Morning Economic News - January 27, 2009

Commentary and Overnight Trading

While investors were understandably excited over the double upside surprise Monday - actual increases in both the Existing Home Sales Index and the Leading Index - there are a few notes of caution appropriate going into Tuesday. First, the big housing indicator due out Tuesday is the Case-Shiller Price Index, which is very unlikely to post an upward surprise. The Existing Home Sales report showed a fairly sizeably month-to-month drop in home prices and the Case-Shiller index, which focuses on the most overheated big metro markets has performed worse on prices than the existing home sales report for several months. It's doubtful that the trend is going to reverse right now. Second, that increase in the Leading Index was driven heavily by Federal Reserve actions which boosted two components of the index directly, the money supply and the interest rate spread. There was very little evidence that those actions had bled through to affect other leading indicators and no indication that there were any current effects, as the Coincident Index fell 0.5%.

On the other hand, the Existing Home Sales report is usually considered a lagging indicator. In normal times, this would mean that existing home sales would not start to rise until after the general economy was beginning to recover. Because this recession is driven so heavily by the housing market, that probably doesn't apply completely, but it is still reason to consider the good news especially good.

Oil markets seem to be liking the news, with the futures price north of $46 in spite of the dollar rising against the yen and the Canadian dollar. The dollar had risen against the pound and euro earlier, but is currently down a quarter to half percent against those currencies. [1:02 AM Eastern] Japan's Nikkei index is up more than 5.5% with an hour and a half left to the close. US stock market futures are up more than 1% for the three major indexes.

Monday's Economic Numbers

Existing Home Sales - December 2008

• Total Existing Home Sales Annual Rate: 4.74 million units


• Monthly Change: Up 6.5%

Leading Index - December 2008

• Leading Index: Up 0.3%


• Coincident Index: Down 0.5%


• Lagging Index: Down 0.4%

What I'm Reading

Goldman Sachs: Economy Looks Bad for 2010. Sorry, Democrats.

Big Mideast Funds Scale Back

Sovereign wealth funds, among the stars of last year's World Economic Forum, are a lot more skittish this time around.

U.S. Retail Sales Are Expected to Drop

U.S. retail sales are forecast to decline 0.5% this year as
consumers continue to pull back, according to the National Retail
Federation.

Fed Move Into `Uncharted Waters' Spurs Pressure to Overhaul Its Forecasts Federal Reserve officials are
considering an overhaul of their economic forecasting, aiming to
make clear their objectives for growth and inflation in the aftermath of the longest recession since the 1930s.

Bank of Japan Focusing on Easing Corporate Borrowing Costs, Minutes Show Bank of Japan policy board members
said they should focus on lowering longer-term borrowing costs
for companies after cutting the overnight rate to 0.l percent in
December, meeting minutes show.

Subbarao May Keep Indian Interest Rates on Hold After Cutting to Record India's central bank Governor Duvvuri
Subbarao may keep interest rates unchanged today after lowering
them to a record this month.

Australian Business Confidence Rises From Record Low on Stimulus Measures Australian business confidence rose
in December from a record low as a government stimulus package
and the most aggressive interest-rate cuts since the last
recession in 1991 buoyed consumer spending.

Germany's Business Confidence May Drop to 26-Year Low as Recession Deepens German business confidence probably
fell to the lowest level in more than 26 years in January as the
global recession damped exports, prompting companies to curb
production and cut jobs.

Philippine Imports Fell Most in 10 Years in November Amid Slowing Demand Philippine imports fell the most in
10 years in November as manufacturers reduced purchases amid
slowing demand at home and abroad.

Morning Economic News - January 26, 2009

Commentary and Overnight Trading

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

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

What I'm Writing

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

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

What I'm Reading

GM to Invest TARP Dough in Brazil

World's Elite Visit Davos in Doubt

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

Reports to Reveal Shoppers' Cutbacks

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

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

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

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

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

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

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

Morning Economic News - January 23, 2009

Commentary and Overnight Trading

The Nikkei dropped more than 3% Friday and the S&P/ASX200 has dropped more than 4% on bad news from the Australian mining sector. The Hang Seng was down 3% earlier, but is near even now [2:44 AM Eastern]. US stock market futures are down a little less than 1%. Oil prices have dropped but remain well above $42/barrel. The dollar is up strongly against the euro and pound, up a bit against the loonie and down slighlty against the yen.

Thursday's Economic News

Housing Starts - December 2008

• Housing Starts: 550,000


• Monthly Change: Down 15.5%


• Year-to-year Change: Down 45%


• 1-Family Monthly Change: Down 13.5%

Jobless Claims - January 22, 2009

• Initial Claims: 589,000


• Change from Last Week: Up 62,000

Money Supply - January 22, 2009

• M1 Seasonally Adjusted Prior Month: $1595.8 billion


• M1 Annual Change (Unadjusted): $238.3 billion

Weekly Mortgage Applications Survey - January 22, 2009

• Purchase Index: 303.1


• Change: Up 2.5%

German economy took big hit in November

The Leading Index for Germany fell 2.2% in November and the Coincident
Index fell 0.5%, according to a Conference Board report released
Thursday. Only three of the eleven indicators included in the indexes
improved.

What I'm Writing

Markets shrug off another big oil inventory gain

The weekly oil report from the US Energy Department showed a big
increase in total commercial petroleum stocks, including increases in
crude oil and all the major refined products except propane, which is
used heavily for heating in the rural Midwest which just experienced a
cold snap. Other tidbits from the report included a substantial drop in
refinery activity and continued drops year-to-year in gasoline
consumption despite a price drop of 39% from this time last year.

New purchase applications up despite rate increase, trouble in refinances

Despite the increase in rates, the Mortgage Bankers Association reported a 2.5% increase in purchase mortgage applications.

The Banker's Depression

Meanwhile, bankers are just sitting on a pile of new money - the
Federal Reserve has printed and put in bank reserves $238 billion new
dollars in the last 12 months. That's a massive 15% increase in the
monetary base (M1 for the technically minded). But bankers aren't
lending it.

What I'm Reading

Microsoft Job Cuts: Layoffs Good News for Economy

I would bet that these job cuts are going to force a lot of people to
find their inner-entrepreneur. These ex-Microsofties are going to end
up starting a lot of small businsees that may eventually grow in size
to become some pretty profitable companies. Who knows, Microsoft may
inadvertently be creating another Gooogle or Apple or, yes, Microsoft.
Creative destruction, gang

Tough GOPers Stand Up to Geithner; All GOPers Should Counter Keynesian Stimulus

Right now capital is on strike. So are investors. Supply-side incentives will bring them back. This is where the GOP must go.

Fed Likely to Focus on Rates, Loans

Fed officials are likely next week to keep their approach for handling the financial crisis, despite internal divisions.

Housing Starts in U.S. Tumble 16% to Lowest on Record as Credit Dries Up Home prices in the U.S. dropped the
most in at least 18 years and builders broke ground on the
fewest houses since record-keeping began as the recession
deepened, government reports said today.

Australia May Cut Interest Rate Below 2% Amid Deep Recession, Fraser Says Australia’s central bank may more
than halve its benchmark interest rate as the nation enters a
long and deep recession, former Governor Bernie Fraser said.

China's Slowdown to Deepen as Recession Pummels Exports, Asian Suppliers China’s economic slowdown, already
the deepest in seven years, is set to worsen as the global
recession pummels its exports, darkening the outlook for
suppliers from Australia to Taiwan.

Geithner Warning on Yuan May Trigger Renewed U.S.-China Economic Tensions Timothy Geithner’s warning that
President Barack Obama believes China is “manipulating” its
currency may trigger renewed tensions between two of the world’s
three biggest economies.

JPMorgan Forecasts Larger Australian Rate Cut Next Month Amid Global Slump JPMorgan Chase & Co. forecasts the
Australian central bank will cut its benchmark interest rate by
1 percentage point next month, double its previous prediction,
amid a deepening slump in the nation’s major export markets.

Singapore Lowers Corporate Tax, Spends Record Amount Amid Worst Recession Singapore cut corporate taxes for
the second time in three years and said it will tap its reserves
to fund record spending amid efforts to drag the island’s
economy out of its deepest recession since independence.

Roubini Says China Is in Recession Despite `Massaged' Economic Growth Data China is in a recession despite
government statistics today showing the world’s third-largest
economy expanded in the fourth quarter from a year earlier,
according to Nouriel Roubini, the New York University professor
who predicted last year’s economic crisis.

Mining Boom Turns to Bust in Western Australia, Raising Risk of Recession Michael Smith moved 2,500 miles
across Australia in July to earn A$120,000 ($80,000) as a
blaster. Now the 30-year-old explosives expert is a motorcycle
courier making half his former wage.

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 20, 2009

Commentary and Overnight Trading

The opening bell of the New York Stock Exchange will be rung at Federal Hall, the site of the first Presidential inauguration, in celebration of the inauguration of President-elect Barack Obama and likely kicking off a losing morning session. US stock market futures are down 1.6% from Friday's close and Asian markets are down 2 to 3% Tuesday [1:10 AM Eastern]. Oil is down more than $2 since Friday and nearing the $34 mark. The dollar is up against the euro, pound and Canadian dollar, down against the Japanese yen.

What I'm Writing

Financial Roadmap: The Week Ahead January 19 to 23, 2009

The three major indicators this week are split between confidence readings and housing markets with one focused on both.

What I'm Reading

Korean Fund Ponders Selling U.S. Treasurys

South Korea's national pension fund said it may sell U.S. Treasurys because
of the prospect that they'll become less profitable and stoke inflation.

Treasury Demands Banks Provide Lending Data as U.S. Tries to Revive Credit The U.S. Treasury, under pressure to
revive lending, is demanding monthly reports from the banks that
received the most capital from the government's $700 billion
rescue program.

Brown Tightens Grip on Financial System, Hands BOE Power to Buy Securities Prime Minister Gordon Brown’s
government tightened its grip on Britain’s financial system,
guaranteeing toxic assets and giving the Bank of England
unprecedented power to buy securities.

Japan's Consumer Sentiment Tumbles to Record Low as Job Prospects Dwindle Japan’s consumers became the most
pessimistic in at least 26 years, indicating households are
likely to keep cutting back as the recession deepens.

China Faces Worst Unemployment in Decades as Economy Cools, Exports Slump China’s official urban unemployment
rate jumped for the first time since 2003 and may climb to an
almost 30-year high as exports slump and a slowdown deepens in
the world’s third-biggest economy.

Trichet Says Economy Will Be `Substantially' Worse Than Forecast This Year European Central Bank President Jean-
Claude Trichet said the outlook for the euro-region economy is
“substantially” worse than the bank predicted a month ago.

Europe's Economy to Shrink for First Time Since Euro Introduction, EU Says The euro-area economy will contract
this year for the first time since the currency was introduced a
decade ago, the European Commission forecast, cutting its outlook
for the region amid the worst financial crisis since World War II.

Premier Key Says New Zealand Is Ready to Bail Out Its Important Companies New Zealand’s government is ready to
lend to any strategically important company that was unable to
borrow directly amid a global credit freeze, Prime Minister John
Key said today.

European Finance Officials Defend Budget Discipline Even as Deficits Soar European finance officials defended
the credibility of their budget rules even as they ramp up
deficit spending to fight the worst recession since World War II.

Morning Economic News - January 16, 2009

Unfortunately due to technical problems I can't do my usual complete roundup of yesterday's economic news for a second day, but with the big news that came out about 2 hours ago, I am going to write a brief post today. Regular reports will resume Monday the 19th.

About 11 PM the Treasury Department, FDIC and Federal Reserve announced an aid package for the Bank of America. Specifically, the agencies are providing "protection against the possibility of unusually large losses on an asset pool of approximately $118 billion of loans". These loans have already been written down to their current, discounted market value. The bank has to meet some fairly stringent conditions including "enhanced executive compensation restrictions" and a "mortgage loan modification program". Treasury also announced that it's extending its Temporary Liquidity Guarantee Program up to 10 years for banks that do new consumer lending.

Major points:

1 - This is a big commitment, but should ultimately free up a lot of capital for new lending, a multiple of the amount involved.

2 - It addresses two of the biggest complaints about the string of financial bailouts - spendthrift executives getting big bonuses at taxpayer expense for driving their companies into the ground and banks accepting bailout funds and continuing not to lend.

3 - The B of A package addresses mortgage modification to attack the problem loans from the bottom as well as the top.

4 - This has been coming for a while and markets had it priced in over the last week.

Markets seem to be responding well to the news, with US stock market futures up just under 1% [2:50 AM Eastern]. The dollar is down against the euro, Canadian dollar and pound, but up against the yen - a reversal of the pattern that's been "normal" the last couple of weeks and may simply represent profit taking. The Nikkei closed up 2.58% and the Hang Seng is down a fraction of a percent. Oil is up less than half a percent.

Treasury press release follows:

anuary 16, 2009
HP-1356

Treasury, Federal Reserve and the FDIC Provide Assistance to Bank of America

Washington, DC – The U.S. government entered into an agreement today with Bank of America to provide a package of guarantees, liquidity access and capital as part of its commitment to support financial market stability.

Treasury and the Federal Deposit Insurance Corporation will provide protection against the possibility of unusually large losses on an asset pool of approximately $118 billion of loans, securities backed by residential and commercial real estate loans, and other such assets, all of which have been marked to current market value. The large majority of these assets were assumed by Bank of America as a result of its acquisition of Merrill Lynch. The assets will remain on Bank of America's balance sheet. As a fee for this arrangement, Bank of America will issue preferred shares to the Treasury and FDIC. In addition and if necessary, the Federal Reserve stands ready to backstop residual risk in the asset pool through a non-recourse loan.

In addition, Treasury will invest $20 billion in Bank of America from the Troubled Assets Relief Program in exchange for preferred stock with an 8 percent dividend to the Treasury. Bank of America will comply with enhanced executive compensation restrictions and implement a mortgage loan modification program.

Treasury exercised this funding authority under the Emergency Economic Stabilization Act's Troubled Asset Relief Program (TARP). The investment was made under the Targeted Investment Program. The objective of this program is to foster financial market stability and thereby to strengthen the economy and protect American jobs, savings, and retirement security.

Separately, the FDIC board announced that it will soon propose rule changes to its Temporary Liquidity Guarantee Program to extend the maturity of the guarantee from three to up to 10 years where the debt is supported by collateral and the issuance supports new consumer lending.

With these transactions, the U.S. government is taking the actions necessary to strengthen the financial system and protect U.S. taxpayers and the U.S. economy. As was stated in November when the first transaction under the Targeted Investment Program was announced, the U.S. government will continue to use all of our resources to preserve the strength of our banking institutions and promote the process of repair and recovery and to manage risks.

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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