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Pre-Market Primer: Markets Decline While Catalonia Mulls Secession From Spain


Catalonia will soon hold a referendum to decide whether or not to break away from Spain.

MINYANVILLE ORIGINAL Stock index futures were down slightly this morning after declining yesterday.

Yesterday, Philadelphia Fed President Charles Plosser said that the Fed's latest quantitative easing program will not lead to more hiring. Plosser's comments stoked fears that the open-ended asset purchasing will not be effective, triggering a broad sell-off late in the day.

In Spain, while the country mulls asking for a bailout from the European Central Bank, a whole other crisis is brewing. The relatively well-off Catalonia region, which includes the commercial hub of Barcelona, has announced that it will hold snap elections and a referendum to decide whether it should break away from Spain and form a separate republic. Many Catalans resent that their region pays more taxes and receives fewer government services than other regions where the economy is less robust.

Prime Minister Mariano Rajoy said that the country will make it harder to take early retirement to help rein in the country's debt. He also said that the country will only take the ECB's offer of a bailout if borrowing costs remain high for a long period of time.

The housing recovery in the United States might be picking up. The S&P/Case-Shiller 20-city home price index showed a sixth-straight rise yesterday. The index rose 1.2% in July. The FHFA's housing price index rose 0.2% on a monthly basis. Today, the Commerce Department will release its new home sales report, which is expected to show that purchases of new houses reached an annualized rate of 380,000 last month, a two-year high. The rate for July was 372,000 new home sales.

Asian and European stocks tumbled today and US index futures are following them down. Dow (INDEXDJX.DJI) futures dropped 0.14% to 13,386, S&P 500 (INDEXSP:.INX) futures fell 0.19% to 1,434.50, and Nasdaq (INDEXNASDAQ:.IXIC) futures slipped 0.27% to 2,795.75.

Yahoo (NASDAQ:YHOO) shares erased some of yesterday's losses in pre-market trading. Yesterday, the Internet portal announced that Ken Goldman will replace Tim Morse as chief financial officer, and CEO Marissa Mayer announced her plans for turning the company around. While her comments were seen as somewhat vague, she did make it clear that the homepage will be dramatically redesigned and the company might use "acqui-hires" to bring fresh talent.

Yahoo currently uses Microsoft's (NASDAQ:MSFT) Bing to power its Web search engine. At an event in Japan yesterday, Google (NASDAQ:GOOG) CEO Eric Schmidt said that he is interested in working with Yahoo and replacing Bing.

The British Bankers' Association, which is responsible for the London Interbank Offering Rate, is preparing to relinquish oversight to government regulators. After it was found this summer that bankers at several major financial institutions were fixing the rate, the government decided that the private group is unfit to be in charge of the benchmark on which much of the world's lending is based.

Twitter: @vincent_trivett
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