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Europe Gropes Toward Integration

Europe is up, despite the lack of a clear resolution to Dexia. The French finance minister Tuesday said, "I think there should be a solution tomorrow." We're waiting. Options include the much discussed good bank/bad bank, followed by sale of assets, and the possibility that the French and Belgian governments could take full control of the bank.

Both the French and Belgian governments have said they would backstop the bank, which led to much speculation about how the governments of Europe could backstop the mountain of bad debt at other banks without having their own sovereign credit ratings jeopardized.

We got some hint on this today. French Finance Minister François Baroin, speaking on a French radio station, said that if any banks needed to be recapitalized, it should take place at a European level, not a national level.

There is yet another hint that a greatly expanded European Financial Stability Facility (EFSF) , or (down the road) euro bonds are coming. European officials are slowly talking themselves into greater euro integration. Whether that will happen fast enough is the question.

Elsewhere:

1. Copper down early morning, to new lows for the year.

2. Monsanto rises 2 percent after beating fourth-quarter estimates (loss of 22 cents a share vs. loss of 27 cents a share consensus) on much stronger-than-expected sales (seed sales up 39 percent!), boosted by strong growth in Latin America. First quarter guidance for the seed producer is well ahead of estimates (10 cents to 15 cents a share vs. 8 cents a share consensus) driven by further growth in Brazil and Argentina. However, full-year guidance for the new year remains conservative at $3.34 to $3.44 a share vs. $3.42 a share consensus.

3. Yum Brands falls 2 percent as earnings were inline with estimates despite U.S. same-store sales slumping 3 percent. Growth came outside of the U.S., where same-store sales grew 19 percent in China and 3 percent internationally. The fast food giant didn’t discuss expectations for a China slowdown, and the strong overseas growth helps it reaffirm 12 percent earnings growth this year and forecast "double-digit earnings growth next year."

4. Walgreen reported a weaker-than-expected 3.1 percent rise in September same-store sales, as both its general merchandise and pharmacy sales disappointed the Street. Lower flu cases, fewer flu shots administered, and fairly flat general merchandise traffic impacted sales last month.

Other retailers will be reporting their September same-store sales Thursday morning.

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