NEWS,07.10.2012

Chavez's socialist rule at risk as Venezuelans vote

Venezuelans have voted with President Hugo Chavez's 14-year socialist revolution on the line as the leftist leader faced youthful rival Henrique Capriles in his toughest electoral challenge yet. Henrique Capriles, a centrist state governor, edged toward the still popular Chavez in final polls thanks to a vigorous campaign that united the opposition and made him its best chance of ending Chavez's 14-year rule.Chavez has used record oil revenue to support ideological allies around the world, while preaching a fiercely anti-US line, so the election will be watched eagerly from the United States to Belarus and Iran.Across the poor neighbourhoods where the flamboyant former soldier draws his most fervent following, loyalists prepared to blow bugles and trumpets in a predawn wake-up call for voters.Opposition sympathizers banged pots and pans in a protest against Chavez on Saturday night, creating a racket in the upscale neighbourhoods of eastern Caracas. In the city centre, which is more pro-government, the noise was drowned out by supporters playing his campaign music and shouting his name."I ask political actors from the left, right and centre to prepare emotionally to accept tomorrow's results. It's not going to be the end of the world for anyone," Chavez said at a last- minute news conference at the presidential palace.The 58-year-old president staged a remarkable comeback from cancer this year. But he could not match the energy of past campaigns - or the pace set by his 40-year-old basketball-loving opponent.Most well-known pollsters put Chavez in front. But two have Capriles just ahead, and his numbers have crept up in others.There is a risk of violence if the result is contested.There will be no formal international observers, although Venezuela invited a delegation of the UNASUR group of South American nations to "accompany" the vote.Local groups will be monitoring and both sides say they trust the electronic, fingerprint vote system. The opposition says it will have witnesses at all of the 13,810 polling centres from tiny Amazon villages to tough Caracas slums.Capriles geared up on Saturday for the vote by hiking a mountain trail at the edge of Caracas that is popular with athletic Venezuelans. He donned running clothes and mirrored sunglasses, and posed for pictures with supporters.Chavez spent about half an hour in the evening speaking to reporters alongside members of the UNASUR delegation, headed by an Argentine politician. Asked by one reporter if he wanted to stay in office beyond 2018, he glibly replied, "Twenty years is nothing," in reference to a popular Argentine tango song.Capriles shot back via Twitter. "Right now some people continue with the same nonsense and the same stories as always, the difference is this time they're on their way out!"In a politically polarised country where firearms are common and the murder rate is one of the highest in the world, tensions have risen alongside weeks of tough campaign rhetoric, and both camps are vowing to "defend" their votes.Capriles would face big challenges Chavez accuses the opposition of plotting violence and planning to "reject the people's triumph" when he wins, but says that effort will be defeated. Some opposition activists fear he could refuse to step down if the result goes against him.Victory for Capriles would remove the most vocal critic of the United States in Latin America, and could lead to new deals for oil companies in an OPEC nation that pumps about 3 million barrels a day and boasts the world's biggest crude reserves.Capriles wants to copy Brazil's model of respect for private enterprise with strong social welfare programs if he is elected - but he would face enormous challenges from day one.For a start, he would not take office until January 2013, meaning Chavez loyalists might throw obstacles in the way of the transition.He also would have to develop a plan to tackle entrenched high inflation, price distortions and an over-valued currency, while surely butting heads with the National Assembly, judiciary and state oil company PDVSA - all dominated by Chavez loyalists.Another big task would be to figure out the real level of state finances. Last month, a Reuters investigation found that half of public investment went into a secretive off-budget fund controlled by Chavez and had no oversight by Congress.The president has denounced his foes as traitors and told voters they plan to cancel his signature social "missions," which range from subsidized food stores to programs that build houses and pay cash stipends to poor women with children.Tens of thousands of new homes have been handed over this year, often to tearful Chavez supporters at televised events.If Chavez wins, he can consolidate his control over Venezuela's economy and continue his support for leftist governments across Latin America, as well as allies farther afield such as Iranian President Mahmoud Ahmadinejad, Syria's Bashar al-Assad, and Alexander Lukashenko of Belarus.

Spain faces fresh street protests

Thousands of Spaniards have marched in cities across the country to decry tough austerity measures, part of a growing protest movement that shows no signs of abating and could culminate in a general strike in November.Hundreds of thousands of Spaniards took to the streets yesterday, creating a headache for the centre-right government as it faces regional elections and tries to assure investors the country is stable.Spanish labour unions said they would call a general strike if the government did not hold a referendum on unpopular spending cuts. Prime Minister Mariano Rajoy unveiled 13 billion euros in additional savings in a tough budget last month."It's up to the government whether there's a general strike or not. If they were going to hold a referendum things would be completely different," said Ignacio Fernandez Toxo, leader of Spain's biggest union, Comisiones Obreras. Spain is now at the eye of the euro zone storm, with expectations mounting that the government will soon seek European aid to keep its borrowing costs under control."It's shameful - we're losing everything," said Carmen Lopez, a department store worker at Sunday's protest in the capital. "Pensions, salaries, public healthcare and education. They're taking everything."Some 60,000 people attended the union-organised march in the centre of Madrid. "How can there be peace without bread?" and "Their plunder, my crisis", placards read."I'm a teacher and they've really cut back in education - there are fewer resources, fewer teachers and more students," said Agustin Moreno, who teaches in the Madrid neighbourhood of Vallecas."We will do everything we can. We will keep protesting," he added.Protesters were decked out in the colours of various unions, and many wore T-shirts saying "I used to have social and labour rights"."They're taking away help for people who are unemployed, just at the time when people most need the help," said primary school teacher Francisca Valverde.Protests were taking place in dozens of cities on Sunday, but there were no reports of any violence.Under pressure Rajoy's People's Party (PP) faces regional elections in Galicia, the Basque Country and Catalonia - increasingly vocal about its desire to break away from Spain - in the coming weeks.In the wake of violence during a protest in Madrid on September 25, Rajoy urged a business audience in New York last week to focus on the "silent majority" of Spaniards who do not protest.But a survey in El Pais newspaper on Sunday showed 77% of Spaniards support the protesters, while more than 90% think protests will become more frequent.The government is increasingly unpopular at home and must convince uneasy investors that it can keep a lid on social unrest and carry out its austerity policies.The right to protest has become a topic of fierce debate in Spain since the September 25 demonstration ended in 35 arrests and left 64 people injured.Last week politicians from the ruling People's Party (PP) said laws surrounding protests should be tightened up, with Madrid's local government chief Ignacio Gonzalez saying the capital was in "a constant state of collapse" because of demonstrations.But a Spanish court on Thursday threw out a police case against the organisers of the protest, saying people had a right to express their opinion. The court will also investigate police brutality at Madrid's Atocha station during the demonstration.

Wall Street: US companies 'blaming' weakness in Europe

Wall Street may be bracing for a pullback as US season begins next week - if the clouds of profit warnings from bellwethers ranging from FedEx to Hewlett-Packard lead to a downpour of lower profits - or even losses.Thanks to aggressive stimulus plans from central banks around the world, the Standard & Poor's 500 index. SPX gained 5.8% over the third quarter.That sharp rally occurred even as companies were struggling. Earnings for that period are forecast to fall 2.4 percent from the year-ago quarter. If that happens, this would be the first earnings decline in three years..Market strategists and investors say US stock valuations are broadly out of sync with earnings estimates.They forecast a pullback in stocks in the coming weeks as more companies report results and reduce expectations for the fourth quarter and beyond.Fourth-quarter estimates for S&P 500 companies show a 9.5% gain in profit from a year ago, according to Reuters data. Analysts say that outlook is too high, given what investors are already hearing from the corporate world."It's a divergence right now where the valuations as far as equity prices (are concerned) have soared, and are really putting in place a stronger economy and stronger fundamentals," said Alan Lancz, president of Alan B. Lancz & Associates, an investment advisory firm in Toledo, Ohio."But earnings will be the telltale sign," Lancz added. "And if the guidance isn't particularly strong, the market might be setting itself up for a little disappointment. I don't see a major correction, but I do see a pullback."The earnings season will kick off on Tuesday with results from after the bell.Analysts expect Alcoa's third-quarter results to show it broke even, down from a profit of 15 cents per share a year earlier.JPMorgan Chase & Co and Wells Fargo, the first big financial names to report, are also on tap next week.Blame Europe Nearly half of S&P 500 companies guiding lower for third- quarter earnings blamed weakness in Europe, according to a Thomson Reuters survey.Another 11% blamed the weak global economy, 8% cited strength in the US dollar, and 6% cited the slowdown in China, the survey showed.Weakness in the US economy has not helped. The final read on US second-quarter gross domestic product last month showed growth of just 1.3%, weaker than an expected 1.7%.On Thursday, software maker Informatica issued a profit warning and said business conditions were worsening in Europe. The software company is considered a bellwether because its products are used alongside those made by larger software companies."Parts of Europe aren't just in recession, they're in depression," said Jeff Kleintop, chief market strategist at LPL Financial in Boston. "I think (analysts) underestimated the extent of the global slowdown, and maybe are still underestimating it."Tech feels chill from China While estimates have come down sharply in all 10 S&P 500 sectors since the start of the year, technology is one area where the lower expectations are most notable. Slower growth in China is a big factor in that trend.Earnings growth in the tech sector is expected to be just 2.3% for the quarter, compared with a July 1 forecast of 13.1%.Apple is a big driver of those gains.Technology's profit growth has been crucial for the S&P 500. Minus technology, S&P 500 earnings are expected to be down 3.4%.The tech sector is where the slowdown in China's economy is having the biggest impact, Kleintop said."They consume a lot of US technology products," he said.Recent data shows that the pace of growth in China, the world's second-largest economy, may slow for a seventh quarter, straining earnings in the tech and materials sectorsApplied Materials lowered its third-quarter estimates in August, citing China and Europe. On Wednesday, the chip gear maker said it planned to cut its global work force by 6% to 9%.FedEx, the world's second-largest package delivery company, cut its fiscal 2013 forecast on September 18, saying a weakening global economy gives its customers a reason to switch to less expensive and slower shipping options. FedEx said its earnings could drop as much as 6% for its fiscal 2013 year, which will end in May.On Wednesday, shares of Hewlett-Packard fell a whopping 13% to a nine-year low after it forecast a far steeper-than-expected drop in 2013 profit.The slide in HP's stock price sharply cut the Dow industrials' gains for the day.The S&P 500 sectors showing the biggest projected earnings decline are materials, forecast down 24%, and energy, expected down 18.8%, data show, with those declines tied largely to the global slowdown.In contrast, consumer discretionary stocks are expected to have the strongest profit growth for the quarter data showing a gain of 7.7%.