Morning Economics News - December 4, 2008

US stocks did a long term about face Wednesday, focusing on good news from the housing market for the first time in months. Positive housing indicators have come out several times since August and the market has not even paused in freefalls those days. Unfortunately, the market chose to ignore very bad news on employment from two sources, the ADP Employment Report and Challenger Job Cut Report, that could point to a bad jobs report Friday from the Labor Department. On the plus side for jobs, the ADP report showed a smaller drop by 50,000 jobs than the consensus estimate for Friday's report, but ADP has been underreporting for several months compared to the Labor Department numbers. There's room for a small upside surprise Friday, but that "upside" is a loss of 250,000 jobs and Goldman Sachs is forecasting the other direction - 400,000 lost jobs.

Stocks fell in Tokyo (1%) and Hong Kong (0.39%) while US stock market futures are down about 1.2%. Oil is down another 2.5% with gasoline a penny above the $1 mark. The dollar is up against the Canadian dollar, euro and pound, down against the yen.

Early Thursday the ECB and Bank of England will make interest rate announcements, widely expected to be cuts, a prospect which could be driving weakness in the euro and the pound.

Oil inventories drop slightly, above average for season

Crude oil inventories fell by 400,000 barrels last week, but that tells
only a small part of the story. Inventories are very near the top of
the average range in absolute terms – number of barrels – and inventory
drops are expected in this season. But even that
is only part of the story, as consumption is down. So, in terms of days
of supply, crude oil inventory levels are actually well above average
for this time of year.

ADP Employment Report - November 2008

• Total Nonfarm Private Employment: 115,526,000


• Monthly Change: Down 250,000

Beige Book - December 3, 2008

• Commercial real estate: weakened broadly


• Economic activity: weakened in all districts

Help Wanted Online Data Series - November 2008

• Monthly Change: Down 70,200 (Not seasonally adjusted)


• Year-to-year Change: Up 296,600

ISM Nonmanufacturing Report on Business - November 2008

• NMI/PMI: 37.3


• Reading above 50 represents growing activity


• Change: Down 7.1

Weekly Mortgage Applications Survey - December 3, 2008

• Market Composite Index: 857.7


• Change: Up 112.1%


• Purchase Index: 361.1


• Change: Up 38%

Downturn Spares Few Areas of U.S.

Economic activity is weakening across the U.S., a Fed
survey shows, with few sectors or regions spared from the deepening
downturn.

China, U.S. to Counter Financial Crisis as `Most Pressing Task,' Wang Says China and the U.S. must work to
counter the global financial crisis as their “most pressing
task,” Chinese Vice Premier Wang Qishan said as the nations
started talks in Beijing today.

Indonesia Unexpectedly Lowers Key Interest Rate to Bolster Economic Growth Indonesia’s central bank unexpectedly
lowered interest rates for the first time in a year to shield
its economy from the global recession.

Japan Capital Spending Falls at Fastest Pace in Six Years as Exports Slide Japanese businesses cut investment at
the fastest pace in six years last quarter as the global
financial crisis darkened the outlook for exports.

Bank of England May Cut Rate to Lowest Since 1951, Requiring New Toolkit The Bank of England may cut interest
rates to the lowest since 1951 today, bringing them closer to
zero and challenging officials to find new tools to head off the
threat of deflation.

Thailand's Credit Rating Outlook Cut at Moody's After Prime Minister Quits Thailand's rating outlook was
downgraded to ``negative'' by Moody's Investors Service, which
joined Fitch Ratings and Standard & Poor's Ratings Services in
cutting the outlook this week amid local political turmoil.

Paulson Considers New Plan to Revive Housing by Pushing Down Lending Rates Treasury Secretary Henry Paulson is
considering a new plan to reduce mortgage rates in another bid
to revive the U.S. housing market, a government official said.

Japan Imperils Economy by Easing Bank Rules, Says Former Chief Regulator Japan’s government is leading the
nation’s banks and economy into a crisis worse than that in the
U.S. by softening rules and encouraging lenders to make risky
loans, the country’s former top regulator said.

ECB May Deliver Most Aggressive Interest-Rate Cut Yet as Economy Worsens The European Central Bank may be
forced to deliver the most aggressive interest-rate cut in its
10-year history as the economic slump deepens.

Australia's Trade Surplus Widens to Record in October: Table of the Day Following is a table of Australia’s balance of
trade figures for October as provided by the Australian Bureau of Statistics
in Sydney.

Japan capex data signals downward revision in GDP

BoE seen slashing rates to 2 pct as economy dives

Goldman Sachs now sees loss of 400,000 jobs in November