Greek voters dealt a serious blow on Sunday to the fragile political consensus that has kept Europe’s currency bloc intact through more than two years of crisis, rejecting the austerity-for-aid policies that have shielded the country from bankruptcy and a euro exit.
Greece’s vote, combined with the victory of Socialist Francois Hollande over incumbent Nicolas Sarkozy in a French presidential election, will raise pressure on Europe’s paymaster Germany to pursue a more growth-oriented approach to the crisis.
But it is far from clear whether Chancellor Angela Merkel, whose insistence on tough deficit reduction in vulnerable southern euro members is popular in Germany, will take more than symbolic steps in that direction, even after Sunday’s elections.
One thing is clear in the aftermath of Sunday’s national elections in France and Greece: Austerity is out; anger is in. Voters took to the polls, and they were decisive. These real-life avengers are here, and they are tossing out those associated with the German-dominated austerity crowd.
In France, the challenger, Socialist François Hollande, ousted President Nicolas Sarkozy, whose ties to the austerity crowd didn’t jibe well with the current zeitgeist. In Greece, voters delivered a stinging rejection of the two incumbent parties; they may pull together the narrowest sliver of a majority, but their ability to govern effectively has been hobbled.
This is for some reason taking the market by surprise, but it’s hard to see why. This was all telegraphed well ahead of time.
“We have been writing for months that once the people got a chance to vote on the austerity packages they would turn them down by voting the leaders that signed them out of office,” Robert Hardy of research and consulting firm GeoStrat wrote in a note Sunday.
Now the markets play a guessing game. Will Hollande and Merkel play well together? Will they get a cute nickname, like Merllande? Or Hollkel? Or will the Franco-German alliance disintegrate? Will Greece sink into chaos? Will it drop the euro?
Berkshire Hathaway [BRK.B 80.94 -0.32 (-0.39%) ] – Berkshire leads our list of stocks to watch, following the annual meeting this weekend in Omaha, and Warren Buffett’s live appearance on CNBC’s “Squawk Box”Monday morning from 6 a.m. through 9 a.m. ET.
Tyson Foods [TSN 18.04 -0.20 (-1.1%) ] – The food producer reported fiscal second-quarter earnings of $0.44 per share, above estimates of $0.39, but sales did come in below consensus. The company sees itself gaining momentum in the second half of the year, and says it still has the potential to earn $2 per share for the year if it executes well.
Procter & Gamble [PG 64.28 -0.23 (-0.36%) ] – Wells Fargo has downgraded the stock to “market perform” from “outperform,” saying the company’s organic sales and market share are lagging that of its competitors. Wells Fargo says P&G lacks upside catalysts until it can demonstrate an ability to expand profit margins.
Vertex Pharmaceuticals [VRTX 37.41 -0.70 (-1.84%) ] – The drugmaker’s stock is jumping after its cystic fibrosis combination therapy showed promise in a mid-stage study.
Cognizant Technology [CTSH 69.66 -1.43 (-2.01%) ] – The information technology services company has lowered its full-year earnings forecast. The company says it’s seeing a slower-than-anticipated acceleration in demand for its services, echoing what its rivals have seen.
Oracle [ORCL 28.41 -0.97 (-3.3%) ], Google [GOOG 596.97 -14.05 (-2.3%) ] – The jury in the trial involving the two are set to resume deliberations this morning. The legal dispute involves Google’s use of Java, which Oracle obtained when it bought Sun Microsystems a few years back.
Liberty Media [LMCA 84.58 -2.26 (-2.6%) ], Sirius XM Radio [SIRI 2.16 -0.05 (-2.26%) ] – The U.S. Federal Communications Commission has turned aside an application by Liberty Media to take control of Sirius XM Radio, calling the application “defective” and “not warranted.” Liberty owns convertible preferred shares which could be turned into a 40 percent stake in the satellite radio operator.
American International Group [AIG 32.83 -1.31 (-3.84%) ] – The U.S. Treasury has announced plans to sell nearly 164 million shares in AIG for about $5 billion, in a move that would cut its take to 63 percent.
Yahoo [YHOO 15.15 -0.25 (-1.62%) ] – The company is reportedly working on a new deal to sell at least part of its stake in Alibaba. The Wall Street Journal reports a deal would be completed within weeks, although it also notes that the two have tried a number of times to forget an agreement in the past, with little success.
Comcast [CMCSA 29.45 -0.91 (-3%) ] – Comcast said its NBCUniversal unit (the parent of CNBC and CNBC.com) is exercising an option to sell most of its stake in the A&E cable channel, and that the deal would likely close in the second half of the year. The transaction would be worth about $2 billion.
Micron Technology [MU 6.55 0.08 (+1.24%) ] – The chipmaker reportedly has won the exclusive right to bid for bankrupt Japanese chipmaker Elpida Memory, according to Reuters.
Merck [MRK 38.84 -0.33 (-0.84%) ], Eli Lilly [LLY 41.28 0.01 (+0.02%) ] – Switzerland’s Roche has abandoned efforts to move the heart drug dalcetrapib to market, following poor results from a late stage study. That follows a similar failure last week by Pfizer [PFE 22.38 -0.22 (-0.97%) ] in this drug category, with analysts predicting negative sentiment towards other such drugs in trials, such as Merck’s anacetrapib and Eli Lilly’s evacetrapib.
DigitalGlobe [DGI 16.44 2.92 (+21.6%) ] – The satellite imagery company has turned down a takeover offer worth $792 million from competitor GeoEye [GEOY 24.83 0.80 (+3.33%) ]. It says GeoEye’s bid substantially undervalues the company.
PepsiCo [PEP 65.90 -1.01 (-1.51%) ] – Morgan Stanley has upgraded the stock to “overweight” from “equal weight,” while upgrading competitor Dr Pepper Snapple [DPS 39.92 -0.19 (-0.47%) ] to “equal weight” from “underweight.”
Apple [AAPL 565.25 -16.57 (-2.85%) ] – DigiTimes is reporting that Apple will release a $799 MacBook Air during the third quarter, citing supply chain sources.
Texas Instruments [TXN 30.59 -0.80 (-2.55%) ] – Nomura Securities has upgraded its rating on the chipmaker to “neutral” from “reduce,” seeing broadbased improvement in several of the company’s markets, as well as reduced inventory levels.
Nvidia [NVDA 12.26 -0.37 (-2.93%) ] – Nomura has also upgraded its rating on chipmaker Nvidia, now rating it “buy,” compared to the prior rating of “neutral.” Nomura sees better days ahead for Nvidia in the graphics and mobile areas.