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business newsPre-Market Primer: Greece Bailout Concerns Throw Off Rally
By
Vincent Trivett
Feb 06, 2012 9:15 am
Greece is bringing European and US stocks down.
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If Friday was too euphoric for you, fear not. Greece is here to put a damper on the start to the week.
Greek Prime Minister Lucas Papademos is struggling to convince his government to approve the budget cuts required to get the 130 billion euro EU rescue fund. The ruling coalition is still working out the details of an austerity package that includes budget reductions equal to 1.5% of GDP, bank recapitalization, and wage reductions.
Negotiations with creditors are still underway. Foreign investors are reportedly going to take a 70% loss on their investments in Greece. The Greek government has 14.5 billion euros of bonds coming due in mid-March, and the head of the eurozone’s finance ministers isn't even sure they will be able to pay that. Jean-Claude Junker told Der Spiegel that a Greek default is still possible.
"If we were to establish that everything has gone wrong in Greece, there would be no new programme, and that would mean that in March they have to declare bankruptcy," Junker said.
European stocks were hurt by the news. The DAX (^GDAXI) is currently down 0.36% and the FTSE 100 (^FTSE) is off 0.24%.
US futures are also indicating a lower open today. Here is where we are this morning:
- Dow (^DJI) futures are off 34 points at 12,759
- S&P 500 (SPY) slid 4.80 to 1,224.30
- Nasdaq (^IXIC) futures are down by 8 points to 7.13.60
Indonesia's economy grew by its fastest rate in 15 years in 2011. The fourth largest country grew by 6.5%, driven by both foreign investment and growing domestic demand.
German factory orders rose 1.7% from November to December, almost double the forecasted increase. Demand for German industrial products was driven by a rise in orders from outside of the eurozone, offsetting a 6.8% decrease in euro-area demand.
Yum Brands (YUM), the owner of KFC, Taco Bell, and Pizza Hut, is expected to report $0.74 per share tonight, up from $0.56 per share in the third quarter. US demand for Yum’s fast food has been slumping since Taco Bell was hit with a lawsuit concerning the negligible beef content in the chain’s beef. Chinese consumers are gobbling it up, though. China accounts for the Kentucky-based chain’s earnings. Shares of Yum brands are up 8.19% year to date. If we do see increased US demand, it would mean that consumers are going out to eat again, but only if it's cheap.
Twitter: @vincent_trivett
No positions in stocks mentioned.
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