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.