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.