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Pre-Market Primer: IMF Report Predicts More Gloom and Doom


Nothing much to like in today's World Economic Report. Earnings season won't be much of a relief either.

MINYANVILLE ORIGINAL Today, on the five-year anniversary of the Dow Jones Industrial Average's (INDEXDJX:.DJI) highest peak on record investors are brace for a season of poor earnings and a frightening report on global growth from the IMF hit foreign stocks hard.

Stocks were hard before the opening bell. Dow futures inched up 0.03% to 13,505.00. S&P 500 (INDEXSP:.INX) futures gained 0.03% to 1,450.30, and Nasdaq (INDEXNASDAQ:.IXIC) futures dropped 0.11% to 2,774.50. European and Japanese stocks traded lower overnight.

The International Monetary Fund released its World Economic Report today. The organization warned in the report that risks for a "serious global slowdown" remain very high. The IMF expects the global economy to grow by just 3.3% this year and 3.6% next year. Despite the turbulence of 2011, the world economy grew by 3.8%. As usual, the EU countries are the biggest concerns. The IMF analysts predicted that Spain, France, and other eurozone countries will miss budget deficit targets.

This is all assuming that eurozone countries ease the stresses on the peripheral debtor countries and continue to move toward more fiscal integration and US policy makers come to an agreement to avoid the "fiscal cliff" of higher taxes and deep cuts in government services.

One of the IMF's recommendations was that Greece's creditors accept a bigger write-down on what they are owed. Being a senior creditor, the IMF can't take its own advice.

Japan's trade surplus unexpectedly grew in August to 454.7 billion yen from 436.3 billion yen in August 2011, breaking a trend towards deficits.

The People's Bank of China injected 256 billion renminbi (over $42 billion) into the country's banking system by offering repurchase agreements. This is the second-biggest liquidity injection that the PBOC has ever undertaken.

No major US economic reports are due out today. Alcoa (NYSE:AA) will kick off earnings season this afternoon. Analysts estimate that profit at the aluminum company fell to $0.01 on sales of $5.57 billion in the third quarter from $0.15 in the year earlier. Shares of Alcoa rose 1.32% to $9.24 in the premarket. Earnings are expected to be lower this season.

Yum Brands (NYSE:YUM), which operates fast food chains such as Pizza Hut and KFC will also report earnings after the close of the trading day. The company, which is getting more and more of its revenue from China, is expected to report earnings of $0.97 per share on $3.66 billion in sales. Shares traded up 0.1% before the bell.

Twitter: @vincent_trivett
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