Morning Economic News - October 9, 2008

US stocks are poised for an up open Thursday, with Dow Jones Index futures up 196 points in overnight trading [4:47 AM Eastern], but the pattern of the last several days has seen multi-hundred point swings in the space of a day, so who knows what could happen by mid-day. Oil prices are off slightly in overnight trading after yesterday's US oil report showed a big drop in demand and a big spike in inventories. The US dollar is trading mixed, but up more than 2% against the yen, 6% against the Aussie buck and 3% against the New Zealand dollar.

Good news on housing - but can it hold?

You probably missed the double dose of good news from housing markets
today as Wall Street and Washington continued with their barrage of
apocalyptic news. The Mortgage Bankers Association reported that new
mortgage applications for home purchases rose more than 3% last week as
mortgage rates fell, while the National Association of Realtors
reported that Pending Home Sales rose 7% in August and were nearly 9%
above the August 2007 level.

Weekly Mortgage Applications Survey - October 8, 2008

Market Composite Index: 465.5

Change: Up 2.2%

Purchase Index: 314.5

Change: Up 3.2%

Pending Home Sales - August 2008

Pending Home Sales Index: 93.4

Monthly Change: Up 7.4%

Yearly Change: Up 8.8%

Global interest rate cut

Several major central banks today made a concerted move to cut key
interest rates to deal with the ongoing global credit crisis. The
concerted move is not likely to have an immediate effect on currency
markets, but may play more to the economies with the most fundamental
strength and the jump on dealing with the crisis. That would tend to
favor Britain, the US and Asia over continental Europe.

British economy still holding on, but heading south

The British economy continued plugging along with a stiff upper lip in
August in spite of another big drop in leading economic indicators. The
August Coincident Index, which measures current economic activity, was
up 0.2% after rising 0.1% in July. The Leading Index was down 0.6% in August, after falling 0.7% in July.

That popping you hear - it's the oil bubble

With demand down strongly, supplies up, the dollar strengthening and
global economic activity in the tank, the oil bubble may be well and
permanently popped. Speculators who fled stocks for the «safe haven» of
oil at $140/barrel have lost twice the money of those who stayed in
stocks. Home prices are off their record highs by even less. You can
bet those once bitten by oil will be twice shy about diving back in and
driving up prices again. Unless there's a major geopolitical
disturbance and a concerted effort by OPEC, Goldman Sachs dream of $200
oil making their clients rich has gone the way of AIG and Lehman
Brothers.

World's Central Banks Launch Rate Cuts

The world's central banks lowered short-term interest rates
in unison. Separately, the U.S. Treasury is considering ways to inject
capital directly into banks, possibly by taking equity stakes.

Asian Stocks Surrender Gains

Most Asian indexes gave up early gains and failed to
recover from the previous day's selloff despite a series of
interest-rate cuts from key central banks.

Iran inflation nears 30 percent in September - media

TEHRAN, Oct 9 (Reuters) - Iran's annual inflation rate
jumped 1.8 percentage points in September to 29.4 percent,
Iranian media said on Thursday, highlighting a growing source of
discontent ahead of next year's presidential election.

Canada housing starts steady in September

Conference Board: US GDP to shrink through H1 2009

Taiwan cbank can't rule out snap rate meeting-source

Kuwait slashes rates; UAE joins global move to cut

South Korea, Taiwan, Hong Kong Cut Interest Rates Following Global Easing South Korea, Taiwan and Hong Kong cut
interest rates a day after reductions by the U.S., Europe and
China to stem damage from the global financial crisis.

U.S. Entered a Recession as Record Consumption Boom Ended, Economists Say By almost all accounts, the U.S. is
now in a recession, according to economists surveyed by Bloomberg
News.

China Cuts Rate to Protect `Big Enchilada' Economy, While Japan Stagnates Wednesday may go down as the day the
economic balance of power shifted in Asia.

Paulson Signals U.S. May Invest in Lenders as Part of $700 Billion Rescue Treasury Secretary Henry Paulson
signaled the government may invest in banks as the next step in
trying to resolve the deepening credit crisis.

Japan Machine Orders Plunge 14.5%, Capping Off Worst Streak in Seven Years Orders for Japanese machinery fell
for a third month in August, marking the longest losing streak
since the country's last recession in 2001.

Trichet Engineers `Regime Change' at ECB as Crisis Engulfs European Banks European Central Bank President Jean-
Claude Trichet is opening up the floodgates as the credit crisis
threatens to cripple the region's banking system.

Bank of England May Follow Rate Cut With `Another Big One,' Allsopp Says Former Bank of England policy maker
Christopher Allsopp said the U.K. central bank may follow its
half-point interest rate cut with another reduction if the
financial crisis doesn't abate.

Morning Economic News - October 8, 2008

In overseas markets, oIl is down over 1.5%, the Dow Jones Industrial Average futures are down 148 points and the dollar is down 0.9% against the yen and 0.2% against the euro. [2:45 AM Eastern Time] The dollar is up against the pound sterling 0.38%. European countries are starting to point together individual bank rescue plans as European Union leaders failed to agree on a combined effort and the European Central Bank lacks the Federal Reserve's lender of last resort powers.

Federal Open Market Committee Minutes - September 16, 2008

Committee members generally saw the current stance of monetary policy
as consistent with a gradual strengthening of economic growth beginning
next year, although they recognized that recent financial developments
had boosted the downside risks to the economic outlook.

Consumer Credit G.19 - August 2008

• Total outstanding consumer credit: $2577.3 billion


• Total rate of change: -3.7%

Japan continues to tank

The Japanese economy continued to deteriorate quickly in August, following July’s half percent drop in the Leading Index with a 0.6% drop in both Leading and Coincident Indexes in August.

Three Silver Linings

Amidst all this pessimism, permit me three silver linings: First, the
strong dollar. Second, plunging energy prices that will generate an
economy-wide tax-cut effect. And third, rapid money-supply growth after
18 months of flat money. In fact, on this last point — which is so
important — it looks like the Fed has un-pegged its fed funds target
rate and is instead focused on pouring cash into the liquidity-starved
global banking system. Meanwhile, the Treasury purchase plan for toxic
assets will get off the ground sooner, not later. And the Fed is now
backstopping the commercial paper market.

Image via Wikipedia

Fed Will Lend Directly to Corporations

The Fed said it will bypass ailing banks and lend directly
to U.S. corporations for the first time since the Great Depression,
while hinting strongly at further rate cuts.

Yes, the Credit Markets Are That Bad

However, the credit crunch will not last forever. We expect the lack of
confidence now permeating the financial system to dissipate in the next
few months, leading to a return to healthy real GDP growth and rising
inflation in the second half of 2009.

Consumers Trim Their Borrowing

Consumer borrowing contracted in August for the first time
in more than a decade, compounding worries about the economy's health.

U.S. CBO says FY08 budget deficit hit $438 billion

US consumer confidence falls in the latest week-ABC

Goldman sees oil slump until global GDP stabilises

GLOBAL MARKETS-World stocks tick higher; Iceland pegs FX

IMF Report Predicts Global Economy Heading for a `Major Downturn' in 2009 The global economy is headed for a
recession next year, as U.S. gross domestic product grinds close
to a halt, the International Monetary Fund said in reports ahead
of a Group of Seven meeting this week.

Fed Will Purchase U.S. Commercial Paper in Attempt to Ease Credit Crunch The Federal Reserve will create a
special fund to buy U.S. commercial paper, seeking to unblock the
financing tool that drives everyday commerce for American
businesses.

China May Cut Rates as Soon as This Week After Central Bank Yields Decline China may cut interest rates as soon as
this week after the yield on one-year central bank bills issued
yesterday had the biggest drop this year, analysts said.

Bernanke Fails to Quell Market Turmoil as Investors Clamor for Rate Cuts Federal Reserve Chairman Ben S.
Bernanke's message of readiness to cut interest rates failed to
assuage in

Morning Economic News - October 7, 2008

Overseas markets are unwinding some of Monday's drama with the dollar up against the yen, down against the euro, US stock market futures up (with the DJIA futures back above 10,000) and oil up 3%, but still well barely breaking the $90/barrel mark. Key interest rates still reflect serious trouble in markets for corporate and interbank credit. [3:38 AM Eastern Time]

Employment Trends Index - September 2008

• Employment Trends Index: 108.4


• Monthly Change: Down 0.8%


• Year-to-year Change: Down just under 10%

Are IRAs safe?

An IRA is nothing more than an account held with a custodian that
has certain tax advantages that vary with the type of IRA. Inside that
account can be almost any kind of investment: commodities, real estate,
FDIC insured bank accounts, T-bills, stock or bond mutual funds and,
yes, stocks...

...[an] IRA could be filled with investments that
make stocks look stable and secure by comparison. Oil and many other
commodities, for example, are down more than twice as much as the major
stock indexes in the same period. High yield bond mutual funds? Riskier
than stocks. Subprime mortgage backed securities? Make stocks look like
gold by comparison.

Markets Fall on Rescue Doubts

Markets around the world tumbled, reflecting investors'
lack of confidence despite stepped up relief efforts by the Fed and
European governments.
The Dow industrials fell below 10000 and European stocks fell to 20-year lows.

IRS Lets Firms Tap Cash Overseas

The IRS relaxed the rules governing how U.S. corporations
can repatriate cash parked overseas in an effort to ease the credit
crisis.

More Economists Expect Recession

A growing number of economists think the U.S. economy is likely either already in a recession or will be by the end of the year.

Treasury's Ryan-More needed to unlock credit markets

S.Korea plays down crisis as won hits 7-yr low

U.S. Sept consumer sales drop sharply -MasterCard

Morning Economic News - October 6, 2008

If you thought everything would be coming up roses in the financial markets this week, guess again. US stock market futures are down approximately 2% in Asian trading (as of 3 AM Eastern Time), oil is down 3% (good news for drivers, but a bad sign overall), and the US dollar is mixed, down substantially against the yen and up against the euro.

Financial Roadmap: The Week Ahead October 6 to 10, 2008

Markets are likely to be on edge this week as they absorb the reality
of the largest single dollar intrusion of government in the marketplace
in history, though the ups and downs in most markets are likely to be
at least somewhat muted compared to last week. There will be plenty of
opportunities for markets to move as there is likely to be both good
and bad news in economic indicators this week. The big news this week
could come in other forms with all kinds of possibilities being touted
including a coordinated interest rate drop by several central banks –
such a move might come on Thursday when the Bank of England is
scheduled to make a rate announcement.

Nonmanufacturing Report on Business (ISM) - September 2008

• NMI/PMI: 50.2


• Reading above 50 represents growing activity


• Change: Down 0.4


• Business Activity/Production Index: 52.1


• Change: Up 0.5

Employment Situation Report - September 2008

• Nonfarm Payroll Employment: 137.318 million


• Monthly Change: Down 159,000


• Unemployment Rate: 6.1%


• Change: Unchanged

Shift in U.S. Role at IMF

Washington doesn't need a bailout package from the IMF, but
it could use the agency's help to boost the credibility overseas of a
U.S. regulatory restructuring.

Europe Races to Shore Up Banks

Europe worked to shore up its financial system while
Germany moved to guarantee bank deposits and planned a bailout for Hypo
Real Estate. Luxembourg and Belgium worked out a Fortis rescue.

Dubai Moves to Bolster Domestic Property Market

Dubai announced that a government-backed fund would start investing in domestic real estate amid Emirates' credit crunch.

UBS lowers China 2009 GDP growth forecast to 8 pct

BEIJING, Oct 6 (Reuters) - UBS on Monday lowered its forecast
for China's gross domestic product growth in 2009 to 8.0 percent
from 8.8 percent, citing a much weaker global growth outlook and
forecasts of a deeper and longer U.S. recession.

Economic News - October 3, 2008

Monster Employment Index - September 2008

• Index: 160


• Monthly Change: Up 1


• Year-to-year Change: Down 26 Points

Money Supply - October 2, 2008

• M1 Seasonally Adjusted Prior Month: $1390.7 billion


• M1 4-Week Average: $1389.4 billion


• M1 Annual Change (Unadjusted): $20.8 billion

Jobless Claims - October 2, 2008

• Initial Claims: 497,000


• Change from Last Week: Up 1,000

Factory Orders - August 2008

• New Orders: $444.4 billion


• Monthly Change: Down 4.0%

Freddie Mac reports rates little changed

The Freddie Mac numbers showed a slight rise in long term rates and a
slight drop in 5-year and 1-year ARMS, the opposite of the Mortgage Bankers Association report yesterday
which showed a slight drop in long term rates and a fairly big hike in
1-year ARM rates. This may reflect the increasing difficulty in placing
anything but conforming Freddie Mac/Fannie Mae mortgages in the current
market.

Fresh Data Show Economy Is Worsening

The weekly number of workers filing new claims for
unemployment hit a fresh seven-year high on layoffs and continued
hurricane effects. Meanwhile, factory orders plunged 4.0% in August.

Fed Window Borrowing Surges

Direct borrowing from the Fed soared over the past week, topping $400 billion
as credit markets remained frozen and lawmakers debated a $700 billion
plan to rescue the financial sector.

Trichet Poised for `Volte Face' Cut on Interest Rates as Summit Approaches Jean-Claude Trichet is poised to
execute his first interest-rate cut since becoming European
Central Bank president almost five years ago.

U.S. Employers Probably Cut Jobs for Ninth Month as Credit Crunch Deepened The U.S. probably lost jobs in
September for a ninth month as the credit crisis deepened the
economic slump, economists said before a government report today.

Fed Bank Chiefs Bullard, Hoenig Signal They're Unready to Back a Rate Cut Two Federal Reserve district bank
presidents signaled they're not prepared to back an interest-
rate cut even after the biggest disruption to the U.S. financial
industry in seven decades.

France Probably Fell Into Recession as Consumers Cut Spending, Insee Says France's economy, the second largest
of the 15 countries sharing the euro, slipped into recession for
the first time in more than 15 years in the third quarter,
Insee, the national statistics office, forecast.

Canada is not in U.S. trouble, Harper tells debate

OTTAWA, Oct 2 (Reuters) - Prime Minister Stephen Harper
admitted on Thursday to concern about global economic trouble
but said in Canada's final election debate that his country was
on a far better economic footing than the United States.

Analyst says recession could drag oil below $50

Economic News - October 2, 2008

The biggest economic news of the day didn't happen until mid-evening when the US Senate passed the $700 billion package to allow the Treasury to backstop bad mortgage debt held by US banks. Since the measure passed, Dow Jones Industrial Index Average futures have dropped 115 points.

Senate Vote Gives Bailout New Life

The Senate's revamped bailout package drew support from 74
lawmakers in a roll call vote. The measure will now return to the
House, where it was unexpectedly defeated, for another vote on Friday.

Weekly Mortgage Applications Survey - October 1, 2008

• Market Composite Index: 455.4


• Change: Down 23%


• Purchase Index: 304.8


• Change: Down 10.9%

Manufacturing Report on Business - September 2008

• Purchasing Managers Index (PMI): 43.5


• 50+ represents growing economic conditions


• Monthly Change: down 6.4


• Inventories: 43.4

Help Wanted Online Data Series - September 2008

• Online Advertised Vacancies: 4,418,000


• Monthly Change: Down 4.7%


• Year-to-year Change: Up 3.5%

Construction Spending - August 2008

• Total Construction Spending: $1,072.1 billion


• Monthly Change: None


• Year-to-year Change: Down 5.9%

ADP Employment Report - September 2008

• Total Nonfarm Private Employment: 115,973,000


• Monthly Change: Down 8,000

Gasoline inventories recovering

US oil inventories rebuilt this week, though the picture is still
mixed. Distillate fuel inventories fell by 2.3 million barrels to the
very edge of the average range for the season, just as the season for
using heating oil gets underway. Gasoline inventories rebuilt to a
level just under the average range, but did so largely on the strength
of a 4.5% drop in product supplied to the market as refineries
continued operating at less than 75% capacity in the wake of hurricane
damage.

Investing in crisis

Just a few thoughts on investing in the current financial situation.
Most of this is targeted to people that have already liquidated their
stock holdings or were waiting to get into the market. If you're
already in stocks, you have a tough decision - is the bottom near or
not. If we're at or near a bottom, your best bet is to hold out for a
rebound. If we aren't near the bottom, you might want to take your
losses and cash out to buy back in closer to the bottom. I lean to
thinking we're near bottom, but that is admittedly a guess.

Mortgage applications down, prices down, rates starting down

Lots of news about the housing economy the last couple of days and all
the numbers dropped - though that was good in the case of mortgage
rates. The Mortgage Bankers Association reported Wednesday that
mortgage applications fell last week and Fixed Rate Mortgage (FRM)
rates dropped slightly while Adjustable Rate Mortgage (ARM) rates rose
slightly. Standard and Poor’s Case Shiller Home Price Index for major
metropolitan areas dropped last month.

Factory Activity Lowest Since 2001

Factory activity failed to grow in September, with the ISM manufacturing index
at 43.5, reaching the lowest level since October 2001. August
construction spending was flat.

Fed Considers Rate Cut as Recession Fears Mount

Federal Reserve officials are weighing further
interest-rate cuts, even if Congress passes a $700 billion rescue plan,
in the face of a deteriorating economic outlook and severely strained
financial conditions.

U.S. Auto Sales Dive

General Motors posted a 16% drop in light-vehicle sales for September, while sales at Toyota and Ford fell more than 30%.

U.S. Senate Approves $700 Billion Financial Rescue, Sends Measure to House The U.S. Senate tonight approved a
$700 billion financial-rescue plan that funds the biggest
government intervention in the markets since the Great
Depression. The package now goes to the House of Representatives,
which rejected an earlier version of the measure.

Trichet May Be Pushed Toward Rate Cut After `Wake-Up Call' From Bank Busts European Central Bank President Jean-
Claude Trichet's balancing act may be drawing to a close.

Australian Exports Turn Trade Balance to Second-Biggest Surplus on Record Soaring coal and iron ore exports
have turned Australia's trade balance from a deficit to the
second-biggest surplus on record.

`Serious Economic Crisis' Looms in Latin America as Credit Freeze Deepens Latin America's fastest economic
expansion in 30 years may be coming to an end as the global
credit crunch stunts investment and squeezes demand for the
region's commodities.

France, Germany Clash Over Proposal to Rescue Banks Hurt by Credit Crunch France and Germany clashed over
whether to create a fund to bail out banks pounded by the global
credit crunch, kicking off a European version of the debate that
has been raging in the U.S. for two weeks.

Monster jobs index ticks up in Sept, remains weak

NEW YORK, Oct 2 (Reuters) - Online job availability
improved slightly in September, but remained considerably
weaker compared to last year, Monster Worldwide, Inc
said on Thursday.

Economic News - October 1, 2008

Case Shiller Index - July 2008

• Composite 20 Index: 166.23


• Monthly Change:Down 0.9%

Consumer Confidence Index (US) - September 2008

• Consumer Confidence Index: 59.8


• Monthly Change: Up 1.3

U.S. Weighs Increase In Deposit Insurance

The Bush administration and congressional leaders are
considering raising the level of consumers' bank deposits guaranteed by
the government as part of a broad effort to revive the failed $700
billion banking-rescue package.

Dollar Takes Bite Out of Euro

The dollar rose against the euro and yen, aided by the recovery in U.S. stocks and hopes for a new bailout.

Tankan shows Japan businesses turn pessimistic

Japan firms pessimistic for 1st time in 5 years

US consumer confidence unchanged in latest week-ABC

Japan Businesses Turn Pessimistic For First Time in Five Years on Exports Japan's largest manufacturers turned
pessimistic about their prospects for the first time in five
years as the deepening U.S. financial crisis stifled demand in
the country's export markets.

Manufacturing in U.S. Probably Shrank as Spending Slumped, Credit Dried Up Manufacturing in the U.S. probably
contracted at a faster pace in September as sales slowed and the
credit crisis deepened, economists said before a report today.

Japan, Australia Money Market Rates Ease on Bailout Hopes, Cash Injections Japanese and Australian money markets
rates fell as U.S. lawmakers worked to salvage a financial-
rescue plan and central banks pumped $15 billion into the system.

FDIC's Bair Thrust Into Bigger Rescue Role as Bernanke Tries to Step Back Federal Deposit Insurance Corp.
Chairman Sheila Bair is being thrust into a bigger role in
resolving the credit crisis as her better-known counterpart at
the Federal Reserve runs into limits on what he can -- and
wants -- to do.