Bloomberg:
- ‘Sad and Depressed’ CEOs See No Light at End of Partisan Impasse. Business leaders, who generally didn’t support President Barack Obama’s policies in the past four years or his re-election bid, weren’t in a more-gracious mood after the results were in. Today’s decline in the U.S. stock markets, the biggest since June, didn’t help. Andrew Puzder, chief executive officer of Hardee’s burger chain owner CKE Inc., said he was “sad and depressed” after Republican Mitt Romney’s defeat and expects the economy “to stay bad with the possibility of being horrific.” Aetna Inc. CEO Officer Mark Bertolini said the insurer may freeze hiring or cut jobs if Obama and Republicans don’t avoid next year’s so- called fiscal cliff of tax increases and spending cuts.
- Big Texas Welcome to Californians. A slim majority of Californians did something strange on Election Day. They voted to make themselves worse off while boosting the economies of Texas, Arizona, Nevada and other states. They did this by passing Proposition 30, the brainchild of Democratic Governor Jerry Brown. The ballot initiative raises the sales tax from 7.25 percent to 7.5 percent and imposes higher income-tax rates on many Californians. The top marginal tax rate goes from the current 10.3 percent to 13.3 percent, one of the highest in the nation. The higher income taxes will lapse in seven years -- but are retroactive to Jan. 1, 2012! In Proposition 30, Brown entreated Californians to join him in a soak-the-rich scheme, sold as a panacea for the state’s financially stressed school systems. However, Proposition 30 will hit almost all Californians. Both rich and poor families will pay higher sales taxes.
- Americans Forget Disaster of Big Government 1970s. Do Americans suddenly like tax increases and bigger government? Or did they simply forget what happens when you raise taxes and make government larger? These are questions to ask as we analyze the yesterday’s election results to discern the fiscal consequences.
- Samaras Wins Greek Austerity Bill in Race to Secure Aid. Greek Prime Minister Antonis Samaras mustered the support of enough lawmakers to secure approval of austerity measures needed to unlock bailout funds, after more than 50,000 protesters ringed Parliament. The bill on pension, wage and benefit cuts was approved with 153 votes in favor in the 300-seat Parliament early today, according to acting Parliament speaker Athanasios Nakos. A total of 128 voted against the bill, with 18 voting “present.” One lawmaker was absent. The voting was televised on state-run Vouli TV. The vote took its toll on Samaras’s government, with Samaras expelling one lawmaker from his New Democracy party for failing to support the bill. Samaras’s main coalition partner, Pasok, which provides Samaras with the majority he needs to rule, expelled six lawmakers after the vote for their failure to support the legislation.
- Spain Said to Consider Palace Sales to Raise Cash. The Spanish government is considering a sale of a small, century-old palace in the heart of Madrid’s business district as part of a plan to raise cash from 100 prime properties, a person with knowledge of the matter said. Castellana 19, built in 1903 and later used to house Spain’s stock-market regulator, would be sold outright rather than leased, said the person, who asked not to be identified because the plan’s details aren’t public. The property was valued at 28.7 million euros ($37 million) in 2010, the year before the agency moved out. The government said last month it had selected 100 buildings that could be privatized by the end of 2016.
- Asian Equities Slide, Yen Advances as U.S. Fiscal Cliff Looms. Asian stocks slid the most in six weeks and the yen advanced as President Barack Obama’s re- election set up a budget showdown to avert the so-called fiscal cliff. New Zealand’s dollar declined after the nation’s unemployment rate unexpectedly surged. The MSCI Asia Pacific Index (MXAP) dropped 1 percent as of 12:27 p.m. in Tokyo.
- Japan Machinery Orders Fall More Than Forecast on Exports. Japan’s machinery orders fell more than expected in September as slowing global demand hurts exports, while the nation’s current account surplus narrowed to its lowest level for the month since at least 1985. Orders, an indicator of capital spending in three to six months, declined 4.3 percent from the previous month, the Cabinet Office said today in Tokyo. The median of 29 estimates in a Bloomberg News survey was for a 2.1 percent drop.
- China’s Economic Growth at Stake as Communist Party Meets. China’s Communist Party kicked off a congress in Beijing to choose its fifth generation of leaders since taking power in 1949, a decision that will shape the nation’s economic and financial policies for the next decade. At the opening ceremony of the congress, President Hu Jintao walked onto the stage in China’s Great Hall of the People with his predecessor, Jiang Zemin, 86, who served as general secretary from 1989 through 2002. Hu spoke of the progress China’s economy had made under his tenure. He said China must further overhaul the economy and reduce income gaps. The backgrounds of the successful candidates to fill the top Politburo Standing Committee -- likely all men -- will give investors clues to their appetite for policy shifts that the World Bank says China must embrace to become a high-income economy.
- N.Z. Jobless Rate Surges to 13-Year High, Currency Plunges. New Zealand’s unemployment rate unexpectedly rose last quarter to a 13-year high, adding to evidence of a faltering recovery and sending the best-performing Group of 10 currency this year plunging. The jobless rate jumped to 7.3 percent from 6.8 percent in the second quarter, Statistics New Zealand said in a report today in Wellington. That’s the highest since the first quarter of 1999 and was more than the 6.7 percent median estimate in a Bloomberg survey of economists.
- Gold Rises as Investors Increase ETP Holdings to All-Time High. Gold gained as investors boosted holdings in exchange-traded products to a record and as a drop from the highest price in two weeks encouraged buying. Spot gold advanced as much as 0.2 percent to $1,720.50 an ounce and traded at $1,719.53 at 10:21 a.m. in Singapore. A fourth day of gains would be the longest since August. The metal reached $1,731.82 yesterday, the most expensive since Oct. 23. Holdings in ETPs backed by bullion rose the most in a month to 2,591.995 metric tons, data compiled by Bloomberg show.
- What County-by-County Results Tell Us About the Election. (map)
- 7 Exit Poll Voter Trends. (video)
- What Obama's Victory Means for Business.
- House GOP Set to Keep Hammering Obama's Energy Plans. The loudest critics of President Barack Obama's energy policies were re-elected to Congress on Tuesday, teeing up two more years of battles over signature Republican issues such as U.S. oil production and environmental regulation.
- The President's Cliff Walk. Boehner offers a fiscal olive branch to the White House. So much for the post-election honeymoon. The financial markets took a header Wednesday on (take your pick) the return of European troubles, the risk of a Beltway breakdown over the looming tax cliff, or the greater prospect of a major tax increase arriving in 2013. The most important question now is how a re-elected President Obama is going to deal with this economic policy mess. Specifically, is he going to consider his re-election to be a mandate to repeat his first-term record of rejecting all GOP ideas and insisting on his priorities?
Zero Hedge:
- In September Uncle Sam Continued To Hand Out Car And Student Loans Like A Drunken Sailor. (graph)
- On Long-Term Fiscal Probity? Or Another 'Quick Fix'...
- US Credit Euphoria Suggests More Caution Ahead. (graph)
- Get Ready For The Government To Eat Billions In Loan Modifications. Democrats want to go back to the good old days when Fannie and Freddie were tools of both the Congress and the Administration. The Dems want the D.C. mortgage agencies to write off all underwater loans. The goal is to socialize the losses that borrowers are faced with.
- Here's What We Know About The Man Everyone Thinks Will Soon Control China's Economy.
- Legalizing Marijuana Is A 'Conflict That's Going To be Huge' In The Workplace.
- If You Think Elizabeth Warren Is Going To Act Like A Junior Senator, Think Again.
NY Times:
Reuters: - Obama Victory Fails to Thrill European Business. European citizens and political leaders welcomed President Barack Obama’s re-election Wednesday. European money was less enthusiastic. Many business executives and investors in Europe, like their counterparts in the United States, would have welcomed a president who was one of their own. They had more faith in Mitt Romney to steer the U.S. economy, by far the biggest market for European exports. “The business community was clearly in favor of Romney, that’s no secret,” said Fred B. Irwin, president of the American Chamber of Commerce in Germany. “The business community felt that the Obama administration ignored them.”
- U.S. panel urges wariness as Chinese investment grows. China's fast-growing direct investment in the United States has created jobs and helped some firms and localities, but the security and economic risks posed by the large Chinese state role made such investment a "potential Trojan horse," a congressional advisory panel said in a study on Wednesday.
- China submarines soon to carry nukes, draft US report says. China appears to be within two years of deploying submarine-launched nuclear weapons, adding a new leg to its nuclear arsenal that should lead to arms-reduction talks, a draft report by a congressionally mandated U.S. commission says. China in the meantime remains "the most threatening" power in cyberspace and presents the largest challenge to U.S. supply chain integrity, the U.S.-China Economic and Security Review Commission said in a draft of its 2012 report to the U.S. Congress. China is alone among the original nuclear weapons states to be expanding its nuclear forces, the report said.
- Big real estate investors say Sandy hurts lower Manhattan values. Lower Manhattan office building values are likely to suffer as a result of damage inflicted by Superstorm Sandy that has left thousands of downtown Manhattan workers unable to return to their offices, major real estate executives said at a conference on Wednesday. "I think there's been value erosion downtown," Howard Lutnick, chairman and CEO of Cantor Fitzgerald LP and BGC Partners Inc, said during the New York University Schack Institute of Real Estate Capital Markets in Real Estate conference. "It had just started to come back. The concept now of fear of flooding is going to affect values."
- Qualcomm(QCOM) revenue beats Street, shares rise. Qualcomm Inc posted quarterly earnings and revenue that blew past Wall Street expectations and sent its shares up 8 percent as demand increased for chips used in devices such as the Apple Inc iPhone and it overcame a supply shortage.
- Monster Bev.(MNST) profit misses, again rejects safety claims. Monster Beverage Corp, facing investigations into the safety of its energy drinks, reported a smaller-than-expected quarterly profit as it stepped up promotional spending. Shares in Monster, which again rejected the safety concerns as "baseless," slid 12 percent in after-hours trading even as the company reported rising sales.
- Spain faces long-term debt demand test. Spain will test appetite for its longer-term debt on Thursday for the first time in a year and a half, and decent demand could give it some leeway to delay a request for a European bailout as its borrowing needs for the year would be met.
- Whole Foods(WFM) sees sales hit from Sandy, shares down. Whole Foods Market Inc, the largest U.S. natural and organic grocery chain, on Wednesday reported a profit rise in line with forecasts but said Superstorm Sandy has dragged sales this quarter, which sent its shares down 2 percent after hours.
- Peter Bofinger, member of the economic panel advising German Chancellor Angela Merkel, says Europe's debt crisis is worsening, citing an interview. The crash that happened in Greece may follow in Spain, he said. The actions of the ECB don't change the fundamental problems, Bofinger said. A fundamental problem in all countries is that the business cycle is heading into recession.
- None of note
- Asian equity indices are -1.50% to -1.0% on average.
- Asia Ex-Japan Investment Grade CDS Index 119.0 +6.0 basis points.
- Asia Pacific Sovereign CDS Index 87.50 +.5 basis point.
- FTSE-100 futures +.49%.
- S&P 500 futures +.34%.
- NASDAQ 100 futures +.38%.
Earnings of Note
Company/Estimate
- (DDS)/.71
- (FCN)/.60
- (AAP)/1.21
- (SMG)/-.57
- (WEN)/.05
- (MWW)/.05
- (VMC)/.15
- (DUK)/1.44
- (KSS)/.88
- (DIS)/.68
- (NVDA)/.36
- (PSA)/1.68
- (ENR)/1.55
- (IGT)/.32
- (JWN)/.72
- (MCHP)/.48
- (CECO)/-.45
8:30 am EST
- The Trade Deficit for September is estimated to widen to -$45.0B versus -$44.2B in August.
- The Initial Jobless Claims are estimated to rise to 365K versus 363K the prior week.
- Continuing Claims are estimated to fall to 3257K versus 3263K prior.
- (HMST) 2-for-1
- The Fed's Bullard speaking, Spanish bond auction, BoE rate decision, ECB rate decision, Draghi press conference, China inflation data, 30Y T-Bond auction, weekly Bloomberg Consumer Comfort Index, (K) analyst day, (MMM) investor meeting and the (LRCX) investor meeting could also impact trading today.
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