Morning Economic News - February 10, 2009

Commentary and Overnight Trading

Overnight trading results early Tuesday [2:57 AM Eastern] are almost as lackluster as Monday's US stock market returns. The Nikkei closed down 0.29%, while the Hang Seng is up 0.01%, while US stock market futures are down just under 1%. Oil is up 26 cents a barrel and gold is up 0.39% while silver is down by the same percentage. The dollar is down slightly against the yen, up solidly againsg the euro, pound and Canadian dollar.

Economic Reports

Employment Trends Index - January 2009

• Employment Trends Index: 96.6


• Monthly Change: Down 1%


• Year-to-year Change: Down 18.6%

What I'm Reading

Slowdown Hits Emerging Markets

The global downdraft is hitting emerging economies with a speed and ferocity few imagined possible just months ago.

China's Inflation Slows to 1%, Weakest Pace in Two Years, as Economy Cools China’s producer prices tumbled by
the most in almost seven years and inflation cooled to the
weakest pace since 2006 as the government struggled to revive
growth in the world’s third-biggest economy.

BOE's King Must Print Money Now to Escape Credit `Mess,' Former Aides Say Bank of England Governor Mervyn King
should print money now and abandon economic assumptions that
have failed to save the U.K. from its worst recession since
World War II, a group of former central bank economists said.

U.K. Home Sales Drop to Lowest Since at Least 1978 as Recession Deepens U.K. housing sales dropped to the
lowest level since at least 1978 in the quarter through January
as property prices dropped further and Britain’s recession
deepened, the Royal Institution of Chartered Surveyors said.

Australia's Business Confidence Plunges to Record Low as Exports Decline IOOF Holdings Ltd. and Australian
Wealth Management Ltd., the asset managers that agreed to merge
last year, said funds under management plunged as financial
markets tumbled amid the global credit crisis.

Japan's Consumer Sentiment Stayed Near Record Low in January on Job Cuts Japan’s consumer sentiment stayed
near its lowest level in at least 26 years in January,
indicating households are likely to keep cutting spending.

South Korean Economy to Shrink 2%, Government to Boost Spending, Yoon Says South Korea’s new Finance Minister
Yoon Jeung Hyun pledged to increase stimulus spending after
forecasting the economy will contract about 2 percent this year
and lose around 200,000 jobs.

Bond Vigilantes Drive Treasuries to Worst Start Since 1980 in Test of Fed The bond vigilantes may be making a
comeback.

ECB Says Mixing Bad-Bank Plan, Asset Guarantee Would Curb Toxic-Paper Cost The European Central Bank said
governments should consider combining a so-called bad bank with
guarantees of securities to achieve the most cost-effective way
of ridding lenders of toxic assets.

Morning Economic News - February 9, 2009

Commentary and Overnight Trading

US stock market futures show a market set to give back about a third of Friday's gains in the opening hours as delays in the Fed's Term Asset-Backed Securities Lending
Facility and the Obama administration's financial rescue package are reported. The Nikkei dropped 1.33% Monday, while the Hang Seng is up 0.84% [3:50 AM Eastern]. Oil is down half a percent and gold is down more than 1%, while industrial metals are up. The dollar is trading up against the euro, pound and Canadian dollar, down against the yen.

Economic Reports

Consumer Credit - December 2008

• Total outstanding consumer credit: $2562.3 billion


• Total rate of change: Down 3.1%

Employment Situation - January 2009

• Nonfarm Payroll Employment: 134,580,000


• Monthly Change: Down 598,000


• Unemployment Rate: 7.6%

What I'm Writing

Financial Roadmap: The Week Ahead February 9 to 13, 2009

This week will be fairly light in the number of economic indicator releases, but some of the numbers could be very revealing...the markets are in one of those weird moods where bad news is seen as
bringing relief closer. This is normally Fed focused, but with the Fed
sidelined by a lack of ammunition, it's now fiscal policy focused. And
that's where the biggest news of the week may come from, as Congress is
likely to put the finishing touches on a fiscal stimulus package early
in the week.

What I'm Reading

Real-Estate Sector Cheers Tax Credit

A proposed tax credit for home purchases is raising the
hopes of the real-estate industry, which believes it could stabilize
the housing market.

U.S. Delays Financial-Rescue Plan as Officials Grapple With Toxic Assets Treasury Secretary Timothy Geithner
delayed the announcement of the Obama administration’s
financial-recovery plan as officials debated proposals aimed at
addressing the toxic debt clogging banks’ balance sheets.

Japan Machinery Orders Fall for Third Month, Corporate Bankruptcies Climb Orders for Japanese machinery fell
for a third month in December and bankruptcies increased as
businesses scrapped investment plans amid a collapse in exports
and deteriorating earnings.

India's Economy Forecast to Expand 7.1% This Year, Weakest Pace Since 2003 India’s economy may grow at the
slowest pace since 2003 this year, undermining Prime Minister
Manmohan Singh’s re-election bid in two months.

Taxpayers Risk $9.7 Trillion on Bailouts as Senate Debates Obama Stimulus The stimulus package the U.S. Congress
is completing would raise the government’s commitment to solving
the financial crisis to $9.7 trillion, enough to pay off more
than 90 percent of the nation’s home mortgages.

Taiwan's Exports Decline by a Record 44.1% as Sales to China, U.S. Tumble Taiwan’s exports fell by an
unprecedented 44.1 percent last month on reduced global demand
for the island’s computer chips, laptops and mobile phones.

Japan's Recession May Be Worst in Half Century, BOJ's Chief Economist Says Japan’s economy is deteriorating at a
pace unseen in the past half century, the central bank’s chief
economist said.

China Exports May Fall by Most in Decade as Demand Plunges in U.S., Europe China’s exports probably fell by the
most in a decade in January as demand dried up in the U.S. and
Europe, making it harder to revive growth in the world’s third-
biggest economy.

Morning Economic News - January 22, 2009

Commentary and Overnight Trading

Wednesday's big economic news release was a study in how the TARP went wrong. Home builder sentiment is down again, hitting another record low. And who can blame them? They're being hit by a triple whammy, all engineered by the people who run the banks. Perhaps the bankers' massive string of errors was not purposeful and knowing, but it certainly wasn't mere happenstance either. The housing market was run to overheating by profligate lending. Builders, whose business is building houses not reading financial tea leaves, invested in building more homes since they were selling like hotcakes and profit margins were high. Then the bankers got skittish and stopped making these bad loans to consumers. Well enough. Solid builders could have weathered that storm with more creative financing, incentives, slimming down those high profit margins and just taking occasional losses where needed. But then the banks added insult to injury with the third whammy - they stopped rolling over the builders loans and began to foreclose on newly built homes, competing against the builders who often still owed them money on other loans. It's easy to feel sorry for the builders, but damn hard to feel sorry for the bankers. Thursday may bring better news on housing, in the weekly mortgage report.

US stock futures are up a fraction of a percent in overnight trading and Asian stock markets are up 1 to 2%. Oil futures have managed to add another 9/100 of a percent, a small number but a big achievement on top of Wednesday's 9% rise in the spot price and pretty speculative with the US oil inventories due out Thursday morning. The dollar is in a familiar pattern, outperforming the battered euro and pound, losing against the yen and up, despite the oil price rise, against the loonie. [2:30 AM Eastern]

Economic News

Housing Market Index - January 2009

• Current Month Index: 8


• Monthly Change: Down 1


• Current 1-Family Sales Index: 6


• Monthly Change: down 2

State Street Investor Confidence Index - January 2009

• Global Index: 60.3


• Monthly Change: Up 12.1


• Year-to-year Change: Down 9.2

French Leading Index down over 1%

The Conference Board reported another round of bad news for the French
economy Wednesday, with a 1.4% drop in the Leading Economic Index for
France and a 0.2% decline in the Coincident Index. The weakness was
widespread with only 3 of the 11 indicators in the two indexes
improving.

What I'm Reading

Should Obama Help Banks or Homeowners?

From Andy Busch of BMO Capital Markets:

The disease remains housing and home prices.This is why I expect new
TARP money to flow towards the housing market and to reduce the supply
of foreclosures.  Here's an idea:  why not declare that as of January
1st 2009, all homes in foreclosure will be purchased by TARP?  This
attacks the supply or inventory problem forcing prices down.  It would
take away a major negative driver of bank assets.  Yes, but it still
means the government has to do something with those homes. 

The best solution would be to follow the RTC model by
putting the properties together and then holding a fire sale to clear
the market.  The government would take the loss between what they pay
for the homes and what they sell them for to the market.It's this loss
that no one wants to take or absorb.  While the US taxpayer is on the
hook for it, this solution attacks the central problem.  More
importantly unlike an acronym or a "bad bank", it will stabilize home
prices.  Taxpayers can live with nationalizing or socializing home
owner losses from the real estate market much easier than they can live
with taxpayer losses from the banking industry.  Let's see which
political party picks up on this first ...

Politics Seen in Bank Bailout Decisions

As Obama's team revises TARP, it faces dissatisfaction with
the program's implementation. Some politicians, including Barney Frank,
have used leverage to seek funds for their home-state banks.

U.K. Pound Serves as Omen for Dollar

As the British pound continues to sink, its travails are a cautionary tale for the U.S. dollar.

China GDP Confirms Slowdown

China said its economy expanded 6.8% in the fourth quarter
of 2008 from a year earlier, confirming a slowdown that has cut growth
nearly in half in just a year.

China's Economy Grew 6.8% in Fourth Quarter, Slowest Pace in Seven Years China’s economy expanded at the
slowest pace in seven years as the global recession dragged down
exports, increasing pressure for more government spending and
lower interest rates to buoy growth.

South Korea's Economy Contracts More-Than-Expected 5.6% as Exports Plunge South Korea’s economy shrank a
larger-than-expected 5.6 percent last quarter, the biggest
decline since the Asian financial crisis a decade ago as exports,
business investment and consumer spending plunged.

Japan's Exports Plunge Record 35%, Signaling More Cuts in Jobs, Production Japan’s exports plunged by a record
in December, signaling companies will be forced to shut factory
lines and fire more workers, driving the economy deeper into
recession.

Bank of Japan to Consider Buying Corporate Bonds; Keeps Key Rate at 0.1% The Bank of Japan said it will
consider buying corporate bonds to prevent a shortage of credit
from worsening a recession it predicted will deepen next year.

Japanese Corporate Loan Demand Rises to Record as Recession Dries Up Funds Demand for loans among Japanese
companies surged to a record this month as falling profits and
stagnating credit markets left businesses with less cash to
operate, a central bank survey showed.

Singapore's Government May Unveil Record Budget, Tap `Rainy Day' Reserves Singapore, suffering its deepest
recession since independence, will probably announce record
spending in its budget today to help companies hurt by the
global slowdown and preserve jobs.

Vietnamese Trade Deficit Narrowed In January, Easing Currency Concerns Vietnam’s trade deficit narrowed for
the first time in more than two years, as a global recession
slashed demand for its goods as well as restricting the nation’s
appetite for products from overseas.

Morning Economic News - January 14, 2009

Commentary and Overnight Trading

Asian stock markets rose slightly Wednesday, with the Nikkei up 0.29% and the Hang Seng up 0.26% at time of writing [3:28 AM Eastern] and US stock market futures are up a few points. Oil is up 3%, but still holding below $40/barrel. In a reversal of the recent pattern, the dollar is down against the Canadian dollar, euro and pound, but up against the yen.

Economic Indicators

Federal Budget - December 2008

• Year-to-date: $485,198 million deficit


• Prior Year-to-date: $106,815 million deficit

International Trade - November 2008

• Trade Deficit: $40.4 billion


• Monthly Change: Down $16.7 billion

UK Leading Index down 1%

The UK capped off a full 12 months of declines in its leading economic
indicators with a 1% drop in November, according to the Conference
Board. The Coincident Index was unchanged, with 3 of the 4 coincident
indicators actually improving.

Korean economy tanking

The Conference Board reported widespread weakness in the Korean economy
with a headline drop of 3.5% in the Leading Index. Of 11 economic
indicators tracked in the Leading and Coincident Indexes for Korea, 10
declined in November.

What I'm Reading

Global Trade Posts Sharp Decline

Foreign trade fell 18% for the U.S. from July to November,
part of a global trend that makes the world-wide slump harder to fight.

Feds: Ailing Banks Need More U.S. Funds

As Obama lobbied Senate Democrats for the remaining
financial-rescue funds, Bernanke argued for a new effort to help banks
get bad loans off their balance sheets.

Fed Seeks New Effort to Cleanse U.S. Banks as Toxic Assets Retard Lending The Federal Reserve’s top two
officials urged a new effort to address the toxic assets held by
financial companies, warning that they threaten to prevent banks
from resuming lending to households and companies.

Thai Central Bank Cuts Benchmark Rate More Than Forecast to 2% From 2.75% Thailand’s central bank cut its
benchmark interest rate more than economists expected for a
second month after inflation cooled to the slowest pace in six
years and political protests sent confidence to a record low.

U.K. to Guarantee $29 Billion of Loans to Companies to Keep Credit Flowing Business Secretary Peter Mandelson
said the U.K. government will guarantee as much as 20 billion
pounds ($29 billion) of bank loans to medium-sized companies in
order to keep credit flowing during the recession.

Asia's Interest-Rate Cuts, Spending May Propel Recovery, Economists Say Asia’s interest-rate reductions and
fiscal stimulus packages unveiled in recent months may help
propel a recovery in demand and economic activity later this
year, economists said.

China Overtook Germany as World's Third-Biggest Economy in 2007, Data Show China’s economy overtook Germany’s
in 2007 to become the world’s third largest, underscoring the
nation’s increasing economic and political clout.

Fed May Look for International Credentials in Seeking Geithner Replacement The candidates for president of the
New York Federal Reserve Bank include several with international
experience, indicating officials may be seeking a new leader in
the mold of departing chief Timothy Geithner.

U.S. Retail Sales May Have Dropped for Record Sixth Month as Jobs Vanished Sales at U.S. retailers probably fell
in December for a sixth consecutive month as rising unemployment
caused consumers to retrench, economists said before a report
today.

South Korean Employment Falls for First Time Since 2003 as Economy Slumps The number of South Koreans with
jobs fell in December for the first time since October 2003, the
latest sign the economy may be sinking into a recession as
exports plunge and domestic demand falters.

Oil Collapse Forces Gulf Nations to Run Deficits, Cut Foreign Investment Tumbling oil prices are forcing
many of the richest Persian Gulf states to record budget
deficits and limit a critical source of foreign investment for
poorer Arab countries.

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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.

Morning Economic News - December 24, 2008

Commentary and Overnight Trading

Tuesday the stock market shrugged off a megadose of bad news that would have easily made for a 500 point drop in the Dow in September or October with a relatively small 1% drop. Both major housing sales indicators fell significantly in November. Part of the reason may be just how far the market has already fallen and that's reflected in another number that came out Tuesday: The State Street Investor Confidence Index. The Index, which measures the ratio of institutional investments in equity versus (theoretically less risky) debt securities fell by 1/3, indicating a huge shift out of stocks over the last month.

Markets trading overnight seem little thrilled or scared by the days news either, with US stock market futures up two-tenths of a percent, oil down 0.15% and Asian stock markets mixed with the biggest move a 2.37% drop in the Nikkei. The dollar is down against the yen, euro, pound and Canadian dollar. [3:14 AM EAstern]

Tuesday's Economic News

State Street Investor Confidence Index - December 2008

• Global Index: 48.0


• Monthly Change: Down 6.5


• Year-to-year Change: Down 17.9


• North America Index: 30.1


• Monthly Change: Down 15.2

Existing Home Sales - November 2008

• Total Existing Home Sales Annual Rate: 4.49 million


• Monthly Change: Down 8.6%


• Year-to-year Change: Down 10.6%

New Home Sales - November 2008

• Annual Sales Rate (Seasonally Adjusted): 407,000


• Monthly Change: Down 2.9%


• Annual Change: Down 35.3%

German Leading Index Down 2.6%

• Leading Index: Up 0.1%


• Coincident Index: Up 0.3%

What I'm Reading

Recession Compounds Housing Woes

A deepening recession and tight credit conditions are
compounding problems in the housing market, suggesting that declines in
home prices may continue well into 2009.

Japan Manufacturers' Confidence Slumps as Recession Deepens, Survey Shows Confidence among Japanese
manufacturers fell the most on record as exports collapsed,
signaling the recession will extend into 2009.

Thailand to Lift Spending as Government Predicts First Recession in Decade Thailand’s new government plans to
increase spending and tax breaks to stimulate domestic demand as
it forecast the economy will slip into its first recession in
almost a decade.

Philippine Imports Fall for First Time in 17 Months on Electronics Orders Philippine imports fell for the
first time in 17 months as demand waned for raw materials used
by electronics exporters amid a global recession.

U.S. Housing Prices Collapse at Near-Depression Pace After Purchases Slide Sales of single-family houses in the
U.S. dropped in November by the most in two decades and resale
prices collapsed at a pace reminiscent of the Great Depression,
dashing speculation the market was close to a bottom.

U.S. Economy Contracted 0.5% in Third Quarter as Recession Began to Deepen The U.S. economy shrank in the third
quarter at a 0.5 percent annual pace as the now year-old
recession intensified.

U.K. Economy Shrank Most Since 1990 in Third Quarter, Exceeding Estimates The U.K. economy shrank the most
since 1990 in the third quarter and mortgage lending dropped to
the lowest in 14 years as tightening credit exacerbated the
slide into recession.

China Stocks Lure BlackRock With `Mother' of Stimulus Plans as Mobius Buys The biggest investors in emerging
markets say China is the best choice for 2009, betting plans to
stimulate growth will lead a stock market recovery in the fastest
growing major economy.

Australian Funding Costs Decline for a Fourth Day on Central Bank Actions Australian funding costs fell for a
fourth day on speculation central banks worldwide will add to
cuts in borrowing costs that led to near-zero interest rates in
the U.S. and Japan.

Philippine Peso, Stocks Drop in Year on Signs Global Slump Hurting Exports The Philippine peso headed for its
worst year since 2000 and stocks had their biggest annual loss
in at least two decades on signs the global slowdown is hurting
sales of the nation’s exports.

US, UK housing slump deepens; Japan boosts spending

Morning Economic News - December 22, 2008

Commentary and Overnight Trading

US stock market futures are up about 3/4 percent in early overnight trading [1 AM Eastern], the Nikkei is up 1.57%, the Hang Seng is down 1.67% and the S&P/ASX 200 down 1.61%. The NYMEX crude oil future is up 1.75%, with the February future trading almost $10 above Friday's spot price close (but still below $45/barrel). The dollar is up against the yen, pound and Canadian dollar. It's down against the euro, in spite of Barclays and UBS predicting a 10% drop in the euro in the next three months.

Financial Roadmap: The Week Ahead December 22 to 26, 2008

Investors will find lots of information packed into the holiday
shortened week and it's even more packed with no major indicators due
out until Tuesday. The first numbers due out are the Commerce
Department's final 3rd quarter GDP and corporate crofits figures with a
0.5% drop in GDP expected. Aside from corporate profits, Tuesday will
have one other big corporate oriented figure – the State Street
Investor Confidence Index. This index, which measures the actual risk
taking behavior of institutional portfolios, could help indicate if the
market has actually bottomed or if we are in a sustained bear market
rally – if the big boys are starting to move out of debt securities
back into equities, it's a good sign.

What I'm Reading

Euro Will Fall 10% Versus Dollar in 3 Months, UBS, Barclays Say

Trade-Finance Pinch Hurts the Healthy

The global financial crisis is drying up financing that
firms depend on for trade, making the recession deeper than it
otherwise would be.

Paulson Wants Rest of TARP Funds

The U.S. rescue of the auto industry drained what remained
in the first half of Treasury's $700 billion bailout fund, prompting
Paulson to call on Congress to release the rest of the money.

Aid to Homeowners May Double Next Year Under Bush-Backed Mortgage Program The mortgage-industry effort to stem
foreclosures aims to double the number of borrowers getting help
next year, as Democrats call for using taxpayer money to address
the crisis.

Japanese Exports Plunge Record 27% as Economy Sinks Further Into Recession Japan’s exports plunged the most on
record in November as global demand for cars and electronics
collapsed, signaling more factory shutdowns and job cuts are
likely as the recession deepens.

New Zealand's Recession Probably Deepened, Signaling More Rate Cuts Needed New Zealand’s recession probably
extended into a third quarter as consumers and businesses reined
in spending and exports of milk, timber and wool eased.

Japan Lowers Its Economic Assessment for Third Month as Recession Deepens The Japanese government lowered its
assessment of the economy for a third month, describing
conditions as the most severe since 2002.

Recession-Strapped U.S. Christmas Shoppers Search for Bargains, Discounts Cash-strapped shoppers are searching
for bargains in the final days before Christmas and some are
limiting their gift-giving to children in what could be a make-
or-break weekend for U.S. retailers.

Treasury Bond Bubble Sucks up Investors Who Can't Say No to Lowest Yields The world’s biggest bond investors
can’t stop buying Treasuries even though they’re comparing
government debt to Internet stocks just before the technology
bubble burst.

Oligarchs Seek $78 Billion Loans as Credit-Market Squeeze Empowers Putin Russian oligarchs are lining up for
$78 billion of Kremlin loans to survive the credit squeeze,
handing Prime Minister Vladimir Putin the opportunity to increase
government control of the nation’s biggest companies.

Japan exports collapse as yen, world recession bite

China FX reserves fall in Oct, first time since '03

Japan recession deepens, Ireland bails out banks

Morning Economic News - December 18, 2008

Commentary and Overnight Trading

The big question Thursday morning is how US markets will react to the bombshell Chrysler dropped after the market close Wednesday: all plants closed for at least a month starting Friday. Bear in mind that, while this is awful news for temp workers and suppliers, it won't lower costs enough to keep the company afloat long term because Chrysler's union workers will get on average 95% of their pay under the job bank agreement.

In early overnight trading (1:30 AM Eastern) US stock market futures are mixed - the Dow Jones Industrial Average up 13 points, the NASDAQ down 12.5 points and the S&P 500 up 0.7 - as are Asian indexes. Oil is down more than 1% on top of Wednesday's 8% drop to put the NYMEX crude future below $40. The dollar is up strongly against the yen, up slightly against the pound and the Canadian dollar and down slightly against the euro.

Update and correction: US stock market futures are up - DJIA by 65 points, S&P 500 by 6.4 points. NASDAQ futures are up 5, but I'm having to get the numbers from an alternate source as my usual source isn't reporting NASDAQ - the previous "down 12.5" was actually the 12/17 close. The dollar is now up substantially against the pound and down substantially against the euro. Oil is up, with the NYMEX contract back above $40.

Wednesday's Economic News

Consumer Price Index (CPI) - November 2008

• CPI-U: 212.425


• Monthly Change: Down 1.9%


• Year-to-year Change: Up 1.1%

Federal Funds Rate (FOMC) - December 16, 2008

• Overall, the outlook for economic activity has weakened further


• …inflationary pressures have diminished appreciably…the Committee expects inflation to moderate further in coming quarters.


• …weak economic conditions are likely to warrant exceptionally low levels of the federal funds rate for some time. 

Current Account - 3rd Quarter 2008

• Current Account Deficit: $174.1 billion


• Quarterly Change: Down $6.8 billion


• Goods Deficit: $214.7 billion


• Quarterly Change: Down $1.6 billion

Weekly Mortgage Applications Survey - December 17, 2008

• Market Composite Index: 841.4


• Change: Up 2.9%


• Purchase Index: 286.1


• Change: Down 4.5%

What if we added a whole oil producing state next year?

The Energy Information Administration is predicting big increases in US oil production in 2009. In fact, according to This Week in Petroleum
one new platform in the Gulf of Mexico, the Thunder Horse platform,
«would rank as the fourth largest producing State» in the country.
Thunder Horse will produce more oil than Louisiana or Oklahoma. Three
new platforms combined will produce more oil than all the states
combined except Alaska, Texas and California.

Creative Financing: Help During the Housing Downturn

With home prices falling in many parts of the country, sales slower
than normal in other parts and mortgage standards higher than any time
since the late ’80s, buyers and sellers can both benefit from creative
financing - owner finance, lease options, lesser known grant and loan
programs, and more.

What I'm Reading

Global Crisis Resists Central-Bank Moves

Central banks around the world cut rates a day after the
Fed's move, and Japan, the U.K. and euro-zone economies may follow suit.

OPEC Plans Record Output Cut

OPEC will cut crude production by a record 2.2 million
barrels a day, but the cartel's announcement failed to stop oil prices
from dropping to their lowest level in four years.

Global Confidence Wanes as World Sinks Into Recession, China Growth Slows Confidence in the world economy fell
in December as a recession spread beyond the U.S. and growth
weakened in China and Latin America, a survey of Bloomberg users
on six continents showed.

European November Inflation Rate Falls Most in Almost Two Decades to 2.1% Europe’s inflation rate fell the
most in almost two decades last month as oil prices plunged,
giving the European Central Bank more leeway to cut interest
rates.

Current-Account Deficit in U.S. Narrowed in Third Quarter on Export Gains The U.S. current-account deficit
narrowed more than forecast in the third quarter to $174.1
billion, reflecting gains in exports and decreases in foreign
earnings on American assets.

U.K. Unemployment Rose at Fastest Pace Since '91 as BOE Weighed Deeper Cut U.K. unemployment rose at the
fastest pace since 1991 in November and the Bank of England
considered cutting interest rates to the lowest ever this month
as the recession tightened its grip.

Fed Efforts to Unlock Housing Market Fail to Spur Buying: Chart of the Day The Federal Reserve’s efforts to make
homes more affordable have yet to bolster buying and instead are
fueling a surge in refinancing, according to data compiled by the
Mortgage Bankers Association.

Nomura Cuts Vietnam Growth Forecast to 5% on Delays in Investment Projects Nomura Holdings Inc. cut forecasts
for Vietnam’s economic growth because of delays in foreign-
invested projects amid a faltering global economy.

Bernanke Charts New Fed Course With Zero Rate, Pledge to Purchase Assets The Federal Reserve opened a new era
in U.S. monetary history, cutting interest rates to as low as
zero and pledging to buy unlimited quantities of securities,
after conventional policies failed to arrest what may be the
worst recession since World War II.

Zoellick Says the Right Government Policies Are Crucial to Global Recovery The right government policies will
be key to reviving economic growth forecast to cool globally in
the first half of 2009, World Bank President Robert Zoellick
said today.

Zhou Stokes Speculation China Will Cut Rates Again Soon as Inflation Eases Chinese central bank Governor Zhou
Xiaochuan stoked speculation that an interest-rate cut is
imminent, reiterating that falling inflation has added pressure
for a reduction.

Chrysler shuts plants

Dec 18 - Facing a credit crisis and dwindling
sales, Chrysler announced it would shut down all manufacturing
operations from Dec. 19 for at least a month

Morning Economic News - November 11, 2008

US stock markets Tuesday will still be trying to process Monday's news - Deutsche Bank rated General Motors shares as worthless predicting bankruptcy by year end, the second largest US consumer electronics retailer did file bankruptcy less than a month before retail's biggest day of the year, and DHL announced it will cut 9500 jobs and no longer offer shipping services in the United States. To top it off, economist Nouriel Roubini is predicting another 20-25% drop in the US stock market before the end of 2009. Amazingly US stock market futures are only down a notch, with the Dow Jones Industial Average and the S&P 500 down less than half a percent and the NASDAQ down just over a half percent [4:02 AM Eastern]. Asian stock markets aren't faring as well, with the Nikkei down 3%, the Hang Seng down 4.77% and the S&P/ASX200 down 3.58%. The dollar is mixed, down against the Canadian dollar, the euro and the yen, up against the pound. Oil is down 3% with gasoline flirting with the 130 cent mark.

Employment Trends Index - October 2008

• Employment Trends Index: 105.3


• Monthly Change: Down 1.8%


• Year-to-year Change: Down 12%

Deutsche Bank: GM Is Worth Nothing.

Deutsche Bank said publicly today what many detractors of General Motors Inc. have been thinking for some time — the company is worthless.

In a note, Rod Lache of Deutsche reduced his rating on the shares to
sell (helpful) and put a price target of $0 on the automaker, saying
the company has few options at this point beyond “external government
intervention.”

Data Show Deeper Recession in Europe

European economies are sliding deeper into recession, with
retail sales falling in Britain and factory output declining in Italy
and France.

Economists Urge G-20 to Act Quickly

Days before world leaders convene in Washington, they are
getting a raft of advice from academic economists on addressing the
financial crisis.

U.K. Home Sales Drop to Lowest in at Least 30 Years as House Prices Fall U.K. home sales declined to the lowest
level in at least three decades and the lending freeze pushed down
prices for a 15th month, the Royal Institution of Chartered
Surveyors said.

China's Inflation Slows, Leaving Room for Further Interest-Rate Reductions China's inflation cooled to the
slowest pace in 17 months, making further interest-rate cuts
more likely as the world's fourth-biggest economy loses steam.

ECB's Quaden Sees Forecast Revisions Paving Way for Lower Interest Rates European Central Bank council member
Guy Quaden said he expects the bank to reduce its forecasts for
economic growth and inflation ``substantially'' next month,
paving the way for lower interest rates.

China's `Huge' Stimulus May Help World Economy Along With Domestic Growth China's massive effort to shore up
its domestic economy may also do the world a favor.

Australia Faces First Recession in Two Decades as Export Outlook Darkens Australia's economy, which cruised
through the 1997 Asian financial crisis and the dot-com bust, is
facing the prospect of its first recession in almost two decades.

Paulson's Revised AIG Terms Begin Treasury Transfusions to `Zombie' Firms The revised bailout of American
International Group Inc. marks a new phase in the government's
effort to shore up financial markets: It's the first time cash
from the rescue fund Congress created last month has been
committed to a failing company.

German Investor Confidence Probably Stayed Near Record Low in November German investor confidence probably
stayed near a record low in November after the financial crisis
pushed Europe's largest economy to the brink of a recession, a
survey of economists shows.

Japan exports tumble as global downturn bites

Japan Oct corporate bankruptcies up 13.4 pct yr/yr

Japan exports fall 9.9 pct in first 20 days of Oct

Circuit City files for bankruptcy protection

Morning Economic News - November 6, 2008

Asian markets are down 4 to 6% and US stock market futures are down just under 1% Thursday [1:51 AM Eastern] after Wednesday's 5% loss on Wall Street. NYMEX crude oil futures are down 0.9% and Brent Crude spot prices are down 2%. The dollar is down slightly against the yen and up against the euro, pound and Canadian dollar.

Mortgage applications dropped as rates spiked last week

New applications for home purchase mortgages dropped 13.9% and
refinance applications dropped 27.8% last week as 30-year and 15-year
Fixed Rate Mortgage (FRM) rates increased according to the Weekly
Mortgage Applications Survey from the Mortgage Bankers Association. The
1-year Adjustable Rate Mortgage (ARM) rate fell slightly, but points
paid on 1-year ARMs doubled and the interest rate remained nearly half
a percent higher than the 30-year FRM rate.

Weekly Mortgage Applications Survey - November 5, 2008

• Market Composite Index: 379.9


• Change: Down 20.3%


• Purchase Index: 260.9


• Change: Down 13.9%

ADP Employment Report - October 2008

• Total Nonfarm Private Employment: 115,798,000


• Monthly Change: Down 157,000

Nonmanufacturing Report on Business - October 2008

• NMI/PMI: 44.4


• Reading above 50 represents growing activity


• Change: Down 5.8

UK recession looking worse

These numbers solidify the case for the expected Thursday drop in the
bank rate by the Bank of England and point to even more rocky times for
the pound and for foreign investment in the UK.

Credit crunch could hurt oil exploration, boost prices as economy recovers

US crude oil and propane/propylene inventories were unchanged last
week, but inventories of gasoline and distillate fuels pushed total
commercial petroleum inventories up more than 5 million barrels.
Gasoline demand has perked up a little since prices began to fall, but
remains more than 2% below year ago levels and jet fuel demand is down
more than 15% compared to the same period in 2007.

U.S. Explores Its Options With TARP

Treasury reported it is exploring additional ways to apply the $700 billion financial-rescue package.

New Debt Could Hamstring Obama

U.S. borrowing in coming months will be at record levels, and could constrain President-elect Obama's economic agenda.

German Cabinet Clears Stimulus Plan

Germany's cabinet approved measures to boost the economy
that will cost the country's public finances about $29.9 billion over
four years.

Australian Jobs Unexpecteldy Surge on Interest-Rate Cuts, Cash Handouts Australian employment unexpectedly
surged in October by the most in six months, a sign lower
interest rates, government handouts and exports may help the
economy sidestep a global recession.

ECB May Cut Rate Again as Worst Slump in 15 Years Spurs `Radical Action' The European Central Bank will cut
interest rates for the second time in less than a month today as
the region's economy suffers its worst slump in 15 years,
economists said.

Japan Recession May Be Shallower Than U.S., Cabinet Office Economist Says Japan's recession will be shallower
than the U.S. and Europe because damage from the global credit
crisis has been limited, the Cabinet Office's top economist said.

King May be Forced Toward Zero Rate Policy as Economy Heads for Recession Bank of England Governor Mervyn King
may have to consider the most radical round of interest-rate
cuts since World War II as the financial crisis tears through
Britain's economy.

Japan Sept coincident indicator index +0.1 point m/m

Mexico's Walmex Oct same-store sales up 2.0 pct

Mexico Oct consumer confidence dives to record low

Morning Economic News - October 28, 2008

The big news Monday was from the housing market. New home sales rose 2.7% in September, adding extra validity to the reported rise of 5.5% in existing home sales. This was the first month where both numbers rose this year, the best indicator yet that the housing market is nearing a bottom - news which should help ease concerns about mortgage backed securities.

Tuesday Japan's stock market recovered most of Monday's loss, with the Nikkei average rising 6.41%. The Hang Seng index rose more than 12%. At the time of writing [4:37 AM Eastern time], the dollar is up more than 2% against the yen and down against the euro and the pound. Oil is up 26 cents while natural gas is down a penny.

New Home Sales - September 2008

• Annual Sales Rate (Seasonally Adjusted): 464,000


• Monthly Change: Up 2.7%


• Median Sales Price: $218,400

Bargain Hunters Shrink Glut of Homes

Lower home prices are luring some buyers back into the U.S.
housing market, but foreclosures and a weakening economy are likely to
keep downward pressure on prices.

ECB's Trichet Signals a Rate Cut

Trichet signaled in a notably direct statement that the ECB is likely to cut its key rate next week.

New-Home Sales Jump 2.7%

New-home sales increased by 2.7% last month as inventories
declined and builders slashed prices to their lowest level in four
years.

Europe Faces `Huge Threat' as Meltdown in Emerging Economies Hurts Exports The European economy's close ties to
emerging markets are turning from a blessing to a curse.

Bank of England Says Global Downturn, Emerging Markets Pose Stability Risk The Bank of England said the world
economic downturn and turbulence in emerging markets pose
heightened risks to Britain's financial stability.

German Consumer Confidence Unexpectedly Rises After Decline in Oil Prices German consumer confidence
unexpectedly rose for a second month as a drop in oil prices left
households with more money to spend.

Consumer Confidence in U.S. Probably Slumped This Month as Stocks Plunged U.S. consumers probably turned more
pessimistic in October as stocks plunged and banks shut off
credit, raising the risk spending will tumble, economists said
before reports today.

Japan Sept retail sales -0.4 pct year/year

US Sept new homes sales up; inventory, prices fall

Chicago Fed Midwest factory index falls to 5-yr low

I'm writing a bit early today [2:08 AM Eastern], so the markets still have time to move a lot in Asia before the close. Cross your fingers that they do or Wall Street could be in for another really awful day, as Japan's Nikkei is down more than 7.8% at this writing, the Hang Seng is down 4.66%, the S&P/ASX 200 is down 2.64% and US stock market futures are down 1.5% (NASDAQ) to 3.5% (DJIA). NYMEX crude oil futures are down 50 cents from Thursday's New York close.

Jobless Claims - October 23, 2008

• Initial Claims: 478,000


• Change from Last Week: Up 15,000


• 4-Week Moving Average: 480,250

Money Supply - October 23, 2008

• M1 Seasonally Adjusted Prior Month: $1453.8 billion


• M1 4-Week Average: $1477.4 billion

ortgage rates below year ago levels

Freddie Mac reported lower Fixed Rate Mortgage (FRM) rates this week
and a slight increase in Adjustable Rate Mortgage (ARM) rates, while
RealtyTrac reported that home foreclosures fell 12% in September.
Freddie Mac’s weekly Primary Mortgage Market Survey showed 15-year FRM,
30-year FRM and 1-year ARM rates all at least a quarter percent lower
than the same week last year.

Mexican economy down across the board

The oil dependent Mexican economy showed serious weakness in August,
with the Leading Index dropping 0.9% following on the heels of a small gain in the Leading Index and a 0.5% drop in the Coincident Index in July.

Shipping Firms Gear Down

Transportation
companies are reporting sharply lower freight volumes, a sign that the
pipelines of global commerce have begun to slow.

IMF Moves to Ease Borrowing Policy

The IMF plans to help developing nations weather the
financial crisis by providing loans that don't require borrowers to
make far-reaching policy changes.

Deeper Job Cuts Risk Steepening Slump

Employers grappling with the financial crisis are accelerating job cuts in
multiple industries, potentially deepening the economic downturn.

Paulson Planning to Buy Stakes in Regional U.S. Banks to Unfreeze Credit Treasury Secretary Henry Paulson is
preparing to take stakes in a number of regional U.S. banks as he
seeks to halt the freeze of credit to businesses and households,
according to a person briefed on the matter.

South Korea's Economy Slows, Stoking Concern of First Recession Since 1998 South Korea's economy expanded at
the slowest pace in four years last quarter, sparking concern
the nation is headed for its first recession since requiring an
International Monetary Fund bailout 10 years ago.

China Pressed to Join Credit-Crisis Fight as Asian, European Leaders Meet China, the world's largest holder of
foreign currency, will be pressed to get more involved in
combating the global financial crisis at today's biennial summit
of Asian and European leaders.

India's Subbarao May Shift Stance to Growth From Prices as Economy Cools When India's central bank governor
Duvvuri Subbarao took office in early September, combating
inflation was his ``immediate'' priority. In seven weeks, his
agenda has changed.

Bank of Japan Rate Cut Speculation Increases Amid Concern of a Recession Speculation the Bank of Japan will
cut interest rates is growing on concern that the world's second-
largest economy will suffer a prolonged recession.

Brazil to Pump $50 Billion Into Currency Market to Stem 28% Slide in Real Brazil's central bank will pump the
equivalent of $50 billion into currency markets, its boldest move
yet to stem a two-month, 28 percent tumble in the real that has
saddled companies with losses and stoked inflation.

U.S. M-2 money supply rose $43.6 bln Oct 13 week

US jobless claims advance more than forecast

U.S. home prices fell in August vs July - FHFA

Morning Economic News - October 20, 2008

Look for a week on Wall Street driven by political news including OPEC action, improvement or lack of improvement in the credit markets and a fair amount of rumor driven volatility. Monday looks promising based on trading in Asia, where the Nikkei was up over 3.5%, the Hang Seng was up more than 5% and Australia's S&P/ASX 200 was up more than 4%. The dollar is up against the yen and down against the euro and pound as Europe continues to get its own financial house in better order with several European bank bailout plans coming together in the wake of the US plan. Oil is trading up about 2.5% on the strength of OPEC related rumors, a trend that may reverse on the release of a weak Leading Index Monday. [Trading data as of 3:50 AM Eastern Monday]

Financial Roadmap: The Week Ahead October 20 to 24, 2008

This week markets will have even more reason to focus on geopolitical
news and the details of the credit crunch as only three major US
monthly economic indicators are released and the first of those is
almost a foregone conclusion.

Housing Starts - September 2008

• Housing Starts: 817,000


• Monthly Change: Down 6.3%


• Year-to-year Change: Down 31.1%


• 1-Family Monthly Change: Down 12%

Crisis Helps Stimulate the Dollar

The dollar has benefited from the global flight from risky assets as well as the unwinding of bets made with borrowed cash.

Threat of Deflation Looms

Policy
makers navigating the U.S. through the credit crisis may have a new
concern for 2009: deflation. The risk remains slim, but a faltering
economy can set the stage for a deflationary environment.

Europeans Step Up Bank Bailout

The Netherlands will inject $13.4 billion into ING. Meanwhile, Germany
reversed course and hastily cobbled together a rescue package.

Germany to approve bank package, China growth slows

HONG KONG
(Reuters) - Germany was set to approve a rescue package for banks on
Monday and top Dutch lender ING sought an injection of government
funds, but in a reminder that no country is immune from the global
crisis, China reported weaker-than-expected growth.

White House adviser says parts of U.S. in recession

China's Growth Eases to 9%, Slowest Pace Since 2003, on Financial Turmoil China's economy, the biggest
contributor to global growth, expanded at the slowest pace in
five years as the financial crisis cut demand for exports.

South Korea's Won Gains on $130 Billion Financial Rescue; Bank Stocks Rise South Korea's won and stocks rose
after the government announced Asia's biggest financial rescue
package to open access to overseas credit markets and allay
concern of a recession.

Trichet Says Europe's Banks Are on Path to Recovery After Cash Injections European Central Bank President Jean-
Claude Trichet urged banks to start lending again after policy
makers put them ``on the path'' to recovery by pumping record
amounts of cash into money markets.

U.K. Home Prices Fall Most in Six Years as Economy Slumps, Rightmove Says U.K. house prices posted the biggest
annual decline in at least six years in October as the British
economy stared ``into the abyss,'' Rightmove Plc said.

Cullen Says New Zealand Officials Working on Bank Wholesale Guarantee Plan New Zealand officials are working on
a plan to guarantee wholesale deposits at the nation's banks,
Finance Minister Michael Cullen said.

U.K. Government Will Step Up Spending, Borrowing to Soften Economic Slump The U.K. government will step up
public spending projects and increase borrowing in a bid to curb
the country's biggest economic slump since 1991, ministers
including Chancellor of the Exchequer Alistair Darling said.

Morning Economic News - October 14, 2008

A bottom, a bear market rally or delusion in the face of depression? Monday's stock market rally in the US included a doubling of the record for Dow Jones Industrial Average increase in a single day. In overnight trading, Tuesday looks to be much more subdued. At 3:47 AM Eastern, Dow Jones Industrial Average futures were up 30 points. S&P 500 and Nasdaq 100 futures were up by similar percentages; Larger gains last week were followed by some very down days, though. Oil is rebounding and the dollar is trading mixed, but has picked up most of the ground it lost to the yen over the last several days. [Update: DJIA futures are up 126 points at 4:32 AM Eastern]

Paul Krugman wins the Nobel Prize in Economics

Krugman, however, insisted that he did not in practice favor
protectionism; it is difficult for policymakers to fine tune the
relevant variables.

Credit Crisis: Watching for Signs of Progress

A rundown of indicators to watch for progress on the credit crisis.

U.S. to Buy Stakes In Largest Banks

The U.S. is set to buy preferred equity stakes in several
top financial institutions as part of a broad effort to bolster the
banking system. Not all of the banks involved are happy with the move,
but agreed under pressure.

Image via Wikipedia

As European Bailouts Gel, Sticker Shock Sets In

Fed Opens Cash Spigot to Overseas Markets

Bank of Japan to Hold Unscheduled Meeting Today to Discuss Monetary Policy The Bank of Japan said it will hold
an unscheduled monetary policy meeting today to discuss ways to
make it easier to add funds to money markets.

U.S. Said to Invest in Citigroup, Goldman, Bank America, JPMorgan, Wells The Bush administration will invest
about $125 billion in nine of the biggest U.S. banks, including
Citigroup Inc. and Goldman Sachs Group Inc., the latest step in
a global drive to shore up confidence in the financial system.

German Investor Confidence Probably Slumped as Financial Crisis Deepened German investor confidence probably
slumped in October as the deepening financial crisis threatened to
tip Europe into a recession, a survey of economists shows.

French Business Confidence Slumps to 15-Year Low on Prospects of Recession French manufacturing confidence
slumped in September to the lowest in 15 years as new orders
dropped ``markedly'' and the economy probably fell into a
recession, the Bank of France said.

Silvio Berlusconi Shares in Pain of Investors as His Losses Top $2 Billion Prime Minister Silvio Berlusconi
promises Italians they won't lose ``even a euro'' of their bank
accounts in the current credit crisis. By contrast, the world's
richest government leader according to Forbes has already shed
about 1.7 billion euros ($2.3 billion) of his personal fortune.

China's Currency Reserves Rise to Record $1.9 Trillion, Shielding Economy China's foreign-exchange reserves
rose to a world record $1.906 trillion, helping to strengthen
the nation's finances as the credit crisis threatens to trigger
a global economic slump.

Mexico gross fixed investment jumps 12.3 pct in July

Brazil eases bank reserve rules again amid crunch

France unveils 360 bln euro bank rescue plan

German financial plan worth 470 bln euros-sources

China trade surplus hits record despite global woes