"Sequestration" to kick in as supercommittee fails. Barring a miracle, Congress' "supercommittee" is today expected to concede it has failed to produce $1.2T in deficit cuts in time for Wednesday's deadline. Even though that would trigger "sequestration" - or automatic spending cuts (and not, as it sounds, a form of torture) - HSBC forecasts more battles over the deficit. At some point rating agencies will lose patience, so further downgrades could be on the cards.
Moody's warns on France. Rising debt yields and weak growth prospects could be negative for France's credit rating and threaten its stable outlook, Moody's said, although it added that the country's AAA grade is not "at this stage" under pressure. The report sent European stocks lower and the yield on France's 10-year yields higher, although they've pared some of the earlier increases.
Spanish bond yields rise despite election result. Yields on Spain's 10-year government bonds are up midday in Europe despite the pro-austerity Popular Party winning a solid majority of 186 seats in the 350-seat parliament in yesterday's election. Despite the drastic change, it's "palpably useless," Ambrose Evans-Pritchard wrote. New PM Mariano Rajoy "cannot alone do anything...to prevent a death spiral." Or as one civil servant said, "We can choose the sauce they will cook us in, but we're still going to be cooked."
EU studies eurobonds. With the expansion of the eurozone rescue fund looking severely wounded, if not dead, the European Commission explores its next bazooka: A proposal for the joint issuance of bonds among member nations. The idea may not have any legs, though, as the Germans are vehemently opposed to becoming liable for the debts of their spendthrift neighbors, while their constitutional court seems to have put the kibosh on the idea two months ago.
Transatlantic to finally walk down the aisle. Having spurned a series of suitors such as Warren Buffett, Transatlantic Holdings (TRH) is in talks with yet another buyer, Alleghany (Y), and the firms may even announce their engagement today, reports say. Alleghany will pay about $59-$60 a share, a premium of up to 10% on Transatlantic's close on Friday. The price values Transatlantic at $3.4B, above Alleghany's market cap of $2.7B.
Lloyds makes CEO contingency plans. Lloyds (LYG) said CEO Antonio Horta-Osorio is making "good progress in his recovery" after taking medical leave, but that it will draft in David Roberts to become interim CEO if Horta-Osorio doesn't return by the year-end, as expected. Roberts is a non-executive director at Lloyds and Chairman of its risk committee. Investors seem skeptical and shares are -7% premarket.
Availability rate at shopping malls to fall. Space available for leasing at local shopping centers will fall to 12.4% by the end of 2012 from a peak of 13.3% in Q2 2011, CBRE Group has forecast. That would bring the first annual decline since 2005, although what it says about the wider picture is unclear: economic growth will play a part in the trend but another factor is a lack of construction.
Japan OKs budget as exports fall. Japan's parliament has passed an additional ¥12.1T ($157B) budget, including the issuance of new bonds, to pay for earthquake reconstruction and to help fight the strong yen. With exports falling 3.7% in October and the country unexpectedly posting a ¥273.8B ($3.56B) trade deficit, Japan hopes that the spending will ensure continued economic growth.
China prefers "unbalanced recovery" to "balanced recession." Having warned of a "chronic" global recession on Saturday, Chinese Vice-Premier Wang Qishan today said, "An unbalanced recovery would be better than a balanced recession." In other words, China should focus on its own growth rather than worry about the trade surplus with the U.S.
Western Digital told to pay Seagate $525M An arbitrator has ordered hard-drive maker Western Digital (WDC) to pay $525M to rival Seagate (STX) for misappropriation of confidential information and trade secrets. Western Digital plans to "vigorously" challenge the verdict.
H-P's earnings seen down, with cash the focus. H-P (HPQ) is expected to report that EPS and revenue declined to $1.13 and $32B respectively when it release its FQ4 results after the bell. With total debt of over $25B at the end of July, which was well above its $13B in the bank, H-P's money management is becoming an increasing concern, especially as its ratings are under review for a possible downgrade.
In Asia, Japan -0.3% to 8348. Hong Kong -1.4% to 18226. China -0.1% to 2415. India -2.6% to 15946.
In Europe, at midday, London -2.1%. Paris -2.8%. Frankfurt -2.7%.
Futures at 7:00: Dow -1.4%. S&P -1.7%. Nasdaq -1.1%. Crude -1.4% to $97.41. Gold -1.1% to $1706.00.
Monday's economic calendar:
8:30 Chicago Fed National Activity Index
10:00 Existing Home Sales
Notable earnings before Monday's open: TSN