Congress to return to work with seven weeks to avoid cliff. Congress is due to return today following the election with just seven weeks left to broker a deal over the fiscal cliff and avert $600B in automatic spending cuts and tax hikes. Democrats want to raise taxes for the rich but the GOP doesn’t, although some senior Republicans have expressed a willingness to consider increasing revenues by eliminating tax loopholes.
Microsoft’s Windows chief to leave. The head of Microsoft’s (MSFT) Windows division, Steven Sinofsky, is leaving the company less than three weeks after the introduction of Windows 8. Sinofsky had been tipped as a possible future CEO, but, reports The Verge, his "abrasive" personality and habit of "putting up roadblocks for products" that threatened his power have brought his downfall. Microsoft veteran Julie Larson-Green will take Sinofsky’s place.
Greece bond auction looks to have secured debt payback. Greece should be able to redeem €5B of T-bills owed to the ECB on Friday after raising €4.06B in a sale of bills, above the government’s target of €3.125B. Primary dealers have until Thursday to submit non-competitive bids, which is likely to bring the total above €5B. The auction came after eurozone finance ministers yesterday granted Greece an extension of two years to meet its deficit-GDP targets, although the eurogroup and IMF are in open conflict about the timing of its debt-GDP targets.
Top Stock News
Verizon Wireless to distribute $8.5B to owners. Verizon Wireless plans to disburse a total of $8.5B in dividends to 55%-owner Verizon (VZ) and 45%-owner Vodafone (VOD) by the year-end. The U.S. cellular carrier distributed $10B last year, but had been non-committal until now about a follow-up.
Fox, ABC, CBS ratings tank while NBC soars. Average primetime ratings for live and same-day viewing among 18-49 year olds have slumped by over 10% for ABC (DIS), CBS (CBS) and Fox (NWS) this season, UBS finds. However, Comcast’s NBC is up 22%. TV executives have attributed the fall to consumers watching shows at their own convenience, although Disney CEO Bob Iger has admitted that the absence of "new, big, real, buzz-worthy hits" might have something to do with it.
Vodafone swings to H1 loss on £5.9B writedown. Vodafone (VOD) shares fell 4% premarket after the mobile carrier swung to an H1 loss of £1.98B from a net profit of £6.68B last year. Earnings were hit by impairments of £5.9B for Vodafone’s Spanish and Italian operations due to tough conditions and increased discounts. Revenue declined 7.4% to £21.78B. Vodafone expects to receive a £2.4B dividend from Verizon Wireless’s distribution by the end of the year, and plans to use £1.5B of that to buy back shares.
Home Depot increases profit and outlook. Home Depot’s (HD) net profit edged up 1.4% to $947M in Q3, helped by recent improvements in the U.S. housing market but hurt by a charge of $165M for the closure of seven stores in China. Earnings topped forecasts, with adjusted EPS coming in at $0.74 and revenue rising 4.6% to $18.1B. Home Depot raised its full-year forecasts to above Street consensus, although shares were only +0.1% premarket.
Cisco’s earnings expected to rise but analysts are concerned. Cisco’s (CSCO) FQ1 earnings are due out after the bell, with analysts expecting that adjusted EPS rose to $0.46 from $0.43 as revenue increased 4.6% to $11.77B. However, Cisco has been the subject of growing negative sentiment lately, hurt by its high-tech rivals issuing pessimistic guidance for the year-end due to the weak economy. Some analysts fear that Cisco may miss consensus, while others aren’t optimistic about what its guidance might be.
Blackstone dives into $1.2B Gulf of Mexico JV. Blackstone (BX) has formed a joint venture with privately held LLOG Exploration to invest a combined $1.2B to develop the latter’s oil discoveries in the Gulf of Mexico. LLOG has 90 undeveloped prospects in the Gulf, all of which will be owned and financed by the JV. The partnership represents the latest investment by a private-equity firm in the Gulf.
Top Economic & Other News
Japanese parties agree to deal to avert their cliff. Japan’s ruling and opposition parties have agreed to pass a bill that will allow the government to borrow $480B and finance 40% of the fiscal-year budget, thereby averting the prospect of the state running out of money by the end of this month. The opposition, which controls the upper house, had blocked the bill as it tried to force PM Yoshihiko Noda to call an election.
IEA cuts oil demand outlook. The IEA has reduced its forecast for global Q4 oil demand by 290,000 bpd to 90.1M bpd, due to "persistent weakness" in Europe and the effect of Hurricane Sandy, which chopped U.S. consumption by 230,000 bpd in October. In its monthly report, the agency also lowered its 2013 growth prediction and forecast total consumption of 90.4M bpd.
Iranian oil output rises despite sanctions. Iranian oil output rose by 70,000 bpd to 2.7M bpd in October following seven months of declines, while exports spiked to 1.3M bpd from 1M in September, the IEA estimates. The increased sales were mainly to China and South Korea, and may have brought Iran an extra $900M in revenue, Reuters calculates. The IEA also reckons Iranian crude held in floating storage has halved to 13M barrels from 25M-30M barrels in April.
In Asia, Japan -0.2% to 8661. Hong Kong -1.1% to 21189. China -1.5% to 2048. India -0.3% to 18619.
In Europe, at midday, London -0.6%. Paris -0.3%. Frankfurt -0.7%.
Futures at 7:00: Dow -0.3%. S&P -0.4%. Nasdaq -0.5%. Crude -0.2% to $85.37. Gold -0.1% to $.1729.60
Today’s economic calendar:
7:30 NFIB Small Business Optimism Index
7:45 ICSC Retail Store Sales
8:55 Redbook Chain Store Sales
2:00 PM Treasury Budget
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