Morning Economic News - February 10, 2009

Commentary and Overnight Trading

Overnight trading results early Tuesday [2:57 AM Eastern] are almost as lackluster as Monday's US stock market returns. The Nikkei closed down 0.29%, while the Hang Seng is up 0.01%, while US stock market futures are down just under 1%. Oil is up 26 cents a barrel and gold is up 0.39% while silver is down by the same percentage. The dollar is down slightly against the yen, up solidly againsg the euro, pound and Canadian dollar.

Economic Reports

Employment Trends Index - January 2009

• Employment Trends Index: 96.6


• Monthly Change: Down 1%


• Year-to-year Change: Down 18.6%

What I'm Reading

Slowdown Hits Emerging Markets

The global downdraft is hitting emerging economies with a speed and ferocity few imagined possible just months ago.

China's Inflation Slows to 1%, Weakest Pace in Two Years, as Economy Cools China’s producer prices tumbled by
the most in almost seven years and inflation cooled to the
weakest pace since 2006 as the government struggled to revive
growth in the world’s third-biggest economy.

BOE's King Must Print Money Now to Escape Credit `Mess,' Former Aides Say Bank of England Governor Mervyn King
should print money now and abandon economic assumptions that
have failed to save the U.K. from its worst recession since
World War II, a group of former central bank economists said.

U.K. Home Sales Drop to Lowest Since at Least 1978 as Recession Deepens U.K. housing sales dropped to the
lowest level since at least 1978 in the quarter through January
as property prices dropped further and Britain’s recession
deepened, the Royal Institution of Chartered Surveyors said.

Australia's Business Confidence Plunges to Record Low as Exports Decline IOOF Holdings Ltd. and Australian
Wealth Management Ltd., the asset managers that agreed to merge
last year, said funds under management plunged as financial
markets tumbled amid the global credit crisis.

Japan's Consumer Sentiment Stayed Near Record Low in January on Job Cuts Japan’s consumer sentiment stayed
near its lowest level in at least 26 years in January,
indicating households are likely to keep cutting spending.

South Korean Economy to Shrink 2%, Government to Boost Spending, Yoon Says South Korea’s new Finance Minister
Yoon Jeung Hyun pledged to increase stimulus spending after
forecasting the economy will contract about 2 percent this year
and lose around 200,000 jobs.

Bond Vigilantes Drive Treasuries to Worst Start Since 1980 in Test of Fed The bond vigilantes may be making a
comeback.

ECB Says Mixing Bad-Bank Plan, Asset Guarantee Would Curb Toxic-Paper Cost The European Central Bank said
governments should consider combining a so-called bad bank with
guarantees of securities to achieve the most cost-effective way
of ridding lenders of toxic assets.

Morning Economic News - February 9, 2009

Commentary and Overnight Trading

US stock market futures show a market set to give back about a third of Friday's gains in the opening hours as delays in the Fed's Term Asset-Backed Securities Lending
Facility and the Obama administration's financial rescue package are reported. The Nikkei dropped 1.33% Monday, while the Hang Seng is up 0.84% [3:50 AM Eastern]. Oil is down half a percent and gold is down more than 1%, while industrial metals are up. The dollar is trading up against the euro, pound and Canadian dollar, down against the yen.

Economic Reports

Consumer Credit - December 2008

• Total outstanding consumer credit: $2562.3 billion


• Total rate of change: Down 3.1%

Employment Situation - January 2009

• Nonfarm Payroll Employment: 134,580,000


• Monthly Change: Down 598,000


• Unemployment Rate: 7.6%

What I'm Writing

Financial Roadmap: The Week Ahead February 9 to 13, 2009

This week will be fairly light in the number of economic indicator releases, but some of the numbers could be very revealing...the markets are in one of those weird moods where bad news is seen as
bringing relief closer. This is normally Fed focused, but with the Fed
sidelined by a lack of ammunition, it's now fiscal policy focused. And
that's where the biggest news of the week may come from, as Congress is
likely to put the finishing touches on a fiscal stimulus package early
in the week.

What I'm Reading

Real-Estate Sector Cheers Tax Credit

A proposed tax credit for home purchases is raising the
hopes of the real-estate industry, which believes it could stabilize
the housing market.

U.S. Delays Financial-Rescue Plan as Officials Grapple With Toxic Assets Treasury Secretary Timothy Geithner
delayed the announcement of the Obama administration’s
financial-recovery plan as officials debated proposals aimed at
addressing the toxic debt clogging banks’ balance sheets.

Japan Machinery Orders Fall for Third Month, Corporate Bankruptcies Climb Orders for Japanese machinery fell
for a third month in December and bankruptcies increased as
businesses scrapped investment plans amid a collapse in exports
and deteriorating earnings.

India's Economy Forecast to Expand 7.1% This Year, Weakest Pace Since 2003 India’s economy may grow at the
slowest pace since 2003 this year, undermining Prime Minister
Manmohan Singh’s re-election bid in two months.

Taxpayers Risk $9.7 Trillion on Bailouts as Senate Debates Obama Stimulus The stimulus package the U.S. Congress
is completing would raise the government’s commitment to solving
the financial crisis to $9.7 trillion, enough to pay off more
than 90 percent of the nation’s home mortgages.

Taiwan's Exports Decline by a Record 44.1% as Sales to China, U.S. Tumble Taiwan’s exports fell by an
unprecedented 44.1 percent last month on reduced global demand
for the island’s computer chips, laptops and mobile phones.

Japan's Recession May Be Worst in Half Century, BOJ's Chief Economist Says Japan’s economy is deteriorating at a
pace unseen in the past half century, the central bank’s chief
economist said.

China Exports May Fall by Most in Decade as Demand Plunges in U.S., Europe China’s exports probably fell by the
most in a decade in January as demand dried up in the U.S. and
Europe, making it harder to revive growth in the world’s third-
biggest economy.

Morning Economic News - February 6, 2009

Commentary and Overnight Trading

Asian indexes are up strongly Friday morning, with the Nikkei closing up 1.6% and the Hang Seng up more than 3% at this writing [3:30 AM Eastern]. US stock market futures are marginally higher, but much less than the Asian markets. Oil futures are down 1%, just above the $40 mark. The dollar is up against the Canadian dollar, down against the yen, euro and pound.

Economic Reports

Monster Employment Index - January 2009

• Index: 118


• Monthly Change: Down 13


• Year-to-year Change: Down 42 Points

Money Supply - February 5, 2009

• M1 Seasonally Adjusted Prior Month: $1595.8 billion


• M1 4-Week Average: $1584.5 billion


• M1 Annual Change (Unadjusted): $238.3 billion

Jobless Claims - February 5, 2009

• Initial Claims: 626,000


• Change from Last Week: Up 35,000

Japanese Leading Index takes biggest tumble in over 30 years

The Japanese Leading Index experienced its biggest monthly decline in
more than thirty years in December, dropping 4.3%, while the Coincident
Index dropped 1.4%. Still, four leading indicators improved: real money
supply, stock prices, interest rate spread, and the (inverted) business
failures*.

What I'm Reading

States' Jobless Funds Run Low

A growing number of states are running out of cash to pay
unemployment benefits, a development that comes as initial jobless
claims passed 600,000 last week.

Fed Calls Emergency Consultants to Triage and Treat AIG, Stricken Markets Every Sunday night, New York
bankruptcy lawyer Marshall Huebner spends a 13-hour shift on
call as an emergency medical technician. His day job involves
work on another sort of rescue: The government’s $152.5 billion
bailout of American International Group Inc.

Sarkozy Defies Protests, Promises $10.2 Billion Cut in French Business Tax French President Nicolas Sarkozy
defied calls for more aid to consumers, saying his 26 billion-
euro ($33 billion) plan to spur investment will cushion a
deepening economic slump and increase productivity.

U.S. Jobless Rate Probably Climbed to 16-Year High as Recession Deepened Unemployment in the U.S. probably
climbed in January to the highest level since 1992 and payrolls
dropped for a 13th consecutive month as the recession showed no
sign of abating, economists said before a report today.

Australian Central Bank Cuts GDP, Inflation Forecasts, Says Rates to Help Australia’s central bank slashed its
forecasts for economic growth and inflation, increasing Governor
Glenn Stevens’s scope to extend interest-rate cuts that have
taken the benchmark rate to the lowest in more than four decades.

Shirakawa Says Bank of Japan Will Limit Asset Buying to Save Balance Sheet Bank of Japan Governor Masaaki
Shirakawa said the central bank will limit its purchases of
stocks and corporate debt to protect its balance sheet and the
credibility of the yen.

Hong Kong January Luxury Home Sales Surge 31% as Lower Prices Lure Buyers Sales of Hong Kong luxury homes rose
to their highest in six months in January, indicating that prices
may have stabilized as buyers seek bargains, according to data
by Centaline Property Agency Ltd.

Geithner's Window to Halt Flight of Capital From U.S. Banks May Soon Close Treasury Secretary Timothy Geithner
must use his Feb. 9 speech to lure private investment to U.S.
banks or risk an accelerating flight of capital that would
result in creeping nationalization, analysts and investors said.

India Bucks Global Auto Trend After Rate Cuts Spur Record Sales at Suzuki After six months of deliberating
whether to buy a car, Mumbai real-estate agent Abraham Mathew
took out a 300,000 rupee ($6,200) loan to buy a Suzuki Motor
Corp. sedan. The clincher: a 20 percent fall in interest rates.

Morning Economic News - February 4, 2009

Commentary and Overnight Trading

Oil prices have rebounded slightly in overnight trading after falling a bit more than 1% Wednesday. Asian stocks are mixed with the Nikkei down 1.11% with an hour before the close and the Hang Seng up 2.69%. US stock market futures are down with the DJIA futures trading below 7900. The dollar is down against the Canadian dollar and the yen, even against the euro and up against the increasingly beleaguered pound. [1:24 AM Eastern]

Economic Reports

ADP Employment Report - January 2009

• Total Nonfarm Private Employment: 112,702,000


• Monthly Change: Down 522,000

Pending Home Sales Index - December 2008

• Pending Home Sales Index: 87.7


• Monthly Change: Up 6.3%


• Yearly Change: Up 2.1%

Weekly Mortgage Applications Survey - February 4, 2009

• Market Composite Index: 795.4


• Change: Up 8.6%


• Purchase Index: 261.4


• Change: Down 11.2%

What I'm Writing

Stabilizing gasoline demand putting floor under oil

On the demand side, gasoline demand is 0.5% below the same period last
year – stabilizing if not exactly rebounding in the face of retail
prices well below last year's levels...gasoline supply and demand factors may be feeding through to the
increases in crude oil prices that do not seem driven by supply side
fundamentals.

What I'm Reading

CBO: Obama Stimulus Plan Lowers Long-Run Growth

Russia to Expand Bank Support

Russia plans to curb spending and assist banks to shore up its economy.

Bank of Japan Must Take Prompt, Extraordinary Actions, Member Mizuno Says Bank of Japan board member Atsushi
Mizuno said the central bank should take “extraordinary”
actions to counter the recession, indicating it may consider
more steps after buying shares and corporate debt.

Bank of England May Cut Interest Rate Closer to Zero as Recession Deepens The Bank of England will probably
lower the benchmark interest rate closer to zero today as
officials resort to buying securities to revive the economy.

Trichet's Curse Becomes Blessing as Sticky Prices Justify Rate-Cut Delay European Central Bank President Jean-
Claude Trichet’s curse of a year ago may now be a blessing.

Productivity in U.S. Probably Rose Last Quarter Even as Recession Deepened U.S. companies, struggling to contain
escalating losses in the deepening recession, squeezed more
output from their remaining workers last quarter, economists
said before a government report today.

Japan Intervention Depends on Pace of Yen's Moves, Not Level, Gyohten Says Japan will refrain from selling the
yen, trading near a 13-year high against the dollar, unless the
currency’s appreciation gathers pace, a former Finance Ministry
official said.

New Zealand's Fourth-Quarter Jobless Rate Rises to Highest in Five Years New Zealand’s jobless rate rose to a
five-year high in the fourth quarter as a prolonged recession
prompted companies to cut production and fire workers.

Senate Adds Tax Credit for Homebuyers to Stimulus Bill as Final Vote Nears The U.S. Senate voted to cut taxes on
homebuyers and weaken “Buy American” provisions in an economic
stimulus package that tops $900 billion and could come to a vote
as soon as today.

U.K. Corporate Bankruptcies to Surge `Dramatically' This Year, KPMG Says As many as 5,000 U.K. companies may file
for bankruptcy this year as the economy worsens, according to a
report by accounting and insolvency firm KPMG.

Russia Fueling Ruble Tumble With Overnight Bank Loans, Alfa, UniCredit Say Russia’s central bank is exacerbating
the ruble’s 34 percent plunge since August, even as it struggles
to defend the exchange rate, by providing loans to banks that
speculate on the currency, say Alfa Bank and UniCredit SpA.

Morning Economic News - Tuesday February 3, 2009

Commentary and Overnight Trading

Bad news Monday brought a down stock market (except the NASDAQ) and overnight trading looks to be adding to the losses with Dow Jones Industrial Average, S&P 500 and NASDAQ futures all trading down. There was actually some good news buried in the numbers themselves yesterday. The Purchasing Managers Index still shows manufacturing activity contracting, but at a slower pace than December and the same report showed inventories falling faster. Falling inventories mean a shorter time until at least some of those inventories will have to be replenished, so quicker depletion is a good sign for the economy. The Conference Board reported very bad news on online job ads with roughly a million less vacancies advertised in January compared to October. What they didn't put in the headline was that the January 2009 number was virtually identical to the January 2008, calling into question whether the big drop may be a flaw in their seasonal adjustment. Personal spending fell again, but real disposable personal income rose another 0.3% in December, bringing further relief to the 93% of consumers with jobs.

Asian markets are following a down Monday with a slightly down Tuesday. Oil has regained a little less than 1/3 of Monday's losses. The dollar is up against the yen and the pound, down against the euro and the Canadian dollar.

Monday's Economic Numbers

Construction Spending - December 2008

• Monthly Change: Down 1.4%


• Year-to-year Change: Down 3.6%

Help Wanted Online Data Series - January 2009

• Monthly Change: Down 15% (Not seasonally adjusted)


• Year-to-year Change: Down 0.3% (10,200 fewer job ads)

Manufacturing Report on Business - January 2009

• Purchasing Managers Index (PMI): 35.6


• 50+ represents growing economic conditions


• Monthly Change: Up 2.7

Personal Income and Outlays - December 2008

• Personal Income: Down $25.3 billion


• Monthly Change: Down 0.2%


• Real Disposable Personal Income: Up 0.3%

What I'm Reading

Consumers Keep Recovery at Bay

U.S. manufacturing activity contracted at a slower rate
than expected, but steep declines in consumer spending suggest a
recovery in that sector is premature.

Australia Cuts Key Rate to 45-Year-Low 3.25% as Government Boosts Spending Australia’s central bank cut its
benchmark interest rate to the lowest level in 45 years and the
government announced it will spend a further A$42 billion ($27
billion) to ward off a recession.

Bank of Japan to Buy Shares in Companies Held by Banks to Shore Up Capital The Bank of Japan will buy 1 trillion
yen ($11.1 billion) of shares owned by financial institutions to
shore up their capital, which has been decimated by the global
stock-market rout.

Homeowners in U.S. Lost $3.3 Trillion in Property Value in 2008 Amid Slump The U.S. housing market lost $3.3
trillion in value last year and almost one in six owners with
mortgages owed more than their homes were worth as the economy
went into recession, Zillow.com said.

Pending U.S. Home Resales Probably Unchanged, Signaling Slump to Persist The number of Americans signing
contracts to buy previously owned homes was probably unchanged
in December, snapping a three-month drop, economists said
before a report today.

South Korea's Economy Will Shrink 4% in 2009 and Rebound in 2010, IMF Says The International Monetary Fund
expects South Korea’s economy will contract this year for the
first time since the Asian financial crisis a decade ago,
according to a statement from the nation’s finance ministry.

Rupee to Strengthen This Quarter on India Growth Outlook, DBS's Wee Says India’s rupee will strengthen this
quarter as growth outperforms most emerging markets and
foreigners resume purchases amid waning risk aversion, according
to DBS Group Holdings Ltd.

Asia Needs Global Economic Recovery for Region to Exit Slowdown, IMF Says Asian nations will need a recovery in
the global economy before the region can exit a slowdown as its
trade and financial linkages have increased with the rest of the
world, International Monetary Fund Managing Director Dominique
Strauss-Kahn said.

Japan's Wages Slide for Second Month as Companies Cut Costs Amid Losses Japan’s wages fell for a second month
in December as manufacturers slashed production and overtime pay
amid mounting losses.

Morning Economic News - February 2, 2009

Commentary and Overnight Trading

The wait for Friday's employment report is likely to set the tone for the week in stock markets as bad expectations for this important report mute any positive news and give extra oomph to bad news. The pattern is showing up early with drops in Asian stock markets, US stock market futures and oil. The "flight to quality" pattern is holding again in currency markets with the dollar up against the euro, pound and Canadian dollar and down against what seems the stablest of the major currencies, the yen. [2:38 AM]

Friday's Economic News

Leading, Coincident Indicators down for Euro Zone, Mexico and Australia

The oil dependent Mexican economy took the biggest hit in November with
the Coincident Economic Index down 0.6% and the Leading Economic Index
dropping 4.5%. Of all the indicators in both indexes only one – stock
prices – improved.

What I'm Writing

Financial Roadmap: The Week Ahead February 2 to 6, 2009

This week will be a busy one with several labor market indicators, news
from the manufacturing sector including January auto sales, pending
home sales data and consumption spending. The week opens and closes
with indicators from the important areas of employment and the consumer
sector.

Low rates could cut payment time in half

At the current rates an 8.5% 30-year mortgage could be refinanced into
a 15-year mortgage at roughly the same payment – reason enough to
refinance for anyone with 3 to 5 years on a subprime loan who can
qualify now for prime rates.

What I'm Reading

Summers Carves Out Powerful Role

Obama's chief economic adviser is raising the clout of the
National Economic Council -- and the chance of internal conflict in the
administration.

How Bad? Jobs Data Offer a Clue

The first employment report for 2009, which comes out Friday, is going to be bad. The question is: How bad?

Obama Will Require Banks to Expand Lending as Condition of Government Aid President Barack Obama will require
banks to boost lending to consumers and companies in return for
taxpayer aid from the $700 billion bailout fund, in a departure
from Bush administration policy, a key lawmaker said.

Australian Investment Plans Shelved as Global Slump Hurts Mining Companies Planned investment in Australia
dropped for the first time in four years as mining companies
scaled back production because of the global economic slowdown,
Access Economics said.

Aso Risks Worsening Japan's Recession by Delaying Election He Might Lose Prime Minister Taro Aso risks
deepening Japan’s recession in order to delay an election he’s
likely to lose.

Indonesia Inflation Slows to 9-Month Low; May Allow Cut in Interest Rates Indonesia’s inflation slowed to a
nine-month low in January, giving the central bank room to cut
interest rates this week.

South Africa's Central Bank May Cut Benchmark Rate by Most in Five Years South Africa’s central bank may cut
its benchmark interest rate by 1 percentage point on Feb. 5, the
biggest reduction in more than five years, to stimulate an
economy heading toward a possible recession.

U.S. Manufacturing Probably Shrank at Fastest Since 1980 as Sales Slumped Manufacturing in the U.S. probably
shrank in January at the fastest pace in 28 years following a
collapse in sales that caused inventories to swell at the end of
2008, economists said before reports today.

Davos Dreams of Global Financial Cooperation Face Protectionist Resistance As world leaders in Davos called last
week for international cooperation to tackle the financial and
economic crisis, businessmen were complaining that the stress is
only aggravating national divides.

Thai Consumer Prices Fall for First Time in 9 Years; May Prompt Rate Cut Thailand’s consumer prices fell for
the first time in nine years in January, giving the central bank
room to cut interest rates this month.

South Korean Exports Plunge a Record 32.8%, Pointing to Deeper Asian Slump South Korea’s exports tumbled by a
record 32.8 percent in January, foreshadowing a deepening slump
in Asia’s export-driven economies.

Morning Economic News - January 28, 2009

Commentary and Overnight Trading

The drop in the Consumer Confidence Index Tuesday is particularly bad on a couple of levels. Most obviously the level was already at historic lows, so the drop makes a bad situation worse. Secondly, the fact that the Expectations Index fell even more than the Present Situation Index calls into question the Obama administration's prime weapon in reviving the economy and one where the administration seemed to have strong ammunition - Hope.

The Federal Reserve's monetary policy arm, the Federal Open Market Committee, will release a statement tomorrow, but as I noted here the Fed's commitment to a zero rate policy leaves little room for the statement to really say much. Or, as a Bloomberg article today puts it:

Fed's Shift to Zero Rates Leaves Experts Blind, Complicates Bernanke Job Investors will have a tougher time
assessing Federal Reserve policy when officials today replace
interest rates with emergency credit programs as their main
tool for steering the economy.

Still stocks are looking up heading into Wednesday with the Nikkei closing up more than half a percent and US stock market futures up almost 2% [3:22 AM Eastern]. Oil markets have recovered half a percent of Tuesday's 9% drop. With nothing to indicate a demand rebound, a Goldman Sachs report indicating that oil is not ready to rise and another inventory report due out Wednesday, the 9% drop seems more sensible than the rebound. The dollar is up against the yen, down against the euro, pound and Canadian dollar, likely on contrarian profit taking.

Tuesday's Economic Numbers

Consumer Confidence Index - January 2009

• Expectations Index: 43.0


• Monthly Change: Down 1.2

Case-Shiller Housing Price Index - November 2008

• Composite 20 Index: 154.59


• Monthly Change: Down 2.2%

What I'm Reading

Home Prices Slide, Angst Rises

U.S. home prices in the 20 areas tracked by
S&P/Case-Shiller fell 18.2% in November from a year earlier.
Consumer confidence hit a new low.

Unemployment Rises in Every State

State unemployment rates increased across the country in
December, new data show, underscoring how the recession has spared few
industries or regions.

Australian Consumer Prices Decline Most in 11 Years Amid Looming Recession Australian consumer prices declined
by the most in 11 years last quarter, increasing scope for the
central bank to cut interest rates as evidence mounts the
economy is heading for its first recession since 1991.

Dudley Brings Crisis Experience to Job as New York Federal Reserve Chief William Dudley, named president of
the Federal Reserve Bank of New York today, kept up his stamina
during last year’s all-night talks on the financial crisis by
napping on the carpet of his office at the bank.

Japan Finance Ministry Cuts View of Regional Economy as Recession Deepens Japan’s Finance Ministry lowered its
assessment of the regional economy for a fourth straight quarter
as companies cut production in the wake of a collapse in exports.

South Korean Consumer Confidence Rises From 10-Year Low on Stimulus, Rates South Korea’s consumer confidence
rose in January from a 10-year low on optimism interest-rate
cuts and the government’s 51 trillion won ($37 billion) stimulus
may help to revive the economy.