11/10/2011 06:48

Business Insider:   The Italian debt crisis is blowing up.

First, the scoreboard:

Dow: -389.3 pts, -3.2%
S&P 500: -46.8 pts, -3.7%
NASDAQ: -105.8 pts, -3.9%

And now, the top stories:

    Yesterday's post-Berlusconi rally was short-lived as Italy's borrowing costs continue to soar.  The yield on the Italian 10-year bond shot north of 7%.  Overnight, LCH Clearnet raised the margin requirements to trade Italian debt.  This move makes it more expensive to fund trades, and ultimately reduces liquidity in the Italian bond market.  This is extremely problematic for debt-laden Italy, which has a crucial bond auction scheduled for tomorrow.
    Meanwhile Greece has yet to pick a new prime minister and form its new unity government.  Yesterday, we thought the frontrunner was former ECB VP Lucas Papademos.  Now, it looks like it could be someone named Phillippos Petsalnikos.
    By the way, it's not just Italy and Greece.  The spread between German and French bonds are rapidly widening.  For More, Here Are All The Major Issues In Europe Right Now >
    Rumors also circulated that the largest eurozone countries would form a core eurozone, separating them from the weaker peripheral countries like Greece.  However, an EU official, according to Bloomberg, later denied the rumor.
    As usual, U.S. financial firms took a beating on worries of their exposure to eurozone debt woes.  Morgan Stanley plunged 9%.  Goldman Sachs fell 8%.  Jefferies, everyone's new favorite punching bag, dived 10%.
    GM was a big loser today.  The automaker had a stronger-than-expected third quarter, but also warned Europe wouldn't be profitable anytime soon.
    Adobe was another loser today.  The software company said it would lay off 750 employees.  Related restructuring costs forced management to lower Q4 EPS guidance from between $0.41 and $0.50 to between $0.30 and $0.38.


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