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business newsPre-Market Primer: Athens Is Burning
Perhaps not defaulting, but definitely disorderly.
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The Greek Parliament finally approved its austerity bill last night as Greeks riot and burn buildings in Athens. The plan cuts thousands of public jobs, raises taxes, and lowers the minimum wage in a country that is already in the throes of deep economic depression.
The eurozone finance ministers have until Wednesday to accept the Greek plan. If they do, the second bailout package will be secured and Greece will avoid a disorderly default. German Finance Minister Wolfgang Schaeuble said on Friday that the radical austerity plan might fall short of deficit reduction targets.
Whether or not Greece actually implements this deal is still uncertain. When Prime Minister Lucas Papademos came to office, 255 of the 300 members of parliament supported his mandate to make cuts and raise revenue. Last night, only 199 voted for the bill. In April, Greek voters, including those presently rioting in the streets, will have the opportunity to vote in a completely different government. Chiefs of the Greek political parties are expected to give some assurance that the next government will honor the austerity measures by Wednesday.
Europe is rallying on the news. US stock futures also jumped into positive territory.
- Futures on the Dow (^DJI) are up 79 points to 1,286.00.
- S&P 500 (SPY) futures inched up 9.40 points to 11,259.00.
- Nasdaq (^IXIC) futures headed up 17.75 to 2,556.25.
The euro rose 0.4355% to $1.3255 this morning. Brent crude oil futures are up 0.70% to $118.13/barrel and West Texas Intermediate is up 0.70% to 99.70/barrel.
Security services company Diebold (DBD) surpassed expectations this morning and reported a profit of $1.83 per share, up from a loss of $1.26 per share one year earlier. Diebold is up 11.83% in pre-market trading
Japan's economy contracted more than expected in the fourth quarter. The world's second largest economy shrank by 0.6%, an annualized 2.3%. The strong yen (77.61 yen to the dollar this morning) hurt exports, exacerbating the damage to manufacturing from the Tohoku-region earthquake and flooding in Thailand. Despite the poor economic news, the Nikkei (^N225) closed up 0.58%.
Later this morning, President Obama will put forward his FY 2013 budget. The administration projects a $901 billion dollar deficit. The president is likely to include the "Buffett Rule" that mandates that anyone with more than $1 million in income should not pay less than 30% in taxes.
General Electric (GE) announced plans to hire 500 military veterans over the next five years. The conglomerate will also invest $580 million in three aviation plants in the US. Since CEO Jeff Immelt became one of the president's economic advisors in 2009, GE has already hired 9,000 American workers.
Twitter: @vincent_trivett
