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.