Morning Economic News - December 22, 2008

Commentary and Overnight Trading

US stock market futures are up about 3/4 percent in early overnight trading [1 AM Eastern], the Nikkei is up 1.57%, the Hang Seng is down 1.67% and the S&P/ASX 200 down 1.61%. The NYMEX crude oil future is up 1.75%, with the February future trading almost $10 above Friday's spot price close (but still below $45/barrel). The dollar is up against the yen, pound and Canadian dollar. It's down against the euro, in spite of Barclays and UBS predicting a 10% drop in the euro in the next three months.

Financial Roadmap: The Week Ahead December 22 to 26, 2008

Investors will find lots of information packed into the holiday
shortened week and it's even more packed with no major indicators due
out until Tuesday. The first numbers due out are the Commerce
Department's final 3rd quarter GDP and corporate crofits figures with a
0.5% drop in GDP expected. Aside from corporate profits, Tuesday will
have one other big corporate oriented figure – the State Street
Investor Confidence Index. This index, which measures the actual risk
taking behavior of institutional portfolios, could help indicate if the
market has actually bottomed or if we are in a sustained bear market
rally – if the big boys are starting to move out of debt securities
back into equities, it's a good sign.

What I'm Reading

Euro Will Fall 10% Versus Dollar in 3 Months, UBS, Barclays Say

Trade-Finance Pinch Hurts the Healthy

The global financial crisis is drying up financing that
firms depend on for trade, making the recession deeper than it
otherwise would be.

Paulson Wants Rest of TARP Funds

The U.S. rescue of the auto industry drained what remained
in the first half of Treasury's $700 billion bailout fund, prompting
Paulson to call on Congress to release the rest of the money.

Aid to Homeowners May Double Next Year Under Bush-Backed Mortgage Program The mortgage-industry effort to stem
foreclosures aims to double the number of borrowers getting help
next year, as Democrats call for using taxpayer money to address
the crisis.

Japanese Exports Plunge Record 27% as Economy Sinks Further Into Recession Japan’s exports plunged the most on
record in November as global demand for cars and electronics
collapsed, signaling more factory shutdowns and job cuts are
likely as the recession deepens.

New Zealand's Recession Probably Deepened, Signaling More Rate Cuts Needed New Zealand’s recession probably
extended into a third quarter as consumers and businesses reined
in spending and exports of milk, timber and wool eased.

Japan Lowers Its Economic Assessment for Third Month as Recession Deepens The Japanese government lowered its
assessment of the economy for a third month, describing
conditions as the most severe since 2002.

Recession-Strapped U.S. Christmas Shoppers Search for Bargains, Discounts Cash-strapped shoppers are searching
for bargains in the final days before Christmas and some are
limiting their gift-giving to children in what could be a make-
or-break weekend for U.S. retailers.

Treasury Bond Bubble Sucks up Investors Who Can't Say No to Lowest Yields The world’s biggest bond investors
can’t stop buying Treasuries even though they’re comparing
government debt to Internet stocks just before the technology
bubble burst.

Oligarchs Seek $78 Billion Loans as Credit-Market Squeeze Empowers Putin Russian oligarchs are lining up for
$78 billion of Kremlin loans to survive the credit squeeze,
handing Prime Minister Vladimir Putin the opportunity to increase
government control of the nation’s biggest companies.

Japan exports collapse as yen, world recession bite

China FX reserves fall in Oct, first time since '03

Japan recession deepens, Ireland bails out banks