Italy bond yields continue inexorable rise ahead of vote. Silvio Berlusconi's chances of winning a crucial budget vote today have increased after Italy's main opposition said it would abstain. However, pressure on Berlusconi continues to intensify as the yields on 10-year Italian government bonds hit another euro-era high of 6.74%, moving ever closer to unsustainability. Meanwhile, Greece is reportedly close to forming a government after EU finance ministers refused to release $11B in aid until the two main parties sign a letter affirming their commitment to meeting the conditions of the country's bailout deal. However, those finance ministers yesterday failed to agree measures to increase the strength of the eurozone rescue fund to €1T, which even then might not be enough to save Italy.
Olympus admits using massive payouts to hide losses. Olympus' (OTCPK:OCPNY) future is in doubt after it admitted hiding major losses on investments with $1B it initially claimed was related to mergers and advisory fees. The disclosure leaves Olympus, its directors and accountants open to possible criminal charges and lawsuits in what could be one of the biggest accounting fraud cases in corporate history. The revelations are a vindication for ousted CEO Michael Woodford, who was fired for trying to force an investigation into a series of acquisitions made before his appointment.
Dynegy tries to let bondholders take the fall in its bankruptcy. Houston power generator Dynegy Inc (NYSE:DYN) yesterday put its holding company, Dynegy Holdings, and other Dynegy Holdings units into Chapter 11 bankruptcy protection in a move that will cause losses for bondholders but protect shareholders of the parent company, which didn't file for bankruptcy. These shareholders include Carl Icahn and hedge fund Seneca Capital. However, bondholders have already filed a lawsuit over the company's reorganization, while other creditors are expected to start seeing defaults this week on payments.
Toyota scraps FY guidance as FQ2 profit slumps. Toyota's (NYSE:TM) FQ2 net profit dropped 19% to ¥80.4B ($1B) and missed expectations as revenue slipped 4.8% to ¥4.575T, with the car maker struggling to cope with the strong yen and the lingering effects of the March earthquake. In addition, Toyota joined Honda in scrapping its FY guidance because of the floods in Thailand, where it has halted work at its three vehicle plants.
H-P puts webOS platform on the block. H-P (NYSE:HPQ) is looking to sell the webOS mobile platform it obtained when it bought Palm last year for $1.2B, Reuters reports. However, the company is unlikely to make back its money as the software hasn't received significant investment in over a year. Those who may be interested include Amazon (NASDAQ:AMZN), Research In Motion (RIMM) and Intel (NASDAQ:INTC). H-P may still keep the software unit, though, with new CEO Meg Whitman recently saying that the company could produce a new tablet based on the operating system.
Probe opened into $7B pipeline permit process. The State Department’s inspector general is opening a probe into the authorization process of TransCanada's (NYSE:TRP) planned $7B Keystone XL pipeline, which will carry 500,000 barrels of oil a day from Canada to Texas. The investigation follows reports of conflicts of interest involving Cardno Entrix, the company that prepared a favorable assessment of the environmental impact of the pipeline. Meanwhile, the State Department is considering rerouting the pipeline away from the Sandhills region of Nebraska due to potential risks to drinking water, Bloomberg reports.
Citigroup, JPMorgan face highest surcharges. Citigroup (NYSE:C), JPMorgan (NYSE:JPM), BNP Paribas (OTCQX:BNPQY), RBS (NYSE:RBS) and HSBC (HBC) may be forced to boost their reserves by the maximum 2.5 percentage points under plans by regulators to better safeguard the financial system, Bloomberg reports, citing a provisional list. The 2.5 points would be on top of 7% in Tier 1 capital that the banks have to hold as part of Basel III. Finance professor Joseph Mason indicated that the top-ups could actually harm the financial system. "You’re creating an incentive for big banks to hide even more risk to get the surcharge reduced," he said.
Credit Suisse to hand over names of U.S. tax avoiders. Credit Suisse (NYSE:CS) has confirmed that it will release to the IRS the names and account details of American clients with offshore accounts, after U.S. authorities worked legal channels in Switzerland. The bank started informing clients of the action on November 2, telling them they had no right of appeal.
Judge blocks graphic tobacco warnings. A judge has granted a temporary injunction against a federal requirement that would have made tobacco companies put graphic images on cigarette packages from next year. The images would have included dead and diseased smokers, and a man exhaling cigarette smoke through a hole in his throat. Judge Richard Leon ruled that the firms would probably succeed in a lawsuit to block the regulation as unconstitutional because it compels speech in violation of the First Amendment. Leon therefore halted the requirement until after that lawsuit is resolved, which could take years.
$410M BofA overdraft settlement approved. A federal judge has approved a $410M settlement in a lawsuit against Bank of America (NYSE:BAC) that claimed it had charged too much in overdraft fees. Roughly 30% of the money will go to the plaintiffs' lawyers, an amount some thought excessive and tried to challenge.
In Asia, Japan +1.9% to 8801.4. Hong Kong +3.1% to 19843. China +0.8% to 2528. India +0.5% to 17563.
In Europe, at midday, London -0.3%. Paris -2.3%. Frankfurt -2.7%.
Futures at 7:00: Dow +0.4%. S&P +0.4%. Nasdaq +0.6%. Crude +0.7% to $96.20. Gold flat at $1791.00.
Tuesday's economic calendar:
7:30 NFIB Small Business Optimism Index
7:45 ICSC Retail Store Sales
8:55 Redbook Chain Store Sales
1:00 PM Results of $32B, 3-Year Note Auction
Earnings Results: Companies that beat EPS expectations last night and today include Hologic (NASDAQ:HOLX), HollyFrontier Corp (NYSE:HFC), priceline.com (NASDAQ:PCLN), Rockwell Automation (NYSE:ROK). Those in line include Carefusion (NYSE:CFN). Those that missed forecasts include Southern Union (NYSE:SUG). Full real-time earnings coverage here.