Morning Economic News - January 9, 2009

Commentary and Overnight Trading

As I noted yesterday, labor markets tend to lag the general economy while the stock market typically leads it. Dennis Gartman of The Gartman Letter goes a step further, pegging a spike in jobless claims as an indicator that a recession has reached its bottom:

looking back at the chart of weekly initial jobless claims
super-imposed upon the past forty years of economic advances and
recessions we note just how perfectly ‘spikes' in claims happen
precisely in the same quarter as the end of recessions. It is uncanny
how clear that is, for with the exception of the recession of '70 when
claims bottomed early in the recession, in all the rest the recessions'
ends and jobless claims spikes occurred in near perfect tandem.

Jobless claims spiked in December at over 500,000 initial weekly jobless claims and his since fallen back to 467,000. If the December spike did the trick, the 4th quarter could have marked the beginning of the recovery. (On the theory front, the reason job losses need to spike is that a recession is the economy wringing out the excesses of prior growth - overpriced stocks, marginal jobs, poorly managed companies that need to fail so their resources can be put to better use - labor market excesses tend to be the last to get wrung out.

US stock markets were little changed Thursday and US stock market futures are shaping up the same way in overnight trading, with Dow Jones Industrial Average futures down 2 points, S&P 500 up less than a point and NASDAQ 100 up 2 points. [1:59 AM Eastern] Asian markets are mixed and trading in a narrow range, oil is up just over 1%. The dollar is mixed, up against the Canadian dollar and euro, down against the yen and the pound,

Thursday's Economic News

Monster Employment Index - December 2008

• Index: 131


• Monthly Change: Down 12


• Year-to-year Change: Down 38 Points

Money Supply - January 8, 2009

• M1 Seasonally Adjusted November: $1522.5 bllion


• M1 4-Week Average: $1596.6 billion


• M1 Annual Change (Unadjusted): $157.5 billion

Jobless Claims - January 8, 2009

• Initial Claims: 467,000


• Change from Last Week: Down 24,000

Consumer Credit - November 2008

• Total outstanding consumer credit: $2570.9 billion


• Total (annuualized) rate of change: Down 3.7%

What I'm Reading

No Spike in Jobless Claims? Rats. (I argue that the spike could have already happened which would make this week's report is the calm after the storm.)

Wal-Mart, Others See Tough Months Ahead

Retailers led by Wal-Mart warned of lower sales and profits
in months to come as grim declines in December store sales emphasized
the toll the plunge in consumer spending is having on the economy.

U.S. Recession Stymies Mexico's Growth

Mexico's Finance Minister Agustín Carstens said the
country's economy isn't expected to grow at all in 2009 because of the
U.S. recession.

Bank of Korea Cuts Key Interest Rate to Record-Low 2.5% as Recession Looms The Bank of Korea cut its benchmark
interest rate by a half-point to a record low, saying the
economy is deteriorating faster than expected as domestic demand
and exports falter. Stocks fell.

U.S. Job-Market Collapse in 2008 Was Probably Biggest Since World War II The U.S. probably lost 525,000 jobs in
December, capping the biggest collapse in employment since the
end of World War II, economists said before a report today.

South Korea to Seek an Increase in $30 Billion U.S. Swap Deal, Shin Says South Korea will seek to increase the
size of its $30 billion currency swap agreement with the U.S.
Federal Reserve and extend its maturity, Deputy Finance Minister
Shin Je Yoon said.

Fed's Rosengren Calls for `Concerted Policy Actions' to Stimulate Lending The U.S. government needs to pursue
“concerted” fiscal and monetary policies to revive housing
finance, Federal Reserve Bank of Boston President Eric Rosengren
said.

China Exports Probably Fell Most in a Decade as Global Recession Deepened China’s exports probably fell the
most in a decade in December amid a deepening global recession,
making it more likely extra measures will be implemented to
stimulate growth.

Bank of England Cuts Benchmark Rate to 1.5%, Approaching Limits of Policy The Bank of England cut the benchmark
interest rate to the lowest since the central bank was founded
in 1694 as policy makers tried to prevent the credit squeeze
from deepening Britain’s recession.