BHP/POT and Meryvn King on Protectionism and Global Co-op on Policy

WFC reported record profits this morning as credit improved. $0.60 vs. $0.56 consensus on $20.9B of revenue. USB also reported this morning, and saw its 3Q profit rise 51% YoY, to post $0.45 vs. $0.43 expected. (Incidentally, these reports should bode well for Fairfax which owns large stakes in both banks.)

Bloomberg has a story out this morning detailing the deepest budget cuts in British history as Chancellor of the Exchequer, George Osborne, outlined austerity measures designed to virtually eliminate a $245B budget deficit. These plans include eliminating approx 490,000 public-sector jobs, putting a permanent maximum sustainable tax revenue on the financial services sector, cuts to the royal family's funding from the 'civil list', a 7.1% decrease in funds for local governments by 2015, a 24% cut to the Foreign Office budget, and a 6% cut to the Ministry of Justice. The pound is little changed this morning on the announcement.

BHP's offer to Saskatchewan of $360M for infrastructure investment was turned down by the province, as BHP's offer doesn't come close to offsetting the C$3B in revenue thed province would lose if BHP is successful in its attempted acquisition of POT. Saskatchewan Premier Brad Wall will lay out the province's position on the hostile offer in a speech today. Canada has until Nov. 3 to block the bid if it doesn't provide a net benefit to the country. (Bloomberg)

Bank of England Governor Mervyn King gave a speech yesterday ahead of this weekend's G20 meeting discussing the dire need for globally coordinated policy decisions in order to keep the level of protectionism from rising to a point where it would slow global output. “The risk is that unless agreement on a common path of adjustment is reached, conflicting policies will result in an undesirably low level of world output, with all countries worse off as a result,” King said. “The need to act in the collective interest has yet to be recognized, and, unless it is, it will be only a matter of time before one or more countries resort to trade protectionism.” Mr. King went on to discuss how countries with floating exchange rates are 'innocent victims' and how Brazil has had to retaliate and even how India is considering intervening in the market if the rupee appreciates past 43 to the dollar. His most troubling statement however was when he said that a real agreement at the G20 would require a "revolution". (Bloomberg)