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Minyanville's Before The Bell: Subprime Issues Continue, Gloomy Housing Data


Subprime issues continue and Housing data is gloomy. Yet Futures are up.

U.S. equity futures are up this morning after mixed sessions around the globe. As of 7:10 AM EST, S&P futures are trading up 1.40 points at 1450 , and Nasdaq futures are trading up 0.2 points at 1898.

Asian stocks for the most part extended their gains for a second day. Australia's ASX rose 1%, the Nikkei rose 1.1%, Hang Seng finished up 0.6%, and China's Shanghai Composite closed up 1% at a record high of 4,955. India was a laggard with the Sensex off 2.6%.

The record close of the Shanghai Composite certainly weighed in on the minds of those at the People's Bank of China. Bloomberg reports the PBOC decided to raise the benchmark one-year lending rate for a fourth time this year to 7.02% in an effort to cool the world's fastest growing economy. Read Toddo's Chinese Food For Thought, as well as other issues on our China Page, to get caught up on the warning signs of China's overheating economy.

European indexes are in mixed territory. As of 7:10 AM EST the FTSE is down 0.43%, CAC is up 0.17%, and the DAX is down 0.24%

Making headlines in Europe, Bloomberg reports Landesbank Sachsen Girozentrale, the German state-owned bank getting emergency funding, has approximately $4 bln in securities linked to subprime mortgages. Sachsen is the second German Bank to get emergency funding after a credit crunch caused them to be stuck with significant short-term debt.

Back in the U.S. RealtyTrac released a report stating July 2007 foreclosures showed a 9% m/m increase (a 93% gain y/y). California, Florida, Michigan, Ohio, and Georgia accounted for over half the nation's 180,000 filings.

In another sign of the subprime problem spreading, Capital One (COF) announced yesterday that it was shutting its GreenPoint Mortgage unit that will costs approximately 1,900 jobs.

Monster Worldwide's (MNST) CFO Chris Power resigned. The WSJ reports Monster has been going through a management upheaval recently amid an options-backdating scandal. In April, the CEO William Pastore said he would leave after a transitioning period.

Bloomberg reports Ottimo Funding LLC is stuck with approximately $3 bln of short-term debt this month due to continued credit concerns by investors. The irony is that Ottimo has the highest possible credit rating with no exposure to subprime mortgage bonds.

As expected, Subprime issues have been a hot topic at the 'Ville. View the many issues covered by our professors on our Subprime Slime page and make sure you review through Professor Succo's Don't confuse Risk Taking With Value on our Risky Business page.

Don't be fooled by today's light radar with no economic data set to be released. The markets are very cautious as Chairman Bernanke and Secretary Treasurer Henry Paulson is set to meet behind closed-doors with Senate Banking Chairman Christopher Dodd at 10:00 AM EST. But be sure to click here for the rest of the events on our Trading Radar and our Stocks to Watch for more company-specific ideas.

Good luck Minyans!
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