Fitch warns on U.S. outlook following debt-talks failure. The Congressional supercommittee yesterday confirmed it wouldn't be able to agree to a deal to make $1.2T in budget savings. The announcement prompted Fitch to reiterate its warning that such a failure would probably lead to "a revision of the (U.S.'s) rating Outlook to Negative," although a downgrade is less likely. S&P and Moody's said they are maintaining their ratings on the U.S., as $1.2T of automatic spending cuts will be triggered. President Obama has said he will veto any attempts to override those cuts.
Obama to push for payroll tax cuts. Following the failure of the debt panel, President Obama will try to get Congress to preserve an expiring payroll tax cut. Republicans haven't ruled out extending the tax cut and jobless benefits, but they will probably want additional spending reductions to offset the $168B cost.
H-P beats forecasts but gives poor guidance. H-P's (HPQ) FQ4 earnings beat analyst expectations as adjusted EPS came in at $1.17 and revenue slipped 3% to $32.1B. Shares were -2.3% premarket after the company gave FQ1 and FY 2012 guidance that was below forecasts. H-P ascribed the "cautious" outlook to an uncertain economy and planned investments. The company's cash-on-hand, which has been concerning investors, fell to $8B, while its long-term debt increased to $22.6B.
S&P confirms Spain rating but bond yields still rise. Sunday's victory for the right-wing Popular Party in Spain's election hasn't affected the country's AA- credit rating, although its outlook remains negative, S&P said today. The new government's clear majority could allow reform to take place soon, "but Spain must grapple with weak growth prospects, rigid labor markets and high debt," S&P said. Such concerns could be reasons why average yields on the country's short-term debt hit 14-year highs in an auction this morning.
Regulators warn BofA of enforcement action. Regulators have told Bank of America (BAC) that it could face a public enforcement action unless it makes more progress on strengthening itself, as per an MOU from 2009. The enforcement would probably mean intensified scrutiny and greater restrictions. The MOU identified governance, risk and liquidity management as problems that had to be fixed.
KKR consortium to buy Samson for $7B. KKR (KKR) and Itochu (OTCPK:ITOCY) are leading a consortium that has agreed to buy closely held oil and gas group Samson Investment for $7B, Reuters reports. The other investors are NGP Energy Capital Management and Crestview Partners.
Netflix warns of 2012 loss. Netflix (NFLX) yesterday said it would make a net loss in 2012, having previously forecast it might lose money for the first part of 2012. The guidance was tucked away in a prospectus for the stock portion of a $400M offering in stock and convertible bonds. Still, at least subscriber cancellations for Netflix's hybrid streaming-and-DVD business are slowing. Shares -2% premarket.
Saudi Arabia halts $100B plan to increase oil output capacity. Pressure on Saudi Arabia to increase its oil production capacity has been "substantially reduced," Saudi Aramco's CEO said yesterday. It's the clearest signal so far that the kingdom is halting a $100B plan to up capacity to 15M b/d by 2020 after reaching 12M b/d, despite output disruptions in Libya, Syria and Yemen.
Samsung to roll out Google TV next year. Samsung (OTC:SSNLF) is in late-stage talks with Google (GOOG) to launch a "smart" television next year using the latter's software. The TV will enable users to surf the web - including logging onto social networks - and check e-mail, with Samsung hoping that the device will help it to fend off price erosion.
In Asia, Japan -0.4% to 8315. Hong Kong +0.1% to 18252. China -0.1% to 2413. India +0.8% to 16065.
In Europe, at midday, London +0.8%. Paris +0.8%. Frankfurt +0.8%.
Futures at 7:00: Dow +0.3%. S&P +0.5%. Nasdaq +0.1%. Crude +1.5% to $98.34. Gold +1.2% to $1698.70.
Tuesday's economic calendar:
7:45 ICSC Retail Store Sales
8:30 GDP Q3
8:30 Corporate Profits
8:55 Redbook Chain Store Sales
10:00 Richmond Fed Mfg.
1:00 PM Results of $35B, 5-Year Note Auction
2:00 PM FOMC minutes
Earnings Results: Companies that beat EPS expectations last night and today include Brocade Communications Systems (BRCD), Dycom (DY), Hewlett-Packard (HPQ), Jack in the Box (JACK), Zale (ZLC).
Those that missed forecasts include Analog Devices (ADI).