Morning Economic News - January 26, 2009

Commentary and Overnight Trading

The Nikkei dropped less than 1% Monday, while US stock market futures are also down less than 1%, pushing Dow Jones Industrial futures below the 8,000 mark. Oil futures are down nearly 2%, but still above $45. The dollar is up against the Canadian dollar, euro and pound, down slightly against the yen.

With bad news expected Monday on the existing home sales front and from the Leading Index, an upside surprise, even in the form of a smaller than expected drop, has the potential to fuel a rebound from a weak couple of weeks. A reboudn would be especially good news because the S&P is down about 70 points for the month and since 1979 the S&P has followed the January trend for the entire year 32 of 39 times.

What I'm Writing

Financial Roadmap: The Week Ahead January 26 to 30, 2009

The Durable Goods Orders report Thursday from the Commerce Department
may be the most important figure we see this week. A drop is expected
but reports and rumors are that many consumers after more than a year
of cutbacks in personal spending and businesses which have been
pinching pennies for over a year are reaching the point where
replacement of aging durables is no longer optional. With the other
bits of good news for consumers – lower interest rates finally
trickling through in some cases, lower costs of energy and food – pent
up demand for durable goods could lead the way out of this economic
downturn. The main question is «When?»

What I'm Reading

GM to Invest TARP Dough in Brazil

World's Elite Visit Davos in Doubt

Business and political leaders in Davos will meet as the
IMF Wednesday is to cut its global-growth forecast to below 1% for the
year.

Reports to Reveal Shoppers' Cutbacks

A slew of earnings reports from consumer-staples makers will show just how much consumers have cut back.

Gap, H&M's Cambodian Garment Suppliers Keep Tax Breaks to Combat Recession Cambodia, reliant on overseas aid to
finance a quarter of the national budget, said it will extend
tax breaks for clothing manufacturers and invest in power plants
as a cash shortage restricts its ability to provide economic
stimulus.

Economy in U.S. Probably Contracted Most Since 1982 as Spending Collapsed The worst credit crisis since the
Great Depression sent the U.S. economy into a tailspin at the end
of 2008 as consumers and businesses retrenched, reports this week
may show.

Japan Government-Owned Lender May Take Stakes in Non-Financial Companies A Japanese state-owned bank may take
stakes in non-financial companies to help them weather the global
recession, people familiar with the plan said.

South African Inflation Probably Slowed, Making Room for Interest-Rate Cut South African inflation probably
slowed for the fourth consecutive month in December, adding to
pressure on the central bank to accelerate interest rates cuts.

Bank of Israel Will Probably Cut Key Rate Half a Point to a Record 1.25% The Bank of Israel will probably
lower its benchmark lending rate tomorrow to a record as
Governor Stanley Fischer seeks to shore up flagging economic
growth, a survey showed.

U.K. Economy Shrinks 1.5 Percent in the Fourth Quarter: Table of the Day Following are the preliminary GDP growth estimates
for the fourth quarter from the Office for National Statistics in London: