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Minyanville's Before The Bell: Credit Concerns Around The Globe! Futures Lower


Global credit concerns are back on top pushing down U.S. stock futures this morning!

U.S. stock futures are trading lower this morning due continued turmoil in the credit markets around the world. As of 7:30 AM EST, S&P Futures are trading lower by 6.10 points at 1463, and Nasdaq futures are trading lower by 6.2 points at 1944.

Asian markets were mixed. The Hang Seng closed down -0.91%, the Nikkei closed down -0..09%, Taiwan added +0.11%, and Shanghai continued its winning streak adding +0.87%. India's Sensex also added +0.52%.

Over in Europe, The CAC is trading lower -1.02%, DAX is down -0.24%, and the FTSE is down -0.80%.

Topping the headlines this morning, credit issues are scaring investors around the world. In Singapore, DBS Group fell over 2% today after admitting it will have to fund a $921 mln asset-backed commercial paper due to continued turmoil in the credit markets.

State Street (STT) is reported to have a $22 bln exposure to asset-backed commercial paper conduits which accounts for 17% of its assets. Investors are concerned that State Street would have to fund the short term debt should it be unable to roll over these securities (From Reuters)

Private Equity giant Carlyle Group agreed to loan more money to a troubled mortgage fund. Carlyle Capital, a highly-leveraged fund, received $100 mln after it cancelled its dividend and was forced to liquidate due to margin calls less than two months after listing on Euronext Amsterdam. Carlyle Capital said it has already used up a $100 mln loan extended by Carlyle Group last week. (From WSJ) Click here Professor Saut's insights on the current credit crunch in his article, Jeff Saut: Sgt Pepper's...

Goldman Sachs (GS) downgraded Germany's Deutsche Bank (DB) from "Buy" to "Neutral" based on "highly uncertain" earnings. Goldman also cut estimates across the European banking sector to reflect lower expected markets-related revenues. (From Reuters). Professor Shedlock first raised questions on the large banks on August 15. Please read his article Goldman: Deal or No Deal?

In another troubling sign, FT reports US consumers are defaulting on credit-card payments at a significantly higher rate than last year. Credit card companies were forced to write-off 4.58% of payments as uncollectible in 1h of 2007, almost a 30% y/y increase. Please read Toddo's The Credit Card as he warns of credit problems of a different breed.

Shifting to today's radar, we have Consumer Confidence data set to be released at 10:00 AM EST with consensus estimates at 106.5. The most important data, however, will be the release of the FOMC minutes at 2:00 pm. Please click here for the full trading radar for the rest of the week's events. Click on our Stocks to Watch for more company-specific ideas and be sure to keep checking back on our News and Views page for continuously updated information you need to know.

The direction of the markets however is far from a certainty. Toddo warned of this in yesterday's Petty Morning Quarterback that there are very significant cases to consider for the bull and bear arguments. In addition, have a look at Professor Tatro's Clarifying the Market's Current State. Good luck and good trading, Minyans!
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