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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