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Yields pull back as Italy looks to fast-track reform. Italian bond yields have fallen below the 7% level considered unsustainable after the ECB was reported to have continued its intervention. Meanwhile, an auction of €5B in 12-month bills brought a euro-era record 6.09% yield, although this was below the secondary market's 8.45%. U.S. futures and European shares were higher midday, led by Italian stocks on hopes that the country could soon name a successor to PM Silvio Berlusconi, with Parliament looking to rush through austerity measures by the end of the week.

Cisco recovery taking shape as FQ1 tops forecasts. Cisco is showing evidence that its overhaul is working as FQ1 earnings exceeded Street forecasts, with EPS rising to $0.43 from $0.34 a year earlier and revenues increasing 5% to $11.26B. Cisco also gave FQ2 guidance that was largely above consensus, helping to send shares +4.8% premarket. One disappointment was that overall margins again fell, although Seeking Alpha contributor Bubble Busting Investing reckons that a rise in service margins "confirms that the company is doing well in 'bundling' traditional products that are increasingly turning into commodities with superior services."

Green Mountain plunges into a ravine after profit miss. Green Mountain's (GMCR) FQ4 EPS climbed steeply to $0.47 and revenue increased 96% to $711M, but shares tumbled 31% premarket - adding to other large losses recently - as the results came in below analyst forecasts. On the earnings call, CEO Lawrence Blanford swatted away recent criticism from hedge-fund manager David Einhorn about the company's accounting, transparency, and business practices. Whitney Tilson, who has shorted the stock, remains unconvinced, noting that inventories rocketed 156% year on year. "It looks to me like they pulled a lot of demand forward last quarter," Tilson said, "and stuffed the channel." Now, with that game over, the company could be in trouble.

Jefferson files for biggest ever municipal bankruptcy. Jefferson County in Alabama yesterday filed for chapter 9 bankruptcy protection in the largest municipal failure in U.S. history. The county owes over $3B in debt that it took on for what Matt Taibbi called the "Taj Mahal" of sewer treatment plants, with creditors such as JPMorgan (JPM) facing substantial losses. Notwithstanding Jefferson's woes, Texas residents approved a $6B bond measure to pay for water projects and $1.9B for student loans. In polls around the country, voters authorized at least $12.2B of bonds.

California hopes court will help it plug budget gap. California, facing the largest budget gap in its history, is due to go before the state's Supreme Court today to persuade it to uphold two laws that would eliminate 400 redevelopment agencies and require them to turn over a total of $1.7B. Governor Jerry Brown hopes to use the cash to balance the 2011-2012 budget and avoid deeper cuts to education. However, cities across the state argue that the laws are unconstitutional because they violate an initiative authorized by voters, while approval would hit services and redevelopment projects for affordable housing. A ruling is due in January.

Trade gap expected to be stable. U.S. September trade figures are due out this morning, with economists expecting that the trade gap widened slightly to $46.2B from $45.6B in August as slowing global growth curbed trade. The figures will come after China said that its October trade surplus climbed to $17.03B from $14.51B in September, with exports and imports falling on a monthly basis. Imports from the U.S. jumped 7.6 percentage points from September's pace.

U.S. probes Chinese solar panel firms for "dumping." The Commerce Department is investigating allegations by American manufacturers that Chinese rivals have been "dumping" solar panels in the U.S. at below-cost prices, helped by billions of dollars in government subsidies. The dispute, which could lead to tariffs, is becoming one of the most contentious trade cases in years, especially given the troubles at Solyndra and other U.S. panel firms. Helped by falling prices, new installed solar wattage has climbed over 70% a year since 2008, although solar energy still contributes just 0.1% of American electricity output.

Mitsubishi buys copper stake for $5.39B. Mitsubishi (OTCPK:MSBHY) has paid $5.39B for a 24.5% stake in Anglo American's (OTCPK:AAUKY) Chilean copper unit. The deal is Japan's largest ever mining acquisition and will almost double Mitsubishi's copper output at a time when global demand is expected to increase over 40% by 2020. The money from the transaction should come in useful for Anglo American, which last week agreed to buy the Oppenheimer family’s 40% stake in De Beers for $5.1B.

Foreclosure log-jam starts to dissipate. Foreclosure filings rose a monthly 7% in October to 230,678, said RealtyTrac, as repossession processes started to move again following delays due to inappropriate practices. "However, recent state court rulings and new state laws keep changing the rules of the foreclosure game on the fly, creating more uncertainty...and threatening to prolong the road to a robust real-estate recovery,” RealtyTrac CEO James Saccacio said. After 22 consecutive months as the city with the highest repossession rate, Las Vegas ceded that unwelcome title to Stockton in California.

Today's Markets:
In Asia, Japan -2.9% to 8801.4. Hong Kong -5.25% to 19843. China -1.8% to 2528. India closed.
In Europe, at midday, London +0.1%. Paris +1%. Frankfurt +1.3%.
Futures at 7:00: Dow +0.9%. S&P +1%. Nasdaq +1%. Crude +1.4% to $97.05. Gold -1.2% to $1769.30.

Thursday's economic calendar:
8:30 Initial Jobless Claims
8:30 Import/Export Prices
8:30 Trade Balance
10:30 EIA Natural Gas Inventory
1:00 PM Results of $16B, 30-Year Note Auction
2:00 PM Treasury Budget
4:30 PM Money Supply
4:30 PM Fed Balance Sheet

Earnings Results: Companies that beat EPS expectations last night and today include Advance Auto Parts (AAP), Cisco Systems (CSCO).

Those that missed forecasts include Green Mountain Coffee Roasters (GMCR).

Full real-time earnings coverage here.

Notable earnings before Thursday's open: AUQ, KSS, MPEL, VIA.B

Notable earnings after Thursday's close: DAR, DIS, JWN, MCP, NVDA

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Source: Wall Street Breakfast: Must-Know News