Viceroys set to take over in Italy and Greece. Italy's Senate is due to vote today and the lower house tomorrow on the austerity measures that will lead to the exit of Silvio Berlusconi as Prime Minister, probably to be replaced by EU technocrat Mario Monti. However, stability is not guaranteed, as it's not clear how much support Monti will get from Berlusconi's PDL party, while the Northern League coalition partner has said it won't back him. Over in Athens, new Greek PM Lucas Papademos - or should that be "viceroy" given that he's also an EU technocrat - is due to name his cabinet after being appointed yesterday. The political developments have calmed frayed markets, with Italian bond yields continuing to fall today and EU shares rising.
France planning breakaway "union within a union." Despite denials of discussions for a smaller eurozone, The Daily Telegraph reports that France is formulating plans for a "union within a union" - a breakaway organization of "avant-garde" eurozone countries with their own treaty, parliament and headquarters. Jean-Claude Piris, the "eminence grise'' of EU legal texts, has even come out of retirement to help with the blueprint for the new bloc, which would significantly undermine the existing EU.
Exxon first "supermajor" to enter Kurdistan. Exxon (NYSE:XOM) has become the first "supermajor" oil company to enter semi-autonomous Kurdistan, signing contracts to explore for oil and gas in six blocks, reports say. The deal risks the wrath of the government in Iraq, where Exxon is involved in multi-billion dollar projects, but the lure of 45B barrels of oil and 100,000B-200,000B cubic feet of gas in Kurdistan could be too much to leave to independents such as Marathon (NYSE:MRO) and Hess (NYSE:HES), which are already there.
Sinopec to pay $3.54B for Brazil oil stake. China's hunger to control the resources that fuel its growth shows no signs of abating as China Petrochemical (NYSE:SNP) agrees to pay $3.54B to buy a 30% stake in the Brazilian unit of Portugal's Galp Energia (OTCPK:GLPEY). Including projected capital spending, Sinopec’s total investment will be about $5.18B.
Disney enjoys record year. Disney's (NYSE:DIS) full-year net profit climbed 21% to a record $4.8B and the company beat FQ4 forecasts as EPS grew 34% to $0.58 and revenue rose 7% to $10.4B. Analysts had been looking to see if consumer spending would fall because of the softening economy, "but there was no sign of that in the parks (division)," said Evercore's Alan Gould. Disney CEO Rober Iger said investment in Russia, China and India would position the company for further growth.
FHA could run out of money within a few years. The Federal Housing Authority is facing losses of $50B over the coming years and could run out of money if the economy doesn't recover soon, a forthcoming study by Wharton's Joseph Gyourko says. Such a scenario would increase the possibility of the FHA needing a bailout. The agency has played a vital role in the housing sector since the start of the financial crisis. It backs about a third of all new mortgages originated for home purchases, guaranteeing 7.2M loans worth a record $1T.
Companies "scared" of making "permanent" hires. Fears of a double-dip recession are making companies "scared" of hiring permanent staff, Manpower's David Arkless said yesterday. In the past, firms recruited temporary workers at the start of a recovery and gradually took on more permanent staff as the economy improved. Not today, even in sectors where businesses are growing. Companies hit hard by downsizing costs over the last few years find it more palatable to hire and fire temporary workers than having to lay off permanent staff - again.
Thai flooding to hurt PC sector through H1 2012. Damage from the Thai flooding could curtail PC shipments by over 20% in the first quarter of 2012 and continue to have a direct impact through the first half, IDC said, as operations have been disrupted at over a dozen hard disk drive factories. Companies affected include Western Digital (NYSE:WDC) and Seagate Technology (NASDAQ:STX).
Telefonica swings to net loss. Telefonica (NYSE:TEF) swung to a far worse-than-expected Q3 2011 net loss of €429M ($584M) from a profit of €5.1B a year earlier, due to costs related to cutting 6,500 jobs and the hemorrhaging of Spanish subscribers to cheaper rivals. The company reiterated its FY targets, and its plans to pay a dividend of €1.75 a share in 2012 and a minimum of €1.75 thereafter. However, given the carrier's €55.4B net debt, investment commitments, and a difficult environment for asset sales, analysts have questioned these aims. "It's shocking they haven't lowered their guidance," said one.
Obama may seek to cajole and to charm at APEC meeting. President Obama is under pressure to push Chinese leader Hu Jintao on increasing the pace of the yuan's appreciation at an APEC meeting this weekend in Hawaii, although given China's slowing exports and inflation, Obama may not have much joy. And with Europe in such a mess, the President may prefer to flash his megawatt smile in a bid to help the U.S. exploit growth opportunities in Asia.
October budget deficit falls. The government started its new fiscal year with a smaller budget deficit than last year as net spending in October fell to $98.5B from $140.4B in 2010. However, the figures were helped by an accounting shift, due to $31B in October benefits going out in late September. For the whole year, the Congressional Budget Office forecasts an imbalance of $973B, down from FY 2011 but still high by historical standards. The October deficit comes as the Congressional "supercommittee" attempts to find $1.2T in cuts before its Thanksgiving deadline.
In Asia, Japan +0.2% to 8514.47. Hong Kong +0.9% to 19137.28. China +0.1% to 2481.08. India -1.0% to 17192.82.
In Europe, at midday, London +0.4%. Paris +1.1%. Frankfurt +1.0%.
Futures at 7:00: Dow +05%. S&P +0.6%. Nasdaq +0.5%. Crude +0.3% to $98.10. Gold +0.4% to $1766.20.
Friday's economic calendar:
9:55 Reuters/UofM Consumer Sentiment
Earnings Results: Companies that beat EPS expectations last night and today include Disney (DIS), Nordstrom (JWN), Nvidia (NVDA). Those that missed forecasts include Darling International (DAR), Molycorp (MCP), Renren (RENN). Full real-time earnings coverage here.