Morning Economic News - December 31, 2008

Commentary and Overnight Trading

The biggest news of the day is likely to get lost in the news of "record drops" and "record lows" in home prices and consumer confidence. The oil producing states of the Gulf region finalized an agreement to have a common currency and a common central bank by 2010. This is pretty significant news for the dollar, which is the currency of oil sales worldwide, by creating an alternative currency in the oil rich region. The pressure will grow greater the closer the monetary union gets to implementation.

The dollar is doing ok in early overnight trading, up a bit against the Canadian dollar, down less than a tenth percent against the yen and down just over two-tenths percent against the euro and pound. And the news doesn't seem to be doing much for oil prices either, as they're down 2% in overnight trading so far. US stock market futures are mixed, with movement in the 0.75 to 2 point (not percent, but point) range on all indexes. Asian markets are up. [12:25 AM Eastern]

Tuesday's Economic News

Case-Shiller Home Price Index - October 2008

• Composite 20 Index: 158.16


• Monthly Change: Down 2.2%

Consumer Confidence Index - December 2008

• Consumer Confidence Index: 38


• Monthly Change: Down 6.7

Record drop in home prices and consumer confidence at record low

S & P reported another big drop in its Case Shiller Home Price Index,
which covers the top 20 metropolitan areas in the US and the Conference
Board reported that US consumer confidence fell to a record low.

What I'm Reading

Home Prices Decline at Record Pace

A measure of October home prices dropped by the sharpest
annual rate on record. Separately, consumer confidence hit a new low in
December.

Saudi Arabia, Kuwait, Bahrain, Qatar, U.A.E., Oman Approve Monetary Union Gulf Arab leaders approved a monetary
union agreement that aims to create a central bank and single
currency for the region that will help boost trade and strengthen
monetary policy.

Consumer Confidence in U.S. Drops to Record Low as Unemployment Increases Consumer confidence sank to the
lowest level in at least 41 years this month as Americans grew
more concerned about keeping their jobs and paying their
mortgages, raising the risk they’ll spend less next year.

U.K. House Prices Were Most Affordable in Five Years in 2008, HBOS Says U.K. houses are now the most
affordable in more than five years, helping those looking to buy
a home for the first time, HBOS Plc said.

Vietnam's 2008 Economic Growth Slows to 6.2% as Building, Tourism Stumble Vietnam’s economy expanded at the
slowest pace since 1999 as higher interest rates and lending
restrictions earlier this year damped construction and a global
recession hurt tourism.

Indian Economy Succumbs to Global Recession After Surviving Terror Attacks India’s economic growth, unscathed by
terrorist attacks in Mumbai last month, is slowing as the global
recession cuts demand for its exports and cools investment.

Australian Retailers May Have Record Post-Christmas Sales, Group Predicts Australian retailers may have record
post-Christmas sales as lower borrowing costs and government
stimulus packages spur consumer demand, according to the
industry’s peak representative body.

Home Prices in 20 U.S. Cities Dropped 18% From Year Ago, Case-Shiller Says Home prices in 20 major U.S. cities
declined at the fastest rate on record, depressed by mounting
foreclosures and slumping sales.

`Original Sin' Returns to Emerging Markets Requiring Sales of Dollar Bonds Developing nations plan to sell the
most dollar-denominated bonds since 2005, reversing a shift into
local debt, as commodities prices fall, foreign reserves diminish
and emerging-market currencies weaken.