Morning Economic News - December 5, 2008

Another indication that Friday's jobs reports will be bad came in with the Monster Employment Index down 22% year-to-year. It wasn't all bad news though, with jobless claims dropping by 21,000 and the weekly rate 15,000 below the 4-week moving average. With the Goldman Sachs prediction after market hours Wednesday of a 400,000 job loss number Friday and the down day on Wall Street Thursday, there is room for a number below analyst expectations to fuel a rebound in stocks Friday.

Futures traders seem to be betting lightly on that Friday rebound, with the Dow Jones Industrial Average future trading up 30 points, the S&P500 future up 2.1 and the NASDAQ future up 2 points. Asian stocks were flat to up Friday, the Nikkei down 0.08% and the Hang Seng up 2.35%. Oil is up slightly, but still below the $45 mark and gasoline still below 99 cents. The dollar is up against the yen. The dollar is down against the Canadian dollar, euro and pound, but by less than 1/10 of a percent.

Yesterday's Economic Numbers

Factory Orders - October 2008

• New Orders: $407.4 billion


• Monthly Change: Down 5.1%

Jobless Claims - December 4, 2008

• Initial Claims: 509,000


• Change from Last Week: Down 21,000

Money Supply - December 4, 2008

• M2 4-Week Average: $7915.0 billion


• M2 Annual Change (Unadjusted): $540.5 billion

Monster Employment Index - November 2008

• Index: 143


• Monthly Change: Down 7


• Year-to-year Change: Down 40 Points

The best sign yet - Record jump in mortgage applications

The Mortgage Bankers Association reported a record weekly increase in
mortgage applications as rates fell on long term Fixed Rate Mortgages
(FRM) last week. Freddie Mac reported rates down for the week ending
December 3, as well, though the rates were higher than the MBAA
reported rates from the week ending November 28, possibly indicating a
minor increase in rates early this week.

Another round of rate drops from Europe, Britain

The European Central Bank and Bank of England both cut rates for the second month in a row.
The Bank of England cut rates by 1%, following a 1.5% cut last month
and the European Central Bank cut by 0.75% on top of a 0.5% cut.

UK Leading Index down more than 4% in 4 months

UK leading economic indicators piled on the bad news for the future with a 1.7% drop in October, following drops of 0.7%, 0.6% and 1.1% the previous three months. The coincident index continued to hang on with another 0.1% increase.

What I'm reading this morning

Fed Weighs Options as Europe Cuts Rates

The Fed is considering taking unconventional steps to
revive the economy as central banks outside the U.S. cut rates more
aggressively.

Housing Market Faces Broader Ills

Treasury's proposal to push down mortgage rates is raising
the housing industry's hopes but won't cure all the woes that have
curtailed sales.

China, U.S. Agree to Counter Credit Crisis, Pledge $20 Billion for Trade China and the U.S. pledged $20 billion
to fund trade and agreed to deepen financial ties, stepping up
efforts to counter the credit crisis in their final economic
talks before President-elect Barack Obama takes office.

Lawmakers Dodd, Frank Warn Paulson May Not Get Second Half of TARP Money Two top U.S. lawmakers warned
Treasury Secretary Henry Paulson that he may not get the second
half of the $700 billion financial rescue fund, joining
Republicans upset with how the program is being managed.

Trichet Under Pressure to Give Deflation Plan as Rates Get Closer to Zero European Central Bank President Jean-
Claude Trichet is under pressure to outline a plan to revive the
euro region’s economy should he be “trapped” into pushing
interest rates closer to zero.

Pimco Sees Pound Bottom as BOE Cuts Rate to Lowest Level Since Churchill The Bank of England’s third interest-
rate cut since the start of October is raising speculation that
the pound’s 26 percent slide may be coming to an end.

Payrolls in U.S. Probably Fell by Most in 26 Years as Recession Deepened U.S. employers probably cut jobs in
November at the fastest pace in a quarter century as the yearlong
recession engulfing the world’s largest economy deepened,
economists said before a report today.

Japan May Allow Tax Breaks on Profits Returned From Abroad to Spur Economy Japan may introduce legislation that
would waive taxes companies pay on profits returned from abroad,
in an effort to help the economy emerge from a recession.

Sarkozy Morphs from `President Bling-Bling' to Champion of Working Class At 4 a.m. on Sept. 30, as the
collapse of Lehman Brothers Holdings Inc. was shaking up
investors on six continents, President Nicolas Sarkozy convened
an emergency meeting at the Elysee Palace in Paris to broker the
bailout of French-Belgian bank Dexia SA. For an hour, he grilled
Finance Minister Christine Lagarde and Bank of France Governor
Christian Noyer on the terms of the 6.4 billion euro rescue
plan, says François Perol, Sarkozy’s economic adviser.

Bank of Japan Struggles in Attempt to Revive Business Loans: Chart of Day Japanese lenders have shrugged off
central bank Governor Masaaki Shirakawa’s attempts to revive
loans to businesses, as a year-end funding crunch drove
borrowing costs to a record high.

Philippine Inflation Eases to Six-Month Low; May Allow Interest-Rate Cut Philippine inflation slowed to a six-
month low in November as food and fuel prices eased, giving the
central bank room to cut interest rates to boost economic growth.

Dutch November HICP Below ECB's Inflation Target Again: Table of the Day Following is a summary of the November
CPI report from the CBS in Voorburg:

German economy could shrink 4 pct in 2009-D. Bank

BERLIN, Dec 5 (Reuters) - The German economy, Europe's
largest, could shrink by up to four percent next year, Deutsche
Bank chief economist Norbert Walter said in comments published
on Friday.