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Pre-Market Primer: Millionaires Get Unemployment Checks and Postal Service Misses Payments


The Postal Service will have to wait until after the election for Congress to allow it to cut costs.

MINYANVILLE ORIGINAL Stocks are set to open higher this morning as Spain is reported to be preparing to formally ask for a bailout.

Reuter's reported that Spain is going to request a bailout from the EU as soon as this weekend. Germany is lobbying Madrid to wait. The Bundestag's recent approval of the 100 billion euro bailout of Spain's troubled financial institutions came at considerable political cost.

The newest data out today shows that Spain's jobless rate increased by 1.7% in September as the tourist season comes to a close. The Spanish Labor Ministry says that 4.7 million people are out of work in the country.

European stocks rebounded this week after the results of the Spanish bank stress tests bolstered confidence in the country's banking system on Friday. Spanish bonds rallied today, the yield falling 13 basis points to 5.75% on hopes that the European Central Bank will buy up Spain's debt. Moody's was more skeptical about the stress test results. Moody's analysts said that the Spanish financial system could require cash infusions of as much as 105 billion euros to keep capital ratios above the required thresholds. This is much more than the 53.7 billion euro shortfall reported last week.

"The recapitalization amounts published by Spain are below what we estimate are needed for Spanish banks to maintain stability in our adverse and highly adverse scenarios," the analysts wrote. "If market participants are skeptical about the stress test, negative sentiment could undercut the government's efforts to fully restore confidence in the solvency of Spanish banks."

Before the opening bell, US stock index futures suggested that that today will see a repeat of yesterday's modest rally. Dow (INDEXDJX:.DJI) futures gained 0.38% to 13,488.00, S&P 500 (INDEXSP:.INX) futures climbed 0.57% to 1,445.10, and Nasdaq (INDEXNASDAQ:.IXIC) futures headed up 0.51% to 2,802.50.

September motor vehicle sales will be released today. Analysts expect to see sales totals of 11.5 million vehicles for domestic brands and 14.5 million including imports.

The state of New York is suing JPMorgan Chase (NYSE:JPM) for fraud. The suit involves mortgage-backed securities sold by Bear Stearns, which JPMorgan acquired in a fire sale brokered by regulators to save Bear from going under in March of 2008. New York Attorney General Eric Schneiderman alleges that Bear Stearns falsely sold its mortgage-backed securities to investors as a carefully evaluated and continuously monitored debt product during the housing bubble. As we know now, this was not the case.

Credit Suisse (NYSE:CS) lifted several American banks from benchmark to overweight today. The bank's analysts said that they expect loan growth and asset quality will improve along with the general economy and corporate balance sheets. The bank rated Wells Fargo (NYSE:WFC) as neutral and JPMorgan Chase as outperform.

Boeing (NYSE:BA) employees rejected a contract offer late yesterday. Negotiations that affect 23,000 workers will continue today. ConocoPhillips (NYSE:COP) is preparing to sell its stake in the massive Kashgan oil field to the local government in Kazakhstan.

The non-partisan Congressional Research Service discovered that over 2,400 recipients of unemployment insurance in 2009 had annual household incomes of over $1 million. Meanwhile, the US Postal Service just defaulted on a $5.6 billion payment to its retirees' fund.

Twitter: @vincent_trivett
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