Minyanville's Before The Bell: More Subprime Victims, Global Selloff!
Another subprime victim! Asian and European markets hit hard!
Stocks look to be under heavy downside pressure this morning amid a global selloff. As of 8:00 AM EST, S&P futures are trading down 9.3 points at 4125, Nasdaq futures are trading down 14.8 points at 1900.
Late in the day yesterday, Thornburg Mortgage (TMA), a REIT, became another victim of the subprime fallout. Shares of the company were halted after a number of intraday downgrades citing the effects of the current liquidity crisis. The company later announced it was postponing its dividend and that it will not seek Chapter 11 bankruptcy protection. Please read Toddo's Redemption Songs for a great context of the current liquidity crisis.
In Australia, Basis Capital announced to its investors that losses at one of its hedge funds may exceed 80%. Due to ongoing global credit concerns, the company's creditors are forcing Basis Capital to sell its assets even as it is unable to "accurately estimate" the value of units in its Yield Fund. The news sparked a sell-off in markets overseas. Among the hardest hit markets were the Hang Seng down -2.87% and Nikkei down -2.19%. Financials were the biggest of casualties. Get a great perspective with Professor Reamer's Hedge Funds Out Of Excuses?
The selling is hitting European markets as well. CAC is down -1.60%, DAX is down -0.94%, and FTSE is down -1.50%.
In a bit of positive news, Mortgage Bankers Association's index of application to purchase or refinance debt rose to 678.7 from 656.5 last week, the highest level in three months. Also Nestle's shares rose the largest in five years after beating consensus estimates and announcing a buyback of $21 bln. The world's largest food company based in Switzerland also stated higher food prices will likely slow volume growth, but still expects above-target organic growth.
There will be plenty of information for the markets to digest this morning. Below is a look at the economic data released today:
8:30 CPI: 0.2% cons
8:30 Core CPI: 0.2% cons
8:30 NY Empire State Index: 19.0 cons
9:00 Net Foreign Purchases: $126.1 bln
9:15 Industrial Production: 0.3% cons
9:15 Capacity Utilization: 81.8% cons
10:30 Crude Inventories: -4136 k prev
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It should be another volatile session as today is redemption day with tomorrow being expiration Friday. Have a look at Professor Tantro's Embrace the Volatility Or Ignore It to guide you through these sessions. Also be sure to check out our Stocks to Watch and our News and Views section for some stock-specific idea. Good Luck, Minyans!
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