Morning Economic News - December 10, 2008

The Pending Home Sales Index fell, but there were two positive notes: the index ended up 2.4 points (2.8%) higher than expected and the previous month's index was revised upward. The reported drop was 0.7 points, but the drop from the initial September number was only 0.3%. Though the market seemed to repeat the pattern of shrugging off good news from the housing market again Tuesday, the picture was muddled by both a less than crystal clear housing improvement, other events and some natural profit taking. A good report on mortgage applicaionts Wednesday could be powerful fuel for the stock market.

Overnight trading points to an upward trend in the roller coaster, with US stock market futures up just under 1%, Asian stocks trading higher for both the Nikkei and Hang Seng indexes, and oil futures up more than 3%. The dollar is up against the yen, down against the Canadian dollar, euro and pound. [1:10 AM Eastern]

Yesterday's Economic Numbers

Pending Home Sales - October 2008

• Pending Home Sales Index: 88.9


• Monthly Change: Down 0.7


• Yearly Change: Down 1%

Japan’s Leading Index plunged 2.5%

• Leading Index: Down 2.5%


• Coincident Index: Down 0.5%

Bank of Canada drops rates 3/4 percent

• US Federal Reserve Federal Funds Rate: 1%


• US Federal Reserve Discount Rate: 1.25%


• Bank of Canada Overnight Rate: 1.5%

What I'm Reading

Fed Weighs Debt Sales of Its Own

The Federal Reserve is considering issuing its own debt for
the first time, a move that would give the central bank additional
flexibility.

Bernanke's GM Rejection Aimed at Trying to Define Fed Bailout Boundaries More than a year into the credit
crisis, Federal Reserve Chairman Ben S. Bernanke is still trying
to establish how far he’s willing to go to aid troubled
companies.

World Bank Cuts East Asia Growth Forecasts, Sees 'Hard Times' for Region East Asian economies will probably
expand at the slowest pace in eight years in 2009 as easing
export demand and declining investment and consumer spending
portend “hard times” for the region, the World Bank said.

U.K. Economy May Be Shrinking at Fastest Pace Since 1990, Institute Says The U.K. economy may contract at the
fastest pace since 1990 in the current quarter as the recession
intensifies, the National Institute for Economic and Social
Research said.

South Korean Unemployment Rate Climbs to 3.3% as Economy's Expansion Slows South Korea’s jobless rate rose for
the first time in seven months in November as fewer people got
jobs in manufacturing, construction, shops and restaurants.

Singapore Economy to Shrink in 2009 as Output, Exports Fall, Survey Shows Singapore’s economy will probably
shrink next year for the first time since 2001 as manufacturing
output and exports contract and consumer pare spending, a
central bank survey showed.

Japan Machine Orders Fall 4.4% as Global Slump Prompts Makers to Retrench Japanese machinery orders fell in
October as the deepening global recession choked off demand for
the country’s cars and electronics.

Japan's Core Machinery Orders Fall 4.4% in October: Table of the Day Japanese machinery orders, excluding
shipbuilding and utilities, fell 4.4 percent in October from September,
seasonally adjusted, the Cabinet Office in Tokyo said.

China wholesale inflation slumps; flags deflation risk

BEIJING, Dec 10 (Reuters) - China's wholesale price
inflation collapsed in November, undershooting expectations by
a wide margin and raising the risk that the once-sizzling
economy could find itself mired in deflation before long.

Morning Economic News - December 9, 2008

Stocks look poised to give back some of Friday and Monday's gains with US stock market futures down a bit more than half a percent in overnight trading. The Nikkei average rose 0.8% Tuesday, but the Hang Seng dropped 1.94%, the S&P/ASX 200 fell 0.75% and European indexes opened down about 1.5%. Oil is down 0.6% with gasoline futures just over 95 cents. The dollar is up against the Canadian dollar, pound and euro, down against the yen.

Yesterday's Economic Numbers

Employment Trends Index - November 2008

• Monthly Change: Down 1.6%


• Year-to-year Change: Down 13%

What I'm Reading

Fed Seeks Fixes Beyond Rate Cuts

With the Fed's target interest rate quickly approaching
zero, central-bank officials are embracing a broad array of remedies
for the U.S. recession.

Companies Scale Back Hiring

The outlook for the global labor market is deteriorating
markedly as companies struggle with the credit crunch and weaker
consumer demand.

Japan Government Pledges More to Prevent the Economy From `Falling Apart' Japan’s government pledged to take
further measures to support an economy that reports showed today
is in worse shape than analysts predicted.

Bernanke `War Powers' Undermine Fed Presidents, Risk Divide on Next Steps The Federal Reserve’s interest-rate
target is getting close to zero, and so is the power of the
Fed’s regional bank presidents.

German Investor Confidence May Drop to Near Record Low as Economy Stumbles German investor confidence probably
dropped to near the lowest level on record in December as the
financial crisis pushed Europe’s largest economy deeper into
recession, a survey of economists shows.

U.K. Housing Sales Drop to Lowest Since at Least 1978 as Recession Deepens U.K. home sales declined to the
lowest level since at least 1978 as Britain plunged deeper into
a recession, the Royal Institution of Chartered Surveyors said.

Spain's `Best Generation' Stung by First Slump in Memory as Jobs Disappear Roberto Frenedoso, a 23-year
construction worker, has little to do these days except loiter
around a square with his unemployed friends in Madrid’s Getafe
suburb.

French Trade Deficit Unexpectedly Widens to a Record on Slumping Exports France’s trade deficit widened to a
record in October as the global economic slowdown hurt exports.

German Exports Declined in October as Slowing Global Growth Cools Demand Exports from Germany, Europe’s largest
economy, fell in October as cooling global growth curbed demand.

China's Exports Shrink, Industrial Output Cools, Central Bank Adviser Says China’s exports may have contracted
last month as industrial output cooled, adding pressure for
policy makers meeting in Beijing this week to do more to
sustain economic growth.

U.S. First-Quarter 2009 Hiring Plans Held Near 5-Year Low, Manpower Says Hiring plans by U.S. employers for
the first quarter of next year held near a five-year low,
signaling a weak labor market will persist into 2009, according
to a private survey.

China Boomtown Withers as U.S. Importers Push Worker Rights Amid Recession Li Wencheng chain smokes in the office
of his candy factory in China’s southern manufacturing belt and
frets over diminishing returns.

Japan's Third Quarter GDP Revised Down to 1.8 Percent: Table of the Day Following is a summary of real
gross domestic product from the Cabinet Office in Tokyo.

German export outlook bleak despite Oct respite

BERLIN, Dec 9 (Reuters) - Germany's trade surplus widened in
October, suggesting net trade may support the economy in the
final quarter, but the outlook for exports remains bleak with
orders for German goods falling sharply in recent months.

Japan deeper in recession, third-quarter GDP shows

Morning Economic News - December 8, 2008

Asian stock markets rose sharply Monday, with the Nikkei up 5.48% and the Hang Seng up 7.52% at 1 AM Eastern. US stock market futures are also up nearly 2%. The dollar is down slightly against the yen and the Canadian dollar, down more than half a percent against the euro and pound. Oil prices have rebounded nearly 5% from Friday's close on news that major consumer China is likely to lower fuel prices spurring use and OPEC is likely to cut production.

Financial Roadmap: The Week Ahead December 8 to 12, 2008

Two of the biggest news events this week will happen Tuesday, with the
Bank of Canada widely expected to cut interest rates and the National
Association of Realtors set to report on Pending Home Sales for
October. After the Mortgage Bankers Association reported a record
breaking increase in mortgage applications last Wednesday, they
reported a record increase in foreclosures and delinquencies on Friday.
The market actually took the Wednesday report seriously, a first for
positive housing indicators in several months, and took the bad news
Friday in stride. Signs of a bottom or at least a short term
improvement in mood? Good news on Pending Home Sales and mortgage
applications this week could help a rebound; bad news could trigger
another attempt to find a new bottom.

Friday's Economic Reports

Employment Situation Report - November 2008

• Monthly Change: Nonfarm Jobs Down 533,000


• Unemployed Persons: 10,331 million


• Unemployment Rate: 6.7%


• Change: Up 0.2%

What I'm Reading

Obama Says Economy Will Worsen, Not Concerned About Short-Term Budget Gap President-elect Barack Obama said the
U.S. recession will worsen before a recovery takes hold and that
he will offer an economic stimulus plan “equal to the task”
without worrying about a short-term widening of the budget
deficit.

India Rate Cuts, Stimulus May Fail to Shore Up Growth as Investment Slumps Indian Prime Minister Manmohan Singh's
spending plan and interest rate cuts unveiled over the weekend
may not be enough to prevent economic growth slowing to the
weakest pace in six years, economists say.

Shirakawa May Need to Get Bolder to Save Japan Companies From Fund Drought Bank of Japan Governor Masaaki
Shirakawa may be forced to adopt more aggressive measures to ease
a credit shortage for companies, economists say.

U.S. in Danger of Worst Recession Since World War II as Job Losses Deepen The U.S. economy may be headed for
its deepest and longest recession since World War II as mounting
job losses take their toll on consumer confidence and spending.

IMF's Bailout Plan for Latvia Calls for Keeping Currency's Link With Euro Latvia’s International Monetary Fund-
led bailout package will involve loans from other European
governments and will maintain the country’s currency peg to the
euro, the IMF said.

Pakistan May Miss Growth Target, Inflation May Be 22%, Central Bank Says Pakistan’s central bank said the
nation’s economy may miss growth targets and inflation may rise
as high as 22 percent.

Japanese Companies Can Manage With Yen Around 92 vs Dollar, Sakurai Says Japanese companies can remain
profitable if the yen trades around 92 yen per dollar, said
Masamitsu Sakurai, head of the nation’s second-largest business
lobby.

South Korea's Producer Prices Plunge Most in 45 Years as Oil Costs Decline South Korea’s producer prices fell in
November by the most in 45 years as global commodity prices
plunged, giving the central bank room to reduce borrowing costs
further this week.

Kashkari Defends TARP Program After Congressmen Threaten to Withhold Funds Neel Kashkari, who oversees the U.S.
Treasury’s $700 billion financial-rescue plan, defended the
program today after congressional leaders threatened to withhold
the remaining half of the funding.

Employers in U.S. Cut 533,000 Jobs, Most in 34 Years: Table of the Day Following is a summary of the
November employment situation from the Labor Department.

Job Losses Are Worst Since '74

The U.S. lost half a million jobs in November, the largest
monthly drop in 34 years, pushing the unemployment rate to 6.7%, a
15-year high.

China Stimulus Slights Human Capital

China plans to spend $581 billion on a stimulus package,
but just 1% of that is going to social services. That balance needs to
be corrected, many scholars say, if China is to keep growing rapidly
and improving living standards.

Morning Economic News - December 5, 2008

Another indication that Friday's jobs reports will be bad came in with the Monster Employment Index down 22% year-to-year. It wasn't all bad news though, with jobless claims dropping by 21,000 and the weekly rate 15,000 below the 4-week moving average. With the Goldman Sachs prediction after market hours Wednesday of a 400,000 job loss number Friday and the down day on Wall Street Thursday, there is room for a number below analyst expectations to fuel a rebound in stocks Friday.

Futures traders seem to be betting lightly on that Friday rebound, with the Dow Jones Industrial Average future trading up 30 points, the S&P500 future up 2.1 and the NASDAQ future up 2 points. Asian stocks were flat to up Friday, the Nikkei down 0.08% and the Hang Seng up 2.35%. Oil is up slightly, but still below the $45 mark and gasoline still below 99 cents. The dollar is up against the yen. The dollar is down against the Canadian dollar, euro and pound, but by less than 1/10 of a percent.

Yesterday's Economic Numbers

Factory Orders - October 2008

• New Orders: $407.4 billion


• Monthly Change: Down 5.1%

Jobless Claims - December 4, 2008

• Initial Claims: 509,000


• Change from Last Week: Down 21,000

Money Supply - December 4, 2008

• M2 4-Week Average: $7915.0 billion


• M2 Annual Change (Unadjusted): $540.5 billion

Monster Employment Index - November 2008

• Index: 143


• Monthly Change: Down 7


• Year-to-year Change: Down 40 Points

The best sign yet - Record jump in mortgage applications

The Mortgage Bankers Association reported a record weekly increase in
mortgage applications as rates fell on long term Fixed Rate Mortgages
(FRM) last week. Freddie Mac reported rates down for the week ending
December 3, as well, though the rates were higher than the MBAA
reported rates from the week ending November 28, possibly indicating a
minor increase in rates early this week.

Another round of rate drops from Europe, Britain

The European Central Bank and Bank of England both cut rates for the second month in a row.
The Bank of England cut rates by 1%, following a 1.5% cut last month
and the European Central Bank cut by 0.75% on top of a 0.5% cut.

UK Leading Index down more than 4% in 4 months

UK leading economic indicators piled on the bad news for the future with a 1.7% drop in October, following drops of 0.7%, 0.6% and 1.1% the previous three months. The coincident index continued to hang on with another 0.1% increase.

What I'm reading this morning

Fed Weighs Options as Europe Cuts Rates

The Fed is considering taking unconventional steps to
revive the economy as central banks outside the U.S. cut rates more
aggressively.

Housing Market Faces Broader Ills

Treasury's proposal to push down mortgage rates is raising
the housing industry's hopes but won't cure all the woes that have
curtailed sales.

China, U.S. Agree to Counter Credit Crisis, Pledge $20 Billion for Trade China and the U.S. pledged $20 billion
to fund trade and agreed to deepen financial ties, stepping up
efforts to counter the credit crisis in their final economic
talks before President-elect Barack Obama takes office.

Lawmakers Dodd, Frank Warn Paulson May Not Get Second Half of TARP Money Two top U.S. lawmakers warned
Treasury Secretary Henry Paulson that he may not get the second
half of the $700 billion financial rescue fund, joining
Republicans upset with how the program is being managed.

Trichet Under Pressure to Give Deflation Plan as Rates Get Closer to Zero European Central Bank President Jean-
Claude Trichet is under pressure to outline a plan to revive the
euro region’s economy should he be “trapped” into pushing
interest rates closer to zero.

Pimco Sees Pound Bottom as BOE Cuts Rate to Lowest Level Since Churchill The Bank of England’s third interest-
rate cut since the start of October is raising speculation that
the pound’s 26 percent slide may be coming to an end.

Payrolls in U.S. Probably Fell by Most in 26 Years as Recession Deepened U.S. employers probably cut jobs in
November at the fastest pace in a quarter century as the yearlong
recession engulfing the world’s largest economy deepened,
economists said before a report today.

Japan May Allow Tax Breaks on Profits Returned From Abroad to Spur Economy Japan may introduce legislation that
would waive taxes companies pay on profits returned from abroad,
in an effort to help the economy emerge from a recession.

Sarkozy Morphs from `President Bling-Bling' to Champion of Working Class At 4 a.m. on Sept. 30, as the
collapse of Lehman Brothers Holdings Inc. was shaking up
investors on six continents, President Nicolas Sarkozy convened
an emergency meeting at the Elysee Palace in Paris to broker the
bailout of French-Belgian bank Dexia SA. For an hour, he grilled
Finance Minister Christine Lagarde and Bank of France Governor
Christian Noyer on the terms of the 6.4 billion euro rescue
plan, says François Perol, Sarkozy’s economic adviser.

Bank of Japan Struggles in Attempt to Revive Business Loans: Chart of Day Japanese lenders have shrugged off
central bank Governor Masaaki Shirakawa’s attempts to revive
loans to businesses, as a year-end funding crunch drove
borrowing costs to a record high.

Philippine Inflation Eases to Six-Month Low; May Allow Interest-Rate Cut Philippine inflation slowed to a six-
month low in November as food and fuel prices eased, giving the
central bank room to cut interest rates to boost economic growth.

Dutch November HICP Below ECB's Inflation Target Again: Table of the Day Following is a summary of the November
CPI report from the CBS in Voorburg:

German economy could shrink 4 pct in 2009-D. Bank

BERLIN, Dec 5 (Reuters) - The German economy, Europe's
largest, could shrink by up to four percent next year, Deutsche
Bank chief economist Norbert Walter said in comments published
on Friday.

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

Morning Economic News - December 3, 2008

Asian stock markets perked up a bit Wednesday with gains of 1.36% in Hong Kong and 1.79% in Tokyo. US stock market futures are pointing to a down open, off 1% overnight. Oil prices are up half a percent, giving back a fraction of the Monday/Tuesday drop. The old "flight to quality" appears to be in play again as the dollar is up strongly against the euro, pound and Canadian dollar, down less than a tenth of a percent against the yen.

PNC CHRISTMAS PRICE INDEX - Christmas 2008

• PNC Christmas Price Index 2008: $21,080


• Change: Up $1,573


• Percent Change: Up 8.1%


• Core Index (Excluding Swans-a-swimming): Up 1.1%

Price Data Clear Path for Rate Cut

Euro-zone
producer prices fell at their fastest rate on record in October, paving
the way for the ECB to cut interest rates again this week.

EU to Issue Guidelines on Bank Aid

The EU will issue guidelines this month for governments
planning to give money to their banks to support the wider economy,
Kroes said.

Thailand Lowers Benchmark Rate More Than Forecast as Protests Hurt Economy Thailand’s central bank cut its
benchmark interest rate for the first time in 17 months to
support an economy hurt by domestic political turmoil and the
global recession.

U.K. Consumer Confidence Falls to Lowest Since 2004 as Banks Curtail Loans U.K. consumer confidence deteriorated
in November to the weakest in at least four years as
unemployment jumped and banks curtailed credit, Nationwide
Building Society said.

Australian Quarterly Economic Growth Slows to 0.1%, Weakest in Eight Years Australia’s economy grew last quarter
at the weakest pace in eight years as household spending stalled,
increasing pressure on the central bank to add to the biggest
round of interest-rate cuts since a recession in 1991.

India May Increase Spending, Lower Interest Rates After Terrorist Attacks India may boost public spending,
increase export incentives and cut interest rates to support the
economy after the country’s worst terrorist attack in 15 years
last week undermined investor confidence, economists said.

Russian Service Industries Contracted Most on Record Last Month, PMI Shows Russian service industries ranging from
banking and telecommunications to supermarkets shrank in November
by the most on record as the global financial crisis deepened, VTB
Bank Europe’s gauge of industry performance showed.

Pakistan Promises IMF to Raise Interest Rates If Foreign Reserves Tumble Pakistan’s central bank promised the
International Monetary Fund as part of a $7.6 billion bailout
that it will increase interest rates further if the nation’s
foreign reserves drop too low.

Service Industries in U.S. Probably Shrank at Faster Pace as Sales Slumped U.S. service industries probably
contracted in November at the fastest pace on record, sinking
the economy deeper into what may become the worst recession in
decades, economists said before a report today.

Australia Has Scope for More Rate Cuts, Former RBA Chief Macfarlane Says Australia has room to lower interest
rates further and increase government spending to support the
economy amid the current global crisis, former central bank
Governor Ian Macfarlane said.

Finland May Cut 2009 Growth Forecast to Under 0.5%, Finance Minister Says Finland may lower its economic-growth
forecast for next year as the euro region as a whole is already
in a recession, Finance Minister Jyrki Katainen said.

Australia's Economy Expands 0.1 Percent in Third Quarter: Table of the Day Following is a summary of Australia’s key
GDP figures for the third quarter, seasonally adjusted, released by the
Australian Bureau of Statistics in Sydney.

Morning Economic News - December 2, 2008

A little reported but important factor driving yesterday's slaughter on Wall Street was bad news from China. While there was plenty of reporting on a drop in the US Purchasing Managers Index, much less attention was paid to the fact that the same index for China, perhaps the second most important engine of global growth, also dropped sharply. The message from the stock market was clear - there needs to be a trend of solid good news on economic fundamentals for the roller coaster to stop and the market may yet have more bottoms to test when the news is bad. (Fundamentally, Dow 6500-7000 would represent such a cheap market that major players would have to look seriously at trading in the safest assets - Treasury securities and the highest rated investment grade bonds - for stocks.)

Overnight Asian stocks took a serious beating with the Hang Seng down almost 5% and the Nikkei down more than 6%. US stock futures are up about 1% at this hour [5:19 AM Eastern]. The dollar is down against the yen, euro and Canadian dollar, up against the pound. Oil prices have added another 2.5% drop to yesterday's 9.46% drop to put the NYMEX futures contract at $48.03/barrel.

Construction Spending - October 2008

• Total Construction Spending: $1,072.6 billion


• Monthly Change: Down 1.2%


• Year-to-year Change: Down 4.7%

Manufacturing Report on Business - November 2008

• Purchasing Managers Index (PMI): 36.2


• 50+ represents growing economic conditions


• Monthly Change: down 2.7

Trouble in China

Over dinner last week, economic Nobelist Robert Mundell, who advises
the Bank of China and travels there every other month, told me the
Chinese economy is in bad shape. As a bulwark for the global economy,
the China card is fast turning unreliable. Not only are stocks falling
everywhere else in response to this disappointing China news, but
commodity prices like palladium, silver, gasoline, oil, and gold are
all plummeting today. I’ve only seen one news story that reported on
this China economic decline, but I’m convinced it’s the main factor
behind the U.S. stock drop.

Bad Economy Could Cause China Crackup

Let's remember that China a) has been -- along with America -- one of
the primary engines of global economic growth as well as buy of U.S.
bond...

China Is `Heart of Global Slowdown' as Property Slump Stalls Driver of GDP House prices in Shanghai, Shenzhen and
Guangzhou are plunging, and the global economy may grind almost
to a halt next year because of it.

Fed Signals Action As Slump Drags On

The U.S. recession began last December, the National Bureau
of Economic Research said. Bernanke cited actions the Fed is
considering.

Paulson: New TARP Ideas Mulled

Paulson reiterated that the Treasury Department is still
examining new ways to stabilize financial markets, stem foreclosures,
and boost the economy.

'Bernanke-san' Signals Fed Shift, Evoking Bank of Japan's Zero-Rate Policy Federal Reserve Chairman Ben S.
Bernanke signaled he’s ready to dig deeper into the central
bank’s toolkit after cutting interest rates almost as much as he
can, opening the door to a shift by policy makers this month.

Australia Cuts Rates One Percentage Point; RBA Says Policy `Expansionary' Australia’s central bank cut its
benchmark interest rate by one percentage point, extending the
biggest round of reductions since the nation was last in a
recession in 1991.

Bank of Japan Accepts More Bonds as Collateral, Keeps Key Rate Unchanged The Bank of Japan will accept lower-
grade corporate bonds as collateral for loans to banks to help
businesses get access to funds as the country’s recession deepens.

`Great Recession' May Just Be Starting as Job Losses Mount, Credit Shrinks The U.S. economy, now officially in
recession, may be in the midst of the longest slump in the post-
World War II era as job losses mount and credit dries up.

Spanish Jobless Claims Rise for Eighth Month in November, Gaining 6.1% Spain’s jobless ranks swelled for an
eighth month in November, bringing the number of new claims in
the last year to almost a million, as the country heads into its
first recession in 15 years.

Swiss Central Bank Looks for New Tools to Tackle Zero Interest-Rate World The Swiss National Bank is becoming
the first central bank in Europe to learn what it’s like to live
in a zero interest-rate world.

Retailers' Sales Rose 1.9% During Two Days After U.S. Thanksgiving Holiday Sales at U.S. retailers rose 1.9
percent in the two days following the Thanksgiving holiday,
ShopperTrak RCT Corp. said, as a decline on Nov. 29 further
damped the smallest Black Friday gain in three years.

Iceland's Crisis Sends Viking Descendants Back to Native Norway for Jobs Almost 1,200 years after Viking chief
Ingolfur Arnarson left Norway to found Reykjavik, the crisis
engulfing Iceland is forcing his descendants home.

Swiss Inflation Rate Drops More Than Expected, Follows Slide in Oil Price Switzerland’s inflation rate dropped
the most in 15 years in November as the price of oil declined,
giving the central bank more leeway to bolster the economy.