 1B francs. Nomura is adding $800M in savings to $400M it had publicized. Both banks also announced results. Credit Suisse's Q3 net profit rose 12% to a below-forecast 683M francs ($776M), helped by an accounting gain from the widening of its credit spreads. Nomura swung to an FQ2 loss of ¥46.1B ($590M) from a profit of ¥1.1B a year earlier.
Asian manufacturing hitting the skids. Asian factory activity in October indicates that the eurozone debt crisis and recessionary trends are sapping global economic growth. China's official PMI unexpectedly fell to 50.4 from 51.2 in September, while South Korean PMI remained below 50 - and therefore contracted - for a third consecutive month. Taiwan, meanwhile, hit an almost three-year low of 43.7. On the bright side, input prices eased across the region, with the China figure tumbling to 46.2 from 56.6.
Chinese home values fall. Chinese residential real-estate prices fell a monthly 0.23% in October, the second-straight drop and a sign that Beijing's efforts to muzzle speculation are working. However, if buyers get jittery and sales fall further, China's hottest industry could melt down and burn the broader economy.
States may push insurers to increase reserves. Insurers may have to boost reserves by billions of dollars if regulators insist on a stricter approach for meeting claims on "universal-life" insurance products, The Wall Street Journal reports, with states saying that firms have improperly minimized reserves. While no names have been publicly mentioned, Genworth Financial (NYSE:GNW), Lincoln National (NYSE:LNC) and Protective Life (NYSE:PL) are among those that use a disputed methodology that has enabled them to keep reserves down.
DirecTV and Fox reach 11th-hour agreement. DirecTV (NASDAQ:DTV) has come to an agreement with Fox (NASDAQ:NWS) to continue providing the satellite broadcaster's 19M subscribers with Fox channels. DirecTV had threatened to pull the networks today if Fox didn’t back down from demands for a 40% price increase. No financial details were disclosed.
Fed set to thrash out differences. The Fed is due to start a two-day policy meeting today but is deeply divided about what to do next against the background of stubbonly higher unemployment and inflation of 3.9%. Three hawks reckon the Fed has already done too much while two doves believe it needs to do more, including tolerating even higher prices. Ben Bernanke's approach recently has been to fall back on the hope that talking up the benefits of existing policies could increase their impact.
Draghi takes over at ECB. While Fed policy makers may be in a bind, they have nothing on Mario Draghi, who today takes over from Jean-Claude Trichet as President of the ECB. Draghi is due to chair his first policy meeting on Thursday, when he and his officials will have to decide what to do about interest rates given the twin threats of inflation and looming recession. And oh yes, there's that Greek referendum as well.
In Asia, Japan -1.7% to 8836. Hong Kong -2.5% to 19370. China +0.1% to 2470. India -1.3% to 17481.
In Europe, at midday, London -2.8%. Paris -3.7%. Frankfurt -4.3%.
Futures at 7:00: Dow -1.3%. S&P -1.9%. Nasdaq -1.6%. Crude -2.7% to $90.68. Gold -1.3% to $1704.40.
Tuesday's economic calendar:
FOMC Meeting, Day 1
7:45 ICSC Retail Store Sales
8:55 Redbook Chain Store Sales
10:00 ISM Manufacturing Index
10:00 Construction Spending
Earnings Results: Companies that beat EPS expectations last night and today include Allstate (ALL), Emerson Electric (NYSE:EMR), Oshkosh Truck (NYSE:OSK), Sirius XM Radio (NASDAQ:SIRI). Those that missed forecasts include Anadarko Petroleum (APC), AvalonBay Communities (AVB), Baker Hughes (BHI), General Cable (BGC), M Energy (SM), MetroPCS Communications (PCS). Full real-time earnings coverage here.
Notable earnings after Tuesday's close: ACAS, ATML, AXS, BDX, BMR, BRE, CF, CHMT, CVG, DCT, DEI, DISCA, EOG, FISV, JDSU, OKE, OPEN, PBI, PXD, SGY, TE, TIE, TXRH, UNM, WMB, XCO, XL
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