Morning Economic News - February 2, 2009

Commentary and Overnight Trading

The wait for Friday's employment report is likely to set the tone for the week in stock markets as bad expectations for this important report mute any positive news and give extra oomph to bad news. The pattern is showing up early with drops in Asian stock markets, US stock market futures and oil. The "flight to quality" pattern is holding again in currency markets with the dollar up against the euro, pound and Canadian dollar and down against what seems the stablest of the major currencies, the yen. [2:38 AM]

Friday's Economic News

Leading, Coincident Indicators down for Euro Zone, Mexico and Australia

The oil dependent Mexican economy took the biggest hit in November with
the Coincident Economic Index down 0.6% and the Leading Economic Index
dropping 4.5%. Of all the indicators in both indexes only one – stock
prices – improved.

What I'm Writing

Financial Roadmap: The Week Ahead February 2 to 6, 2009

This week will be a busy one with several labor market indicators, news
from the manufacturing sector including January auto sales, pending
home sales data and consumption spending. The week opens and closes
with indicators from the important areas of employment and the consumer
sector.

Low rates could cut payment time in half

At the current rates an 8.5% 30-year mortgage could be refinanced into
a 15-year mortgage at roughly the same payment – reason enough to
refinance for anyone with 3 to 5 years on a subprime loan who can
qualify now for prime rates.

What I'm Reading

Summers Carves Out Powerful Role

Obama's chief economic adviser is raising the clout of the
National Economic Council -- and the chance of internal conflict in the
administration.

How Bad? Jobs Data Offer a Clue

The first employment report for 2009, which comes out Friday, is going to be bad. The question is: How bad?

Obama Will Require Banks to Expand Lending as Condition of Government Aid President Barack Obama will require
banks to boost lending to consumers and companies in return for
taxpayer aid from the $700 billion bailout fund, in a departure
from Bush administration policy, a key lawmaker said.

Australian Investment Plans Shelved as Global Slump Hurts Mining Companies Planned investment in Australia
dropped for the first time in four years as mining companies
scaled back production because of the global economic slowdown,
Access Economics said.

Aso Risks Worsening Japan's Recession by Delaying Election He Might Lose Prime Minister Taro Aso risks
deepening Japan’s recession in order to delay an election he’s
likely to lose.

Indonesia Inflation Slows to 9-Month Low; May Allow Cut in Interest Rates Indonesia’s inflation slowed to a
nine-month low in January, giving the central bank room to cut
interest rates this week.

South Africa's Central Bank May Cut Benchmark Rate by Most in Five Years South Africa’s central bank may cut
its benchmark interest rate by 1 percentage point on Feb. 5, the
biggest reduction in more than five years, to stimulate an
economy heading toward a possible recession.

U.S. Manufacturing Probably Shrank at Fastest Since 1980 as Sales Slumped Manufacturing in the U.S. probably
shrank in January at the fastest pace in 28 years following a
collapse in sales that caused inventories to swell at the end of
2008, economists said before reports today.

Davos Dreams of Global Financial Cooperation Face Protectionist Resistance As world leaders in Davos called last
week for international cooperation to tackle the financial and
economic crisis, businessmen were complaining that the stress is
only aggravating national divides.

Thai Consumer Prices Fall for First Time in 9 Years; May Prompt Rate Cut Thailand’s consumer prices fell for
the first time in nine years in January, giving the central bank
room to cut interest rates this month.

South Korean Exports Plunge a Record 32.8%, Pointing to Deeper Asian Slump South Korea’s exports tumbled by a
record 32.8 percent in January, foreshadowing a deepening slump
in Asia’s export-driven economies.