It is likely to take the combined forces of the European Central Bank, the IMF and the euro zone bailout fund to break Italy’s financial fall, and it’s far from clear that Europe’s leaders are ready to take on that rescue mission.
The precondition for Rome would be to rapidly replace Prime Minister Silvio Berlusconi with an internationally respected figure and adopt long-delayed structural reforms dictated by the European Union and the International Monetary Fund.
That might spur the currency bloc’s leaders, who euro zone officials say have no plans for Italy’s rescue even though its borrowing costs have risen sharply to levels that threaten its ability to raise funds on the market.
“Financial assistance is not in the cards,” one euro zone official said Wednesday, adding the euro zone was not even considering extending a precautionary credit line to Rome.
It may already be too late. Many analysts say the Italian bond sell-off has already gone past a point of no return which will lead to the break up of the currency bloc.
German and French officials have discussed plans for a radical overhaul of the European Union that would involve setting up a more integrated and potentially smaller euro zone, EU sources say.
“France and Germany have had intense consultations on this issue over the last months, at all levels,” a senior EU official in Brussels told Reuters, speaking on condition of anonymity because of the sensitivity of the discussions.
“We need to move very cautiously, but the truth is that we need to establish exactly the list of those who don’t want to be part of the club and those who simply cannot be part,” the official said.
French President Nicolas Sarkozy gave some flavor of his thinking during an address to students in the eastern French city of Strasbourg on Tuesday, when he said a two-speed Europe — the euro zone moving ahead more rapidly than all 27 countries in the EU — was the only model for the future.
The discussions among senior policymakers in Paris, Berlin and Brussels raised the possibility of one or more countries leaving the euro zone while the remaining core pushes on toward deeper economic integration, including on tax and fiscal policy.
The change has been discussed on an “intellectual” level but had not moved to operational or technical discussions, the EU official said. A French finance ministry spokesman denied there was any project in the works to reduce the currency bloc’s membership .
“There have been no conversations between French and German authorities at any level on decreasing the size of the euro zone,” the spokesman said.
SAN FRANCISCO — John T. Chambers, chief executive of Cisco Systems, said Wednesday that he had largely completed the task of reshaping the company, a maker of the gear that runs the Internet.
A Cisco server at a recent conference in San Francisco. Cisco’s chief executive said he was trying to streamline the company.
“We’ve taken 4 to 5 inches off our waistline,” he said in an interview after the company announced its fiscal first-quarter results. Cisco, hoping to compete better, this year cut back on its consumer business and trimmed about 8,400 workers.
“Now we’re ready to go,” he said. The company has now completed two successful quarters under what Mr. Chambers termed “the aggressive, the focused, the simplified Cisco.”
Cisco, based in San Jose, Calif., in recent years has come under fire from Wall Street as unfocused and unrealistic about its growth prospects in the face of greater competition. But for the three months ended Oct. 31, Cisco reported net income fell 8 percent to $1.8 billion, or 33 cents a share, from the same quarter a year ago. Excluding stock compensation and other nonstandard accounting practices, earnings were 43 cents a share, an increase of 2 percent from a year earlier. The company said revenue climbed 5 percent to $11.3 billion.
The net income was somewhat better than analysts had expected. They had predicted 39 cents a share and revenue of $11 billion, according to a survey of analysts by Thomson Reuters.
It is no secret that Goldman Sachs had a rough third quarter. In a regulatory filing on Wednesday, it disclosed just how rough, reporting trading losses on 21 days in the period.
On one of those down days the firm’s traders lost more than $100 million, but the firm also reported that trading gains exceeded $100 million on nine days, according to the quarterly filing with the Securities and Exchange Commission. In contrast, in the period a year earlier it lost revenue on just two days and earned more than $75 million in trading revenue on 31 separate days.
The third quarter is one Goldman executives would rather forget. Hit by losses in its private equity portfolio and broader economic woes at home and abroad, the firm reported a loss of $428 million. That compares with a $1.7 billion profit in the third quarter of 2010, and it represents only the second quarterly loss for Goldman since it went public in 1999.
WATERBURY, Vt. – Green Mountain Coffee Roasters Inc.’s fourth-quarter profit nearly tripled as sales of its single-serve coffee products and its overall revenue soared. But the revenue was lower than analysts expected, and the company’s shares sank more than one-third after hours Wednesday.
Green Mountain’s revenue increased 91 percent to $711.9 million. But analysts on average anticipated revenue of $760.5 million, according to FactSet.
The shares fell $23.62, or 35.2 percent, to $43.40 on the news, which the company released after regular trading ended.
Green Mountain said it earned $75.4 million, or 47 cents per share, for the quarter that ended Sept. 24. That’s compared with $27 million, or 20 cents per share, a year earlier. Its earnings met analysts’ average forecast.
Economics:
- At 8:00 a.m. ET the dovish Chicago Fed President Charles Evans speaks.
- At 8:30 a.m. the Labor Department delivers weekly jobless claims. Economists expect, you guessed it, 400,000 claims, up a bit from 397,000 the week before (which will likely be revised higher).
- Also at 8:30 a.m. we get international trade data for September. Economists think the trade gap widened to $46 billion from $45.6 billion in August. This is an input for third-quarter GDP.
- What’s that? You want more 8:30 a.m. economic data? Okay, then. How about import and export prices for October? The Labor Department reports them, and economists expect import prices to fall 0.3% after rising 0.3% in September. Few will care much.
- At 9:00 a.m., Atlanta Fed President Dennis Lockhart speaks.
- At 11:45 a.m., Ben Bernanke participates in a town-hall meeting somewhere for some reason.
Earnings:
Before the bell we get results from:
- Kohl’s
- Viacom
After the bell we hear from:
- Nordstrom
- Disney
- nVIDIA