Morning Economic News - October 31, 2008

US stock futures are down about 1.5% in overnight trading steering a middle course between a steep 5% decline in the Nikkei average, a 3.96% drop in the Hang Seng and a slight increase in the S&P/ASX 200. Oil prices are down 2.8% and the dollar is down 2% against the yen and up 1.6% against the euro and the pound - the same pattern that has held before several down days for US stocks the last few weeks. [Data as of 3:41 AM Eastern Time]

Money Supply (M1 and M2) - October 30, 2008

• M1 Seasonally Adjusted Prior Month: $1453.9 billion


• M1 4-Week Average: $1471.6 billion


• M1 Annual Change (Unadjusted): $84.7 billion

Jobless Claims - October 30, 2008

• Initial Claims: 479,000


• Change from Last Week: Unchanged

Gross Domestic Product (GDP) - 3rd Quarter 2008

• Real Annual Growth Rate: down 0.3%


• Previous Quarter Rate: up 2.8%


• Current Dollar GDP Growth: Up 3.8%

Data Stoke Campaign Battle Over Economy

The U.S. economy contracted in the third quarter, setting
the stage for a deepening recession and handing Democrats a new
political weapon in the days before Tuesday's presidential election.

German Government Plans Stimulus

Merkel is working on a $32 billion fiscal stimulus program
aimed at softening the slowdown without wrecking efforts to rein in
Germany's budget deficits.

Bank of Japan Cuts Interest Rates to 0.3%; Shirakawa Casts Deciding Vote The Bank of Japan cut its benchmark
interest rate to 0.3 percent in a split decision to help stave
off a prolonged recession.

Japan Inflation Slows, Job Prospects Worsen, Supporting Case for Rate Cuts Japan's inflation slowed in
September and employment prospects worsened, giving the central
bank more scope to cut interest rates.

Treasuries Rise as Economic Contraction Spurs Bets for a Further Rate Cut Treasuries rose, with 10-year notes
snapping a four-day slide, on speculation the Federal Reserve
will cut interest rates in December for a seventh time this year
to revive the shrinking U.S. economy.

Consumer Spending in U.S. Probably Fell in September as Job Losses Climbed Spending by U.S. consumers probably
dropped in September, capping its weakest quarter in three
decades and signaling the economy will continue to slump in
coming months, economists said before a report today.

U.K. Consumer Confidence Drops Close to Lowest Level Since at Least 1974 U.K. consumer confidence dropped in
October close to the weakest level since at least 1974 as the
financial crisis spooked British shoppers, GfK NOP said.

Economy contracts as consumers retreat

WASHINGTON
(Reuters) - The U.S. economy suffered its sharpest contraction in seven
years in the third quarter as consumers cut spending and businesses
reduced investment at the onset of what may be a severe and
long-lasting recession.

Who shrank the economy? Food prices dent U.S. growth

Morning Economic News - October 30, 2008

We may get a few more hours out of the rally on Wall Street Thursday, despite expected bad news in the GDP report. In overnight trading oil prices are up more than 4%, the Nikkei average is up more than 9%, Australia's S&P/ASX 200 is up more than 4% and US stock market futures are up about 3.5% [2:30 AM Eastern]. The dollar is down against all the major currencies except the yen, reversing the trend we've seen on the worst days of the financial panic.

Federal Funds Rate (FOMC) - October 29, 2008

Federal Funds Rate: 1%

Discount Rate: 1.25%

Weekly Mortgage Applications Survey - October 29, 2008

• Market Composite Index: 476.7


• Change: Up 16.8%


• Purchase Index: 303.1


• Change: Up 8.5%

Durable Goods Orders - September 2008

New Orders Change: Up 0.8%
Nondefense Capital Goods Change: Up 0.8%

Gas prices below year ago levels nationwide

Today's This Week in Petroleum from the Energy Information
Administration reported that gasoline prices are now lower than year
ago levels in all US regions. After six consecutive weeks of declines,
prices have fallen nearly 31% to a national average of $2.656 per
gallon. (Locally, gas prices have been under $2/gallon in southwest
Missouri for the last 5 days.) Gas prices may stabilize at this level
as gasoline inventories fell slightly and are again slightly below the
average range for the season when measured in barrels (but within the
average range in days of supply).

Housing market hits the trifecta

This is what we’ve been waiting several months for - real estate
markets hit the trifecta the last four days, with existing home sales,
new home sales and mortgage applications all increasing.

Australian economic growth continued in August

Australian economic indicators continued their July rebound
in August, with coincident indicators rising 0.1% and leading
indicators up 0.4%. This was the sixth consecutive month of increases
in the leading index and the strength was widespread among the various
indicators.

Fed Steps Up Assault on Slump

The Fed cut its benchmark rate by a half-point to 1%, the
lowest level since 2003-04 and a move accompanied by two other central
banks. Markets signaled that investors were continuing to shed the
caution of recent weeks.

Durable-Goods Orders Increase

Demand for expensive goods climbed 0.8% in September,
boosted by higher car and airplane orders for an unexpected increase
amid a weakening economy and a credit crunch.

Bernanke Signals Door `Open' for Cutting Rates to Lowest Level on Record Federal Reserve Chairman Ben S.
Bernanke signaled he's ready to cut interest rates to the lowest
level on record should the central bank's actions fail to stem
the deepening economic slump.

Taiwan Cuts Key Rate to 3% From 3.25%, Following Reductions by U.S., China Taiwan's central bank cut interest
rates for the third time in less than two months, after
counterparts in the U.S. and China lowered borrowing costs to
stem the damage from the global financial crisis.

U.S. Economy Likely Shrank in Quarter as Voters Turned Against Republicans The U.S. economy probably shrank in
the third quarter by the most since the 2001 recession just as
Americans were deciding how to cast their ballots in the Nov. 4
elections.

Bank of Japan May Be Obliged to Lower Rates After Investors Anticipate Cut The Bank of Japan may have little
choice but to cut interest rates tomorrow after a newspaper
report raised investors' expectations that it would.

Fed Offers $120 Billion to Emerging-Market Central Banks as Crisis Spreads The Federal Reserve agreed to provide
$30 billion each to the central banks of Brazil, Mexico, South
Korea and Singapore, expanding its effort to unfreeze money
markets to emerging nations for the first time.

China May Reduce Rates Again as Global Slump Hurts Exports, Manufacturing China may keep lowering interest
rates after three reductions in two months as the global
financial crisis drags down exports and production.

Asia markets signal tentative return of risk taking

BEIJING
(Reuters) - Asian share markets rallied and the euro surged on Thursday
on tentative signs that investors are rediscovering an appetite for
risk in response to global efforts to prevent the financial crisis from
leading to a deep recession.

ECB to cut rates, but by how much?

Economists
are now certain the European Central Bank will cut interest rates again
at its next meeting, the only question is how much. ECB chief
Jean-Claude Trichet's blunt hint that..

Morning Economic News - October 29, 2008

Tuesday, markets shrugged off the news that the Consumer Confidence Index had plunged to an all time low in September as it merely added fuel to the fire for a half point interest rate drop from the Fed Wednesday. Overnight, Asian markets are full steam ahead, though not up by the 10% plus that the Dow rose Tuesday. US markets are likely to give back some of the gains, with stock market futures down about 1% from the close at this writing [2 AM Eastern]. Oil prices are up slightly as the dollar has lost some value against the yen, euro and pound. Markets are working hard to find a bottom, but volatility is likely to be the rule of the day at least through the end of January, so trimming yesterday's gains should be no surprise, though the actual Fed announcement could move markets either direction depending on how the accompanying statement is interpreted.

Consumer Confidence Index - September 2008

• Consumer Confidence Index: 38


• Monthly Change: Down 23.4


• Present Situation Index: 41.9


• Monthly Change: Down 19.2

Economists Search for End of Woes

Economists struggling to gauge the depth of the U.S.
downturn are turning to more forward-looking clues, such as
home-vacancy rates and foreign stock markets.

Americans Still Buying in Europe

American investors continue to acquire more European properties than they sell, although sales are off sharply.

Fed May Cut Rate to 1% in `Very Aggressive' Response to Crumbling Economy The Federal Reserve may lower its
benchmark interest rate to 1 percent today and signal further
reductions to levels unseen since Dwight Eisenhower was
president.

Bank of Japan Interest Rate Cut Speculation Increases After Nikkei Report Speculation the Bank of Japan will
cut interest rates for the first time in seven years jumped
after the Nikkei newspaper reported that the central bank may
halve its target rate this week.

Home Prices Will Hurt U.S. Economic Growth More Than Stocks, Survey Shows Plunging home prices will cut economic
growth in the U.S. more than the drop in stock prices this year,
economists at the University of Southern California and the
University of California, Los Angeles, said.

Japan Small Business Confidence Falls to a Decade Low as Economy Stagnates Confidence among Japan's small and
midsized companies dropped to a decade low as a faltering
economy weighed on profits.

Fed Creates $15 Billion Swap Line With New Zealand to Ease Credit Squeeze The Federal Reserve authorized a $15
billion swap line with New Zealand's central bank to provide U.S.
dollars in the country, the 10th such currency-exchange program
aimed at easing the worldwide credit freeze.

Australia Faces First Recession Since '91 as Resources Drop, JPMorgan Says Australia faces its first recession
since 1991 as prices fall next year for iron ore and coal, the
nation's largest exports, according to JPMorgan Chase & Co.

Fed poised to fight crisis with another rate cut

WASHINGTON
(Reuters) - The Federal Reserve is widely expected to cut interest
rates by at least a half-percentage point on Wednesday in yet another
move to turn around the credit crisis that is threatening the United
States with a deep and prolonged recession.

Morning Economic News - October 28, 2008

The big news Monday was from the housing market. New home sales rose 2.7% in September, adding extra validity to the reported rise of 5.5% in existing home sales. This was the first month where both numbers rose this year, the best indicator yet that the housing market is nearing a bottom - news which should help ease concerns about mortgage backed securities.

Tuesday Japan's stock market recovered most of Monday's loss, with the Nikkei average rising 6.41%. The Hang Seng index rose more than 12%. At the time of writing [4:37 AM Eastern time], the dollar is up more than 2% against the yen and down against the euro and the pound. Oil is up 26 cents while natural gas is down a penny.

New Home Sales - September 2008

• Annual Sales Rate (Seasonally Adjusted): 464,000


• Monthly Change: Up 2.7%


• Median Sales Price: $218,400

Bargain Hunters Shrink Glut of Homes

Lower home prices are luring some buyers back into the U.S.
housing market, but foreclosures and a weakening economy are likely to
keep downward pressure on prices.

ECB's Trichet Signals a Rate Cut

Trichet signaled in a notably direct statement that the ECB is likely to cut its key rate next week.

New-Home Sales Jump 2.7%

New-home sales increased by 2.7% last month as inventories
declined and builders slashed prices to their lowest level in four
years.

Europe Faces `Huge Threat' as Meltdown in Emerging Economies Hurts Exports The European economy's close ties to
emerging markets are turning from a blessing to a curse.

Bank of England Says Global Downturn, Emerging Markets Pose Stability Risk The Bank of England said the world
economic downturn and turbulence in emerging markets pose
heightened risks to Britain's financial stability.

German Consumer Confidence Unexpectedly Rises After Decline in Oil Prices German consumer confidence
unexpectedly rose for a second month as a drop in oil prices left
households with more money to spend.

Consumer Confidence in U.S. Probably Slumped This Month as Stocks Plunged U.S. consumers probably turned more
pessimistic in October as stocks plunged and banks shut off
credit, raising the risk spending will tumble, economists said
before reports today.

Japan Sept retail sales -0.4 pct year/year

US Sept new homes sales up; inventory, prices fall

Chicago Fed Midwest factory index falls to 5-yr low

Morning Economic News - October 27, 2008

Stocks fared very poorly in Tokyo Monday, with the Nikkei down more than 6% largely on the problem of a rapidly strengthening yen with potentially disastrous consequences for the balance of payments. The dollar is down nearly 2% against the yen at this writing [4:38 AM Eastern]. US stock market futures are also down, though not nearly as much as the Nikkei. The Treasury Department released a statement late Sunday from the G7 finance ministers and central banks, which in the pattern of the last several weeks is not good news for Wall Street. When E.F. Hutton speaks, people listen; when Henry Paulson speaks...people sell. All told, it could be rough Monday morning. If the new home sales come in decent, that could turn around late in the day.

Existing Home Sales - September 2008

• Total Existing Home Sales Annual Rate: 5.18 million


• Monthly Change: Up 5.5%


• Year-to-year Change: Up 1.4%

Financial Roadmap: The Week Ahead October 27 to 31, 2008

The big event of the week will be the Wednesday interest rate decision
from the Federal Reserve. The consensus expectation is for a half-point
drop in the federal funds and discount rates. Here's the situation. A
smaller drop or no drop at all would wreak havoc with the psychology of
the market as it makes investors doubt the predictability of the Fed
and with it the stability of everything the Fed touches – very bad for
the market. A larger drop would indicate that the Fed thinks the
situation is even more serious than the dire picture its already
painted – very bad for the market. A half-point drop will not be enough
to satisfy everyone and will be slammed by many as too little, possibly
too late – not exactly good for the market but not as bad as the
alternatives.

Early Job Losses Compound Downturn

A rash of new job data show the labor market is the worst
it has been since the two prior recessions, worrying economists who
usually expect the weakest picture at the end of a recession.

Sharp Slowdown in Asia Nears

Asia may be closer to a slowdown than many people expect,
though it has limited exposure to the debt causing havoc in the U.S.,
Europe.

S.Korea makes record rate cut, markets not impressed

G-7 Fails to Halt Yen's Advance After Calling Currency's Gains `Excessive' The Group of Seven industrialized
nations failed to halt the yen's advance to near a 13-year high
against the dollar after expressing concern about the currency's
``excessive volatility.''

Bank of Korea Slashes Rate by Record 75 Basis Points After Won, Stock Drop South Korea slashed interest rates
by a record amount and pledged extra tax cuts and spending to
tackle the nation's biggest crisis since it needed an
International Monetary Fund bailout 10 years ago.

U.S. Economy Probably Contracted as Consumer, Business Spending Decreased The U.S. economy shrank last quarter
for the second time in a year as consumers and companies pulled
back, reports this week may show.

Ukraine Will Get $16.5 Billion IMF Loan to Support Economy, Banking System The International Monetary Fund
reached agreement with Ukraine on a $16.5 billion loan to help
support the nation's financial system as turmoil in global credit
markets and recession concerns sweep eastern Europe.

Darling Will Say Crisis to Be Deeper, Longer Than Forecast, Times Reports U.K. Chancellor of the Exchequer
Alistair Darling will say this week that the economic crisis will
be deeper and longer-lasting that the government first predicted,
the Sunday Times reported.

Welch Says U.S. Economy Will Improve in Late 2009 Following `Tough Times' Former General Electric Co. Chief
Executive Officer Jack Welch said the U.S. economy will start to
improve in late 2009 after struggling for the next three
quarters.

I'm writing a bit early today [2:08 AM Eastern], so the markets still have time to move a lot in Asia before the close. Cross your fingers that they do or Wall Street could be in for another really awful day, as Japan's Nikkei is down more than 7.8% at this writing, the Hang Seng is down 4.66%, the S&P/ASX 200 is down 2.64% and US stock market futures are down 1.5% (NASDAQ) to 3.5% (DJIA). NYMEX crude oil futures are down 50 cents from Thursday's New York close.

Jobless Claims - October 23, 2008

• Initial Claims: 478,000


• Change from Last Week: Up 15,000


• 4-Week Moving Average: 480,250

Money Supply - October 23, 2008

• M1 Seasonally Adjusted Prior Month: $1453.8 billion


• M1 4-Week Average: $1477.4 billion

ortgage rates below year ago levels

Freddie Mac reported lower Fixed Rate Mortgage (FRM) rates this week
and a slight increase in Adjustable Rate Mortgage (ARM) rates, while
RealtyTrac reported that home foreclosures fell 12% in September.
Freddie Mac’s weekly Primary Mortgage Market Survey showed 15-year FRM,
30-year FRM and 1-year ARM rates all at least a quarter percent lower
than the same week last year.

Mexican economy down across the board

The oil dependent Mexican economy showed serious weakness in August,
with the Leading Index dropping 0.9% following on the heels of a small gain in the Leading Index and a 0.5% drop in the Coincident Index in July.

Shipping Firms Gear Down

Transportation
companies are reporting sharply lower freight volumes, a sign that the
pipelines of global commerce have begun to slow.

IMF Moves to Ease Borrowing Policy

The IMF plans to help developing nations weather the
financial crisis by providing loans that don't require borrowers to
make far-reaching policy changes.

Deeper Job Cuts Risk Steepening Slump

Employers grappling with the financial crisis are accelerating job cuts in
multiple industries, potentially deepening the economic downturn.

Paulson Planning to Buy Stakes in Regional U.S. Banks to Unfreeze Credit Treasury Secretary Henry Paulson is
preparing to take stakes in a number of regional U.S. banks as he
seeks to halt the freeze of credit to businesses and households,
according to a person briefed on the matter.

South Korea's Economy Slows, Stoking Concern of First Recession Since 1998 South Korea's economy expanded at
the slowest pace in four years last quarter, sparking concern
the nation is headed for its first recession since requiring an
International Monetary Fund bailout 10 years ago.

China Pressed to Join Credit-Crisis Fight as Asian, European Leaders Meet China, the world's largest holder of
foreign currency, will be pressed to get more involved in
combating the global financial crisis at today's biennial summit
of Asian and European leaders.

India's Subbarao May Shift Stance to Growth From Prices as Economy Cools When India's central bank governor
Duvvuri Subbarao took office in early September, combating
inflation was his ``immediate'' priority. In seven weeks, his
agenda has changed.

Bank of Japan Rate Cut Speculation Increases Amid Concern of a Recession Speculation the Bank of Japan will
cut interest rates is growing on concern that the world's second-
largest economy will suffer a prolonged recession.

Brazil to Pump $50 Billion Into Currency Market to Stem 28% Slide in Real Brazil's central bank will pump the
equivalent of $50 billion into currency markets, its boldest move
yet to stem a two-month, 28 percent tumble in the real that has
saddled companies with losses and stoked inflation.

U.S. M-2 money supply rose $43.6 bln Oct 13 week

US jobless claims advance more than forecast

U.S. home prices fell in August vs July - FHFA

Morning Economic News - October 23, 2008

In overnight trading, US stock market futures are up a bit over 1%, with the Dow Jones Industrial Average future up 104 points. Japan's Nikkei index has fallen 2.5% and Australia's S&P/ASX 200 fell more than 4%. Oil is up just under 1% and the dollar is trading mixed, down against the yen and the pound, up against the euro and the Canadian buck. [3:38 AM Eastern Time]

Weekly Mortgage Applications Survey - October 23, 2008

Market Composite Index: 408.1

Change: Down 16.6%

Purchase Index: 279.3

Change: Down 10.9%

US proved oil and gas reserves rise, gasoline inventories improve

There was more good news for US gasoline consumers in the weekly oil
report, as gasoline inventories edged into the average range for the
season for the first time since early August. With gasoline demand down
4.3% from last year, this should put gasoline well within the average
range in terms of days of supply.

Mixed news continues as mortgage applications drop

Wednesday brought more mixed news in the housing market as
the Mortgage Bankers Association reported that mortgage applications
fell last week despite a drop in rates and the National Association of
Home Builders predicted housing demand would pick up early next year.

French leading index fell for 10th month

The Leading Index for France fell 0.3% in August, following a 0.7% drop in the index in July
and bringing the number of consecutive declines in the index to 10. The
Coincident Index, which rose 0.1% in July, was unchanged in August.
Only 2 leading indicators and 1 coincident indicator improved in August.

U.S. Layoffs Surged in September

The number of U.S. workers laid off last month climbed to the highest level since just after Hurricane Katrina in 2005.

Fed Will Pay More on Reserves

The Federal Reserve said it would pay a higher interest rate on certain reserves that banks keep with the central bank.

Bernanke May Rely on Fresh Tactics to Aid Economy as Fed Rate Heads to 1% Federal Reserve officials are likely
to bring interest rates down so aggressively over the next few
months that they will have to search for fresh tactics to
continue easing credit.

Greenspan Urges More Regulation After Market `Breakdown'; Rescue Adequate Former Federal Reserve Chairman Alan
Greenspan called for tighter regulation of financial companies,
distancing himself from the free-market culture that he helped to
create.

Japan Exports Rise Less-Than-Expected 1.5% as Global Financial Woes Deepen Japan's exports rose less than
economists estimated in September as overseas demand weakened in
the wake of a deepening global financial crisis.

New Zealand Cuts Benchmark Interest Rate a Record 100 Basis Points to 6.5% New Zealand's central bank cut its
benchmark interest rate by a record 1 percentage point to 6.5
percent and foreshadowed further reductions to limit damage from
the worldwide financial crisis and a slump in the global economy.

Finnish Finance Minister Katainen Says Europe May Face Years of Recession The European economy may be headed for
a recession that could last two to three years, Finland's Finance
Minister Jyrki Katainen said.

Spain's small businesses topple in crisis

Japan exports stall as crisis bites

Morning Economic News - October 22, 2008

Tuesday's economic news brought a reflection of just how massive the exit from stocks to debt securities, especially Treasuries, has been. The State Street Investor Confidence Index, which measures institutional investors confidence by surveying their actual investments in stocks versus debt securities fell 17.5 points to 58.2, the lowest level for the global index since 1999. The North America Index fell the furthest, perhaps because US investors were at the head of the flight to quality.

Oil had fallen 4% in overnight trading at the time of writing [2:23 AM Eastern] despite the likelihood of an OPEC production cut at this week's meeting. The Nikkei average was down nearly 7% despite better than expected earnings from two component companies (Mitsubishi and KDDI). The dollar was down against the yen, but up against the euro, the pound and most Asian currencies. Dow Jones Industrial Average futures were down 1.5%.

State Street Index - October 2008

• Global Index: 58.2


• Monthly Change: Down 17.5


• Year-to-year Change: Down 23.8

Bank of Canada reduces rate for second time in two weeks

The Bank of Canada dropped interest rates a quarter percent Tuesday, less than two weeks after participating in the global rate cut of one-half percent
with several other central banks in early October. The Bank expects
inflationary pressures to reduce well below the 2% target, largely due
to lower commodity export prices

German Leading Index down further, Coincident Index up 0.5%

The German Leading Index fell another 0.2% in August following the 1.4% drop in July. The Coincident Index rebounded by 0.5%, defying a string of three consecutive drops of 1% or more in the Leading Index.

New home sales to slide further, existing home sales to rebound in 2009

The Mortgage Bankers Association is predicting existing home sales to
rebound by about 3% next year, while new home sales are expected to
drop another 12%. The Association’s forecast is based on projections of
negative economic growth for the next 6 to 8 months, unemployment
rising as high as 7.7% (currently 6.1%) and Fixed Rate Mortgage rates
dropping slightly. Prices are expected to continue to fall slightly and
2009 mortgage origination activity (including refinances) is projected
to be about 70% of 2007 levels.

Fed to Aid Money-Market Investors

The Fed said it will lend as much as $540 billion to the money-market
mutual-fund industry in another move to bolster fragile credit markets.

U.K. Warns of Recession

The U.K. economy appears to be entering a recession, said Bank of England
Gov. King. He also said the pound could fall faster and more than
expected.

Bernanke warms to second stimulus plan

WASHINGTON
(Reuters) - Federal Reserve Chairman Ben Bernanke told Congress on
Monday that another wave of government spending may be needed as the
economy limps through what could be an extended period of subpar
growth. 

Argentine Default Looms as Seizure of Private Pensions Roils Bonds, Stocks Argentina's planned seizure of $29
billion of private pension funds stoked concern the nation is
headed for its second default in a decade.

New Home Sales in U.S. Will Decline by 12% Next Year, Mortgage Bankers Say U.S. new-home sales will fall 12
percent next year as housing starts drop by a record, Mortgage
Bankers Association Chief Economist Jay Brinkmann said.

King Says Bank of England Will Act `Promptly' as Recession Seems Likely Bank of England Governor Mervyn King
said Britain's worst banking crisis since World War I is likely to
push the economy into a recession, requiring policy makers to act
``promptly'' to prevent inflation from slowing too much.

Thailand Proposes Asia Pool $350 Billion to Help Protect Financial Systems Thailand will propose that Asian
countries pool $350 billion, or 10 percent of their foreign
exchange reserves, to help protect financial systems from a
looming global recession.

Bank of Japan May Pay Interest on Deposit Reserves, Morgan Stanley Says The Bank of Japan may announce next
week that it will start paying interest on reserves lenders
deposit at the central bank to counter the global financial
turmoil, Morgan Stanley said.

New Zealand May Slash Benchmark Rate By Record 100 Basis Points Tomorrow New Zealand central bank Governor
Alan Bollard will probably cut interest rates tomorrow by a
record amount to limit damage from the global financial crisis.

Morning Economic News - October 21, 2008

At first glance Monday would seem to be full of good signs for the immediate future of the US economy. The stock market had a very positive day, with a point gain that's dwarfed by recent moves but a very large single day gain historically. The Leading Index, which was expected to come in with a 0.2% decline increased 0.3%. But the stock market gains are largely a reflection of the overall volatility of the market, which is subject to irrational swings based on mood and rumor, and the Leading Index gain of 0.3% was largely the result of a 0.4% downward revision to the August numbers. Still, all these numbers largely reflect short term issues more than any fundamental economic weakness, which is reflected in the continuing rebound of the US dollar. The dollar is up against the euro, down against the pound and yen and up against the Canadian dollar in overnight trading (2:38 Eastern Time). Oil prices spurred by rumors of OPEC action have stabilized for the time being in the mid-70s and are up a few cents. US stock market futures are down slightly (38 points on the Dow Jones Industrial Average) with the reasonable expectation that this market will give back some of Monday's gains on Tuesday. Japan's Nikkei has had a solid day so far, nearing closing time up 3.34%.

Leading Index, Coincident Index, Lagging Index (US) - September 2008

• Leading Index: Up 0.3%


• Coincident Index: Down 0.5%


• Lagging Index: Down 0.2%

Fed Chief Backs New Stimulus Package

Bernanke endorsed congressional plans for a stimulus
package, a boost to Democrats looking to inject more funds into the
economy.

China Slows, World Feels the Pain

China's economy is cooling more rapidly than expected, undermining hopes that
Chinese demand could help keep the global economy humming through a
financial crisis.

Japanese Data Point to Sluggish Growth

Two economic reports on the state of Japan painted a bleak picture for the
world's second-largest economy, with expectations of sluggish growth as
the financial environment continues to deteriorate.

Bernanke warms to second stimulus plan

WASHINGTON
(Reuters) - Federal Reserve Chairman Ben Bernanke told Congress on
Monday that another wave of government spending may be needed as the
economy limps through what could be an extended period of subpar growth.

U.S. Moves Toward Second Fiscal Stimulus This Year as Bernanke, Bush Shift Lawmakers and officials moved toward
forging a second fiscal stimulus bill after Federal Reserve
Chairman Ben S. Bernanke endorsed the idea and the Bush
administration dropped its opposition.

Iceland, IMF Are `Very Close' to Deal; Japan, Nordic Nations May Also Help Iceland's government is ``very close''
to a rescue deal with the International Monetary Fund that may
also include financial help from Nordic neighbors and Japan,
Industry Minister Oessur Skarphedinsson said.

Obama Condemns Wall Street's `Greed and Irresponsibility,' Collects Cash Barack Obama relies on the Internet
to bring in millions of small-dollar donors. For heftier-size
contributions, he counts on hundreds of fundraisers, many with
ties to the financial firms he decries on the campaign trail.

Fitch Affirms South Korea Credit Rating; S&P Says Bank Aid to Help Funding Fitch Ratings affirmed South
Korea's credit rating, saying the government's $130 billion
package to aid the banking system is ``sufficiently focused and
affordable.''

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Morning Economic News - October 20, 2008

Look for a week on Wall Street driven by political news including OPEC action, improvement or lack of improvement in the credit markets and a fair amount of rumor driven volatility. Monday looks promising based on trading in Asia, where the Nikkei was up over 3.5%, the Hang Seng was up more than 5% and Australia's S&P/ASX 200 was up more than 4%. The dollar is up against the yen and down against the euro and pound as Europe continues to get its own financial house in better order with several European bank bailout plans coming together in the wake of the US plan. Oil is trading up about 2.5% on the strength of OPEC related rumors, a trend that may reverse on the release of a weak Leading Index Monday. [Trading data as of 3:50 AM Eastern Monday]

Financial Roadmap: The Week Ahead October 20 to 24, 2008

This week markets will have even more reason to focus on geopolitical
news and the details of the credit crunch as only three major US
monthly economic indicators are released and the first of those is
almost a foregone conclusion.

Housing Starts - September 2008

• Housing Starts: 817,000


• Monthly Change: Down 6.3%


• Year-to-year Change: Down 31.1%


• 1-Family Monthly Change: Down 12%

Crisis Helps Stimulate the Dollar

The dollar has benefited from the global flight from risky assets as well as the unwinding of bets made with borrowed cash.

Threat of Deflation Looms

Policy
makers navigating the U.S. through the credit crisis may have a new
concern for 2009: deflation. The risk remains slim, but a faltering
economy can set the stage for a deflationary environment.

Europeans Step Up Bank Bailout

The Netherlands will inject $13.4 billion into ING. Meanwhile, Germany
reversed course and hastily cobbled together a rescue package.

Germany to approve bank package, China growth slows

HONG KONG
(Reuters) - Germany was set to approve a rescue package for banks on
Monday and top Dutch lender ING sought an injection of government
funds, but in a reminder that no country is immune from the global
crisis, China reported weaker-than-expected growth.

White House adviser says parts of U.S. in recession

China's Growth Eases to 9%, Slowest Pace Since 2003, on Financial Turmoil China's economy, the biggest
contributor to global growth, expanded at the slowest pace in
five years as the financial crisis cut demand for exports.

South Korea's Won Gains on $130 Billion Financial Rescue; Bank Stocks Rise South Korea's won and stocks rose
after the government announced Asia's biggest financial rescue
package to open access to overseas credit markets and allay
concern of a recession.

Trichet Says Europe's Banks Are on Path to Recovery After Cash Injections European Central Bank President Jean-
Claude Trichet urged banks to start lending again after policy
makers put them ``on the path'' to recovery by pumping record
amounts of cash into money markets.

U.K. Home Prices Fall Most in Six Years as Economy Slumps, Rightmove Says U.K. house prices posted the biggest
annual decline in at least six years in October as the British
economy stared ``into the abyss,'' Rightmove Plc said.

Cullen Says New Zealand Officials Working on Bank Wholesale Guarantee Plan New Zealand officials are working on
a plan to guarantee wholesale deposits at the nation's banks,
Finance Minister Michael Cullen said.

U.K. Government Will Step Up Spending, Borrowing to Soften Economic Slump The U.K. government will step up
public spending projects and increase borrowing in a bid to curb
the country's biggest economic slump since 1991, ministers
including Chancellor of the Exchequer Alistair Darling said.

Morning Economic News - October 17, 2008

It may be shaping up for a relatively calm day on Wall Street if overnight trading is any indication. Oil has picked up a couple of dollars overnight, but may give some of that back Friday as analysts are calling for more drops next week on weak US demand and growing inventories. The Nikkei opened higher, has traded within about a 200 point range and is up 235 points (2.78%) from yesterday's close and 114 points from today's open. US stock market futures are down less than 1%, indicating markets may open giving back a bit of yesterday's gains. The dollar is down against the yen, euro and pound, up against the Canadian buck and mixed against other currencies. [3:09 AM Eastern]

Consumer Price Index (CPI) - September 2008

• CPI-U: 218.783


• Monthly Change: Down 0.1%


• Year-to-year Change: Up 4.9%


• Core CPI-U: Up 0.1% [Seasonally adjusted]

Housing Market Index - October 2008

• Current Month Index: 14


• Monthly Change: Down 3


• Current 1-Family Sales Index: 14


• Monthly Change: Down 3

Industrial Production - September 2008

• Industrial Production Index: 107.3


• (Base year 2002, Seasonally Adjusted)


• Monthly Change: Down 2.8%


• Manufacturing Change: Down 2.6%

Jobless Claims - October 16, 2008

• Initial Claims: 461,000


• Change from Last Week: Down 16,000


• 4-Week Moving Average: 483,250

Money Supply (M1 and M2) - October 16, 2008

• M1 Seasonally Adjusted Prior Month: $1453.9 billion


• M1 4-Week Average: $1466.0 billion


• M1 Annual Change (Unadjusted): Up $84.8 billioin

Treasury International Capital - August 2008

• Foreign purchases of Long Term US Securities: negative $8.8 billion


• Official purchases: negative $10.2 billion


• Private purchases: $1.5 billion

More bad news for oil speculators

Oil prices got another downward nudge Thursday as the Energy Department
reported another big increase in inventories and another big down week
for US demand, at the same time as the dollar continued to regain
strength against most major currencies. Total petroleum inventories
rose by more than 11 million barrels last week, including big gains in
gasoline and crude oil and a small gain in propane/propylene.

Builder confidence hits another record low

Thursday’s weekly mortgage report from Freddie Mac showed an increase
of more than half a percent in the 30-year Fixed Rate Mortgage (FRM)
rate average, confirming the the results of Wednesday’s report from the
Mortgage Bankers Association...
Also Thursday, the National Association of Homebuilders and Wells Fargo
reported that their Housing Market Index, which measures builder
confidence based on current sales, sales expectations and buyer
traffic, dropped three points in October to a new record low of 14.

Door Open for Fed to Cut Rates Further

With U.S. consumer price inflation receding, the Fed has additional leeway to reduce interest rates further.

Oil's Slide Deepens as Downturn Triggers Drop in Demand

Signs that an enfeebled U.S. economy is using less oil sent
world crude prices below $70 a barrel, a dramatic turnaround for a
market that not long ago had some predicting $200-a-barrel oil as early
as next year.

Rethinking Wisdom of Popping Bubbles

The Fed and its academic advisors are rethinking the proposition that it cannot and should not try to prick financial bubbles.

Housing Starts in U.S. Probably Dropped to 17-Year Low as Credit Dried Up U.S. builders probably broke ground
in September on the fewest houses in 17 years, a sign the real-
estate market deteriorated even before the recent credit
meltdown, economists said before a report today.

China's Economy Probably Slowed, Increasing Pressure for Further Rate Cuts China's economy probably expanded at
the slowest pace in almost four years in the third quarter,
adding pressure for interest-rate cuts and government spending
to prevent a slump.

Japan's Service Demand Slumped 1.4% in August as Consumers Cut Spending Japan's demand for services fell in
August, reinforcing the view that consumer spending is unlikely
to support the ailing economy.

Fed to Meet Credit-Default Industry for Third Time on Clearinghouse Plan The Federal Reserve Bank of New York
plans a third meeting today with the credit-default swap
industry, as it presses for a central clearinghouse for the $55
trillion market, people with knowledge of the talks said.

Community Banks Face Longer Wait for Paulson Cash Than Citigroup, Goldman Community banks that Federal Reserve
Chairman Ben S. Bernanke calls a key link between financial
markets and the U.S. economy face a longer wait for government
aid than their bigger competitors.

Paulson's Bank Capital May Bring Blackstone, Carlyle Back Into Buyout Game The U.S. Treasury's pledge to inject
$250 billion into banks may coax private-equity leaders Stephen
Schwarzman, David Rubenstein and Henry Kravis to resume
investing after more than a year spent mostly on the sidelines.

G7 faces recession

The
world's richest nations are in or close to recession and further
interest rate cuts are needed to stem the worst financial crisis in
nearly 80 years, a Reuters poll of economists shows. 

Morning Economic News - October 16, 2008

If overnight trading is any indication, investors shouldn't expect a big rebound in the stock market Thursday. DJIA futures are up 47 points [3:32 AM Eastern], S&P 500 up 7.50 and NASDAQ 100 up 11.25. The Nikkei fell more than 11% Thursday. Oil is off 4% as the dollar gained against the euro, pound, yen and most other Asian and European currencies early Thursday. Forex traders may be in for a wild ride as the Treasury International Capital report due out Thursday could have big and unexpected numbers with all the turmoil in international credit markets.

Purchase mortgage applications fell slightly as rates spiked

New purchase mortgage applications dropped 0.3% last week according to
the Mortgage Bankers Association Weekly Mortgage Applications Survey.
Rates rose substantially late in the week, almost a half percent for
Fixed Rate Mortgage (FRM) rates, probably accounting for some of the
drop. Refinance applications were up 12.5% which is indirectly good
news for homeowners – successful refinances will relieve pressure
elsewhere whether it is allowing people to avoid downsizing, helping
more homeowners avoid foreclosure or simply providing fuel to keep the
general economy going. 1-year Adjustable Rate Mortgage (ARM) rates rose
7/100 of a percent, but are still well below the levels of July and
August.

Weekly Mortgage Applications Survey - October 15, 2008

• Market Composite Index: 489.3


• Change: Up 5.1%


• Purchase Index: 313.5


• Change: Down 0.3%

Retail Sales - September 2008

Retail Sales: Down 1.2%

Producer Price Index - September 2008

Finished Goods Index: Down 0.4%

Finished Goods Core: Up 0.4%

Finished Goods Annual Change: Up 8.7%

Empire State Manufacturing Survey - October 2008

Business Conditions Index: -24.6

Monthly Change: Down 17

New Orders Index: -20.5

Beige Book - October 15, 2008

• Commercial real estate: Several Districts reported project
  delays and cancellations due to tighter credit conditions and increased
  economic uncertainty.


• Economic activity: weakened in September across all twelve Federal Reserve Districts.


• Manufacturing:
  lower in most Districts, Minneapolis described conditions as mixed and
  Philadelphia noted a slight increase in activity.


• Residential real estate: weakened or remained low in all Districts.


• Credit standards: tightened in several districts.

Economic Fears Spark Market Slump

Fears of a deep recession combined with falling commodities
and bank earnings led to the worst drop in the Dow industrials in 21
years. Data suggest the U.S. economy is poised to fall into its deepest
recession since the early 1980s.

Bernanke Keeps Door Open to Cuts

Bernanke kept the door open to further rate cuts and
stressed policymakers have the tools to address the credit crunch, but
said recovery won't be speedy.

Battered Consumers Push Retail Down

U.S. retail sales dropped 1.2%, the sharpest drop in three years, as a weak
job market and the credit crunch scared consumers. Producer prices fell
on lower energy costs.

Bernanke says credit crisis menacing U.S. economy

NEW YORK (Reuters) - Federal Reserve Chairman Ben Bernanke on Wednesday
gave a dour assessment of the U.S. economy, citing a "significant
threat" from shuttered credit markets in remarks that indicated he was
open to cutting interest rates further.

Economic activity weak across U.S.: Fed Beige Book

WASHINGTON (Reuters) - Economic activity weakened across the United States in
September as businesses revised capital investments, consumers
curtailed spending and the general outlook darkened, the Federal
Reserve said on Wednesday

Bernanke May Discard Decades-Old Aversion to Meddling With Asset Bubbles Federal Reserve Chairman Ben S.
Bernanke signaled an end to the Fed's decades-old aversion to
interfering with asset-price bubbles as the financial crisis
reshapes some of the central bank's most firmly held views on
regulation and monetary policy.

Global Economic Confidence Plunged as Market Rout Fuels Recession Risks Confidence in the world economy
tumbled in October after a deepening freeze in financial markets
increased the chances of a recession, a survey of Bloomberg
users on six continents showed.

UBS Gets Switzerland's Aid to Liquidate as Much as $60 Billion in Assets UBS AG, Switzerland's biggest bank,
was forced into a $59.2 billion government bailout after piling
up the biggest losses of any European lender from the global
credit crisis.

Europe's Central Banks Intensify Efforts to Jolt Credit Markets to Life Europe's central banks are
intensifying efforts to jolt credit markets back to life.

Latin American Economies Pummeled as Investors Flee, Commodities Tumble Latin America's plunging
commodities and fleeing investors are putting an end to the
fastest period of economic growth in the region in more than
three decades.

South Korean Won, Stocks Tumble as Downgrades of Bank Ratings Loom on Debt South Korea's won slumped by the
most since the International Monetary Fund bailed the nation out
in 1997, after Standard & Poor's said banks may struggle to
refinance their debt.

India Joins Brazil, Russia in Fighting Credit Freeze Without Cutting Rates India joined Brazil and Russia in
injecting funds into commercial banks to tackle the global credit
crunch without risking interest rate-cuts that may fan inflation.

EU Pushes for Revamp of 64-Year-Old Financial System to Prevent New Crisis European Union leaders pressed for an
overhaul of the global financial system to prevent a repeat of the
credit crunch that sparked the biggest stock-market selloff since
the Great Depression.

Morning Economic News - October 15, 2008

Things could be shaping up for another fairly sedate day on Wall Street Wednesday, as US stock futures are mixed in overnight trading with the DJIA futures down 22 points, S&P 500 futures down 0.9 points and NASDAQ 100 futures up 10 points [2:32 AM Eastern]. The Nikkei is up 1%, the Hang Seng is down almost 3% and the S&P/ASX 200 is down 0.81%. The dollar is up against the euro, down against the pound and yen, all within fairly narrow ranges. Commodities, including oil, are down slightly.

Federal Budget 2008

• Fiscal 2008 (Final): $454,806 billion Deficit


• Fiscal 2007 (Final): $161,527 billion Deficit

Spanish Leading Index Up Strongly on Monetary Policy

The Spanish index of leading economic indicators broke a three month
down streak with a 0.6% increase in August, but the Coincident Index
fell for the fourth time in six months, down 0.1%. The strength in the
Leading Index was not widespread, stemming almost entirely from a
single factor: Spanish contribution to euro M2, a money supply measure
reflecting pump priming monetary policy in August.

Best news of last week: the unregulated free market did not collapse

It's an arcane topic and that's probably why you haven't heard much about
it, but the settlement of $400 billion of credit default swaps on
Lehman bonds that occurred a few hours prior to Friday's market close
was a major positive event.
...In the end, it was almost a nonevent. In the greatest story of this crisis not yet
told, the private market mechanism set up to handle the settlement of
the swaps worked perfectly....

Devil Is in Bailout's Details

The Bush administration's plan to prop up banks creates a
thicket of issues, most pressingly whether the banks will step up
lending.

No Quick Fix for Housing Prices

The rescue plan for the U.S. financial industry doesn't directly address the root cause of the crisis: falling home prices.

Paulson Lacks Leverage to Force Banks to Put Federal Cash Infusion to Work Treasury Secretary Henry Paulson
persuaded nine major U.S. banks to accept $125 billion in
government investment. Getting them to lend it out may prove a
tougher sell.

Trichet Says Credit Crisis Calls for Return to Bretton Woods `Discipline' European Central Bank President Jean-
Claude Trichet said officials reshaping the world's financial
system should try to return to the ``discipline'' that governed
markets in the decades after World War II.

Bank of Japan to Offer Unlimited Dollar Funds to Ease Money Market Strains The Bank of Japan said it will offer
lenders as many dollars as they want, joining European
counterparts in attempting to lower borrowing costs in money
markets and freeing up credit worldwide.

Roubini Predicts Worst U.S. Recession in 40 Years, End to Market Recovery Nouriel Roubini, the professor who
predicted the financial crisis in 2006, said the U.S. will suffer
its worst recession in 40 years, driving the stock market lower
after it rallied the most in seven decades yesterday.

Australian Government May Add to $7 Billion Stimulus Package, Gillard Say Australia's A$10.4 billion ($7.2
billion) economic stimulus package won't feed inflation and may
be followed by extra spending as the global financial crisis
freezes credit and slows growth, deputy prime minister Julia
Gillard said.

Fed Offers GE, Citigroup Subsidized Cash Through Fund for Commercial Paper The Federal Reserve may subsidize
America's companies by purchasing their short-term debt at rates
below those demanded by private investors in the $1.6 trillion
commercial-paper market.

Morning Economic News - October 14, 2008

A bottom, a bear market rally or delusion in the face of depression? Monday's stock market rally in the US included a doubling of the record for Dow Jones Industrial Average increase in a single day. In overnight trading, Tuesday looks to be much more subdued. At 3:47 AM Eastern, Dow Jones Industrial Average futures were up 30 points. S&P 500 and Nasdaq 100 futures were up by similar percentages; Larger gains last week were followed by some very down days, though. Oil is rebounding and the dollar is trading mixed, but has picked up most of the ground it lost to the yen over the last several days. [Update: DJIA futures are up 126 points at 4:32 AM Eastern]

Paul Krugman wins the Nobel Prize in Economics

Krugman, however, insisted that he did not in practice favor
protectionism; it is difficult for policymakers to fine tune the
relevant variables.

Credit Crisis: Watching for Signs of Progress

A rundown of indicators to watch for progress on the credit crisis.

U.S. to Buy Stakes In Largest Banks

The U.S. is set to buy preferred equity stakes in several
top financial institutions as part of a broad effort to bolster the
banking system. Not all of the banks involved are happy with the move,
but agreed under pressure.

Image via Wikipedia

As European Bailouts Gel, Sticker Shock Sets In

Fed Opens Cash Spigot to Overseas Markets

Bank of Japan to Hold Unscheduled Meeting Today to Discuss Monetary Policy The Bank of Japan said it will hold
an unscheduled monetary policy meeting today to discuss ways to
make it easier to add funds to money markets.

U.S. Said to Invest in Citigroup, Goldman, Bank America, JPMorgan, Wells The Bush administration will invest
about $125 billion in nine of the biggest U.S. banks, including
Citigroup Inc. and Goldman Sachs Group Inc., the latest step in
a global drive to shore up confidence in the financial system.

German Investor Confidence Probably Slumped as Financial Crisis Deepened German investor confidence probably
slumped in October as the deepening financial crisis threatened to
tip Europe into a recession, a survey of economists shows.

French Business Confidence Slumps to 15-Year Low on Prospects of Recession French manufacturing confidence
slumped in September to the lowest in 15 years as new orders
dropped ``markedly'' and the economy probably fell into a
recession, the Bank of France said.

Silvio Berlusconi Shares in Pain of Investors as His Losses Top $2 Billion Prime Minister Silvio Berlusconi
promises Italians they won't lose ``even a euro'' of their bank
accounts in the current credit crisis. By contrast, the world's
richest government leader according to Forbes has already shed
about 1.7 billion euros ($2.3 billion) of his personal fortune.

China's Currency Reserves Rise to Record $1.9 Trillion, Shielding Economy China's foreign-exchange reserves
rose to a world record $1.906 trillion, helping to strengthen
the nation's finances as the credit crisis threatens to trigger
a global economic slump.

Mexico gross fixed investment jumps 12.3 pct in July

Brazil eases bank reserve rules again amid crunch

France unveils 360 bln euro bank rescue plan

German financial plan worth 470 bln euros-sources

China trade surplus hits record despite global woes

Morning Economic News - October 13, 2008

US stock market futures are up in Monday trading overseas. Dow Jones Industrial Average futures are up 4.5% [3:32 AM Eastern Time] If last week's pattern holds, we'd expect the actual market to end up dropping about twice that by the end of the day, but there are ample signals that this may actually represent a real market bottom. The dollar is down slightly against the yen and down substantially against the euro (1.68%) and the pound (0.58%). Commodities prices are down about 6%, but oil has risen 4.5%.

Federal Budget - August 2008

• Year-to-date: $483,354 million


• Year-to-date excluding fiscal stimulus package: $333,354 million


• Prior Year-to-date: $274,393 million

Import Export Price Indexes - September 2008

• Non-petroleum Import Prices: Down 0.9%


• Export Prices: Down 1%


• Yearly Import Price Change: Up 14.5%


• Yearly Export Price Change: Up 6.8%

International Trade (US) - August 2008

• Exports: $164.7 billion


• Monthly Change: Down $3.4 billion

Financial Roadmap: The Week Ahead October 11 to 15, 2008

Three big events this week are nearly irrelevant in terms of the day to
day moves of the market, but still important to medium-long term
planning: the inflation figures from the Bureau of Labor Statistics
(PPI Wednesday and CPI Thursday) and the Beige Book from the Federal
Reserve. With assumed Fed action to spur economic growth priced in,
inflation be damned, no likely scenario for any of the three is going
to change that thinking.

IMF Nations Vow to Prevent New Failures

The IMF chief said member nations agreed to do what is
necessary to prevent another major financial institution from failing,
although he didn't specify any measures.

European Central Banks to Offer Unlimited Dollar Funds

The
Bank of England, the European Central bank and the Swiss National bank
said they will offer unlimited U.S. dollar funds to banks.

Treasury Hones Next Rescue Tool

Paulson
is fashioning yet another tool to stem turmoil in financial markets by
injecting capital directly into banks, details of which could be
announced Monday.

European Leaders Agree to Guarantee New Bank Refinancing, Prevent Failures European leaders agreed to guarantee
new bank debt and use taxpayer money to keep distressed lenders
afloat, trying to stop the worst rout in Europe's stock markets
in two decades and stave off a recession.

Norway Central Bank to Swap $55 Billion of Government Bonds for Mortgages Norway offered to swap as much as
$55.4 billion in government bonds for commercial banks' mortgage
debt, tracking government efforts worldwide to boost liquidity.

Fisher Says Fed Will `Consider Every Option' to Restore Order to Markets The Federal Reserve will consider
all policy options necessary to stabilize financial markets and
limit damage to the economy, said Richard W. Fisher, president
of the Dallas Fed bank.

Paulson Is Studying Europe Plan to Offer Guarantees for Debt Sold by Banks Treasury Secretary Henry Paulson is
studying Europe's plan to provide a backstop for debt issued by
banks.

Trichet Says ECB Can Expand Collateral Rules, Examines Commercial Paper European Central Bank President
Jean-Claude Trichet said the ECB will examine ways to widen its
lending rules after governments asked it to set up a facility to
buy commercial paper.

India Plans to Increase Liquidity in Financial System, Chidambaram Says India is working on more measures to
increase the amount of cash in the financial system, Finance
Minister Palaniappan Chidambaram said, sending shares up after
having fallen the most in 18 years last week.

U.K. Government May Put Its Representatives on Bank Boards, Official Says The British Treasury may appoint its
own representatives to the boards of the country's biggest banks
as it begins buying stakes in them over the next few weeks, a
government official said.

China's Exports Maintain Pace; Trade Surplus Swells to Record $29 Billion China's export growth maintained its
pace in September and the nation's trade surplus swelled to a
record as imports cooled.

France set to announce 40 bln euro bank plan-DJ

PARIS, Oct 13 (Reuters) - France is set to announce a 40
billion euro ($54.89 billion) fund to help banks in difficulty
and will create a vehicle to provide liquidity to interbank
markets, Dow Jones reported on Monday, citing "a source"

Asia greets G7 weekend pledges

Oct 13 - Asian markets started higher on Monday after officials pledged to help repair the world's broken financial system.