weekly economic financial commentary feb 62009

8/14/2019 Weekly Economic Financial Commentary Feb 62009

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WEEKLY ECONOMIC &FINANCIAL COMMENTARY February 06U.S. Review Global Review

Nominal GDPCompound Annual Growth Rate

-6.0%

-4.0%

-2.0%

0.0%

2.0%

4.0%

6.0%

8.0%

10.0%

2000 2002 2004 2006 2008 2010

-6.0%

-4.0%

-2.0%

0.0%

2.0%

4.0%

6.0%

8.0%

10.0%

Nominal GDP - CAGR: Q4 @ -4.1%

Nominal GDP - Yr/Yr Percent Change: Q4 @ 1.7%

Forecast

Central Bank Policy Rates

0.0%

1.0%

2.0%

3.0%

4.0%

5.0%

6.0%

7.0%

8.0%

9.0%

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009

0.0%

1.0%

2.0%

3.0%

4.0%

5.0%

6.0%

7.0%

8.0%

9.0%

US Federal Reserve: Feb @ 0.25%Bank of England: Feb @ 1.00%ECB: Feb @ 2.00%Reserve Bank of Australia: Feb @ 3.25%

, o

Further Monetary Easing Ab

A number of major centralheld policy meetings this wesome, but not all, cut rates fThe Reserve Bank of Au(RBA) kicked things off on Tby slashing its policy ra100 bps, bringing the total aof easing since September

bps (see chart at left). Commexports are important tAustralian economy, and thglobal recession that is in trasurely exert a slowing effeconomic activity down-undRBA is cutting rates to cushiblow to the domestic econom

Despite the deep global dowthe Australian economy appbe holding up better thanother major economies, at lfar. For example, retail saAustralia shot up 3.8 perc

December from the prmonth, bringing their yeayear rise to a resp5.6 percent. (In contrast, total

Please turn

Recent Special Commentary

Falling Revenues Fuel Layoffs

Employment losses have deepenedconsiderably in recent months andrevisions to previously publisheddata suggest that total job losses forthis recession will now top 6.5million. Nonfarm employmentplunged by 598,000 jobs in Januaryand the unemployment rate rose 0.4

percentage points to 7.6 percent.Both numbers were slightly worsethan consensus estimates.

The January employment data alsoincluded revisions to previouslypublished data going all the wayback to April 2007. The newfigures bring total job losses toslightly over 3.5 million sinceemployment peaked in December2007. The heaviest losses by farhave occurred during the past fivemonths, a period during whichnominal GDP has been negative.

Nominal GDP reflects the volume ofgoods and services producedthroughout the economy and theprice at which they were sold. Inshort, nominal GDP is the revenueof the entire economy. With totalrevenue declining at its worst pacesince the late 1950s, manybusinesses and governments are insurvival mode and have no choicebut to cut jobs.

Please turn to page 2

Date Title Authors

February-05 Buy American Legislation: An Economic Perspective Bryson & Quinla

February-04 Economic Downturn Challenges State and Local Tax Revenue Vitner & Khan

January-28 State Employment: December 2008 Vitner, York & W

January-27 Employment: Digging Under the Headlines Silvia, York & W

U.S. ForecastActual Forecast Actual Forecast

2008 2009 2005 2006 2007 2008 2009 2010

1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q

Real Gross Domestic Product1 0.9 2.8 -0.5 -5.3 -4.0 -1.9 -0.5 0.9 2.9 2.8 2.0 1.2 -2.3 1.0

Personal Consumption 0.9 1.2 -3.8 -4.0 -1.2 0.0 0.6 1.1 3.0 3.0 2.8 0.3 -1.3 1.2

Inflation Indicators2

"Core" PCE Deflator 2.2 2.3 2.3 1.8 1.4 1.1 0.9 1.2 2.1 2.3 2.2 2.2 1.1 1.6

Consumer Price Index 4.2 4.3 5.3 1.8 0.3 -0.6 -1.5 1.8 3.4 3.2 2.9 3.9 0.0 2.5

Industrial Production1 0.4 -3.4 -8.9 -9.2 -9.8 -4.2 -2.0 0.4 3.3 2.2 1.7 -1.6 -6.6 0.9

Corporate Profits Before Taxes2 -1.5 -8.3 -9.2 -17.5 -25.0 -24.0 -20.0 -14.0 17.6 15.2 -1.6 -9.1 -21.0 5.2

Trade Weighted Dollar Index3 70.3 71.0 76.1 79.4 85.7 89.8 92.1 93.3 86.0 81.5 73.3 79.4 93.3 81.2

Unemployment Rate 4.9 5.3 6.0 6.8 7.5 8.1 8.7 9.0 5.1 4.6 4.6 5.8 8.3 9.4

Housing Starts4 1.05 1.03 0.88 0.67 0.56 0.60 0.64 0.66 2.07 1.81 1.34 0.90 0.61 0.80

Quarter-End Interest Rates

Federal Funds Target Rate 2.25 2.00 2.00 0.25 0.25 0.25 0.25 0.25 4.25 5.25 4.25 0.25 0.25 1.00

10 Year Note 3.45 3.99 3.85 2.25 2.70 3.00 3.10 3.10 4.39 4.71 4.04 2.25 3.10 3.80

Data As of: January 14, 20091 Compound Annual Growth Rate Quarter-over-Quarter 3 Federal Reserve Major Currency Index, 1973=100 - Quarter End2

Year-over-Year Percentage Change4

Millions of Units

INSIDEU.S. Review

U.S. Outlook

Global Revie

Global Outl

Point of View

Market Data


2/8

U.S. Review Economics Grou

U.S. Review

Nonfarm Employment ChangeChange in Employment In Thousands

-700

-500

-300

-100

100

300

500

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009

Nonfarm Employment Change: Jan @ -598,000

New Orders Non-Defense Capital Goods Ex-AircraftSeries are 3 Month Moving Averages

-40%

-20%

0%

20%

40%

93 95 97 99 01 03 05 07

3 Month Annual Rate: Dec @ -34.1%

Year/Year Percent Change: Dec @ -7.9%

(Continued from Page 1)

Widespread Job Losses Should Continue in Early 2009

Job losses continue to be exceptionally broad based. Virtuallyevery major industry category shed jobs in January, a trend thathas become all too common. The heaviest job losses continue to bein the goods sector, where construction firms shed 111,000 jobs in

January and factories cut 207,000 positions. Some of the largestcutbacks were in the motor vehicle sector, where extended plantshutdowns led to huge drops in employment and hours worked.Other areas with particularly large cutbacks in January includefabricated metals and industrial machinery. In all, durable goodsproducers slashed 157,000 jobs in January accounting for just overthree-fourths of the loss in manufacturing jobs.

Cutbacks in the durable goods sector are likely to continue.Factory orders declined more than expected in December. Overallorders fell 3.9 percent, following declines of 6.5 percent inNovember and 6.0 percent in October. Orders for non-defensecapital goods excluding aircraft were down 6.3 percent inDecember and plunged at a 34.1 percent annual rate over the pastthree months. Shipments for this same key category fell at less

than half that pace, declining at a 14.9 percent pace, indicating thatfurther production cutbacks will be needed to bring productionand inventories back in line with demand.

There was very little cheer in this weeks other economic reports.Weekly first time unemployment claims rose by 35,000 to 626,000in late January, suggesting that Februarys employment data willonce again post a hefty drop. Unemployment will also likely trendhigher from Januarys 7.6 percent.

Motor vehicle sales came in lower than expected, with cars andlight trucks selling at just a 9.6 million unit annual rate. That pacewas more than half a million units below the consensus estimateand marked the weakest pace for motor vehicle sales since 1982.The weakness in sales will make it even more difficult to clear out

bloated inventories of domestic and imported vehicles, whichmeans declines in production and imports will likely extend for afew more months.

The only good news this week is that nonfarm productivity rose ata 3.2 percent annual rate during the fourth quarter, as businessesslashed hours worked at an even faster rate than output declined.While stronger productivity is a generally a good thing, much ofthe recent gain is likely coming out of necessity. Moreover, the flipside of this report is that businesses have been slashing jobs andhours worked. While these cutbacks are a necessary evil in acapitalist society, they are a very bitter pill to swallow.

Selected Current Data

Gross Domestic Product - CAGR Q4 - 2008 -3.8%

GDP Year-over-Year Q4 - 2008 -0.2%

Personal Consumption Q4 - 2008 -3.5%

Business Fixed Investment Q4 - 2008 -19.1%

Consumer Price Index December - 2008 0.1%

"Core" CPI December - 2008 1.8%

"Core" PCE Deflator December - 2008 1.7%

Industrial Production December - 2008 -7.8%

Unemployment January - 2009 7.6%

Federal Funds Target Rate Feb - 06 0.25%

Productivity - Nonfarm Sector

-4.0%

-2.0%

0.0%

2.0%

4.0%

6.0%

8.0%

10.0%

12.0%

95 96 97 98 99 00 01 02 03 04 05 06 07 08

-4

-2

0

2

4

6

8

1

1

Qtr/Qtr Annual Rate: Q4 @ 3.2%

Year/Year Percent Change: Q4 @ 2.7%


3/8

U.S. Outlook Economics Grou

International Trade Balance WednesdayThe trade deficit narrowed considerably to $40.4 billion inNovember from $56.7 billion, dropping to a five-year low. Aollapse in the value of oil imports explains much of the decline.

However, non-oil imports weakened sharply as well, reflectingweakness in the domestic economy. Meanwhile, foreign recessionsare causing exports to decline.

t is clear that the combination of a global recession and the globalredit crunch is causing worldwide trade to dry up. The trade

deficit should continue to improve due in part to the decline in oilprices. Crude oil prices came off roughly 18 percent in December.We expect the trade deficit to continue to narrow to $36.0 billion inDecember. The real trade balance, which is used to calculate realGDP, should also narrow.

Previous: -$40.4 B Wachovia: -$36.0 B

Consensus: -$36.4 B

U.S. Exports and ImportsYear-over-Year Percent Change, 3-Month Moving Average

-20%

-10%

0%

10%

20%

30%

94 95 96 97 98 99 00 01 02 03 04 05 06 07 08

-

-

0

1

2

3

Exports: Nov @ 4.0%

Imports: Nov @ -0.1%

Retail Sales ThursdayRetail sales plunged 2.7 percent in December, the sixth consecdecline. Revisions were substantial with November fallinpercent. Core retail sales, which excludes gasoline statbuilding materials and autos, fell 1.4 percent. The biggest dropin gasoline station sales, which fell 15.9 percent.

We expect retail sales will decline 0.2 percent in January with mvehicle sales continuing to pull down the headline number. vehicle sales registered 9.6 million units in January, the lowest 1982. Same store sales continue to show consumers pulling bacdiscretionary items with department store sales down shaRetail sales excluding autos should increase 0.6 percent due into a slight uptick in prices at the pump.

Retail Sales Ex-Motor Vehicles & Gasoline Stations3-Month Moving Averages

-12.5%

-10.0%

-7.5%

-5.0%

-2.5%

0.0%

2.5%

5.0%

7.5%

10.0%

12.5%

15.0%

96 97 98 99 00 01 02 03 04 05 06 07 08

-12.5%

-10.0%

-7.5%

-5.0%

-2.5%

0.0%

2.5%

5.0%

7.5%

10.0%

12.5%

15.0%

Sales, Year/Year Percent Change: Dec @ -1.1%

3-Month Annual Rate: Dec @ -10.0%

Previous: -2.7% Wachovia: -0.2%

Consensus: -0.4%

Business Inventories ThursdayBusiness inventories declined for the third consecutive month inNovember providing further evidence of a tough fourth quarter forbusiness spending. The inventory-to-sales ratio continued to climbas sales fell faster than business owners could cut production.

We expect business inventories to continue to decline in December

due to the abruptness and depth of the current economic weaknesswhich caught many producers, wholesalers and retailers byurprise. As a result, many had far too much raw material, work-n-process and finished product. Wholesalers and retailers alike

will look to curtail orders for new products, and manufacturers willhave to continue to cut back output. Unintentional inventoryncreases during a weak growth period pose a considerable risk to

production activity. We expect production will fall through thenext three quarters.

Previous: -0.7%

Consensus: -0.6%

Business InventoriesTotal Inventory-to-Sales Ratio

1.20

1.25

1.30

1.35

1.40

1.45

1.50

1.55

1.60

92 94 96 98 00 02 04 06 08

Total Inventory to Sales Ratio: Nov @ 1.41


4/8

Global Review Economics Grou

Global Review

UK Purchasing Managers IndicesDiffusion Indices

25

30

35

40

45

50

55

60

65

2000 2002 2004 2006 2008

UK Services: Jan @ 42.5

UK Construction: Jan @ 34.5

UK Manufacturing: Jan @ 35.8

(Continued from Page 1)

spending in the United States plunged 9.8 percent in December.)Tax rebates that were legislated last autumn helped to boostAustralian retail sales in December. But thats exactly the point.Australian policymakers (both monetary and fiscal) are takingaggressive steps to stimulate the economy. Although Australia mayyet slip into recession, the downturn down-under probably will beless severe than in most other major economies.

As widely expected, the Bank of England cut its policy rate byanother 50 bps on Thursday. In its statement announcing the move,the Bank said that output thus far in the first quarter continues tocontract at a very sharp rate. Indeed, real GDP in the fourth quarterdeclined at an annualized rate of 5.9 percent, the sharpest rate ofcontraction since the very deep recession of the early 1980s. Asshown in the top chart, the purchasing managers indices for themanufacturing, construction and service sectors all edged a bithigher in January. That said, the indices remain in territory that isconsistent with sharp contraction. In our view, the Bank of Englandwill cut its main policy rate which already stands at an all-timelow of 1.00 percent even further in the months ahead as the

British economy remains mired in deep recession.The European Central Bank probably has more cutting to do aswell. However, it did not exercise that option at its policy meetingthis week, choosing instead to keep its policy rate unchanged at2.00 percent. The ECB said that it had anticipated the sharp drop ineconomic activity that has occurred since it last met in earlyJanuary, and it had responded to that anticipation by cutting rateslast month. By that logic, the ECB would be on hold unless theeconomy weakens more than anticipated.

As noted above, we believe the ECB will eventually cut ratesfurther. Although the purchasing managers indices for themanufacturing and service sectors edged higher in January, theyboth remain in deep recession territory (see middle chart).Economic weakness likely will cause CPI inflation to decline

further. Indeed, the overall rate of CPI inflation fell to 1.6 percent inDecember, and the preliminary estimate for January printed at only1.1 percent, the lowest rate in nearly 10 years. In our view, severeeconomic weakness and rapidly declining inflation will give theECB scope to ease policy further in the months ahead.

European ManufacturingPurchasing Manager Indices

30

35

40

45

50

55

60

65

2000 2002 2004 2006 2008

Euro-zone PMI: Jan @ 34.4

U.K. PMI: Jan @ 35.8

Selected Global Data

Japan GDP Year-over-Year Q3 - 2008 -0.5%

CPI December - 2008 0.4%

Unemployment December - 2008 4.4%

BoJ Target Rate Feb - 06 0.10%

Euro-Zone GDP Year-over-Year Q3 - 2008 0.6%

CPI December - 2008 1.6%Unemployment December - 2008 8.0%

ECB Target Rate Feb - 06 2.00%

UK GDP Year-over-Year Q4 - 2008 -1.8%


Unemployment December - 2008 3.6%

BoE Target Rate Feb - 05 1.00%

Canada GDP Year-over-Year November - 2008 -0.8%


Unemployment January - 2009 7.2%

BoC Target Rate Feb - 06 1.00%

Euro-zone Consumer Price IndexYear-over-Year Percent Change

0.0%

1.0%

2.0%

3.0%

4.0%

5.0%

1997 1999 2001 2003 2005 2007 2009

CPI: Dec @ 1.6%


5/8

Global Outlook Economics Grou

U.K. Unemployment Rate WednesdayBritish real GDP fell at an annualized rate of 5.9 percent in theourth quarter, the sharpest sequential rate of contraction since

1980. Indeed, the current slump appears to be the deepest recessionhat Great Britain has suffered since the very painful downturn ofhe early 1980s. The unemployment rate already exceeds six

percent, and the only question seems to be: How high will it go?

The Bank of England will also release its quarterly Inflation Report on Wednesday. The Banks forecasts for GDP growth and CPInflation over the next two years will help investors judge how

much more monetary easing the Bank may undertake. Data onhouse prices in January, which are on the docket for Monday, andhe trade balance in December, which are slated for release on

Tuesday, round out a busy week in terms of U.K. economic data.

Previous: 6.1%

Consensus: 6.3%

U.K. Unemployment RateSeasonally Adjusted

4.0%

4.5%

5.0%

5.5%

6.0%

6.5%

7.0%

7.5%

8.0%

1997 1999 2001 2003 2005 2007

4

4

5

5

6

6

7

7

8

Unemployment Rate: Oct @ 6.1%

Euro-zone Real GDP Growth FridayReal GDP in the Euro-zone declined 0.2 percent (not annualizethe third quarter, and most monthly indicators suggest that theof contraction rose significantly in the fourth quarter. Indeedestimate that real GDP fell one percent in the fourth quarter.only did exports fall sharply, but growth in consumer spenprobably turned negative as well last quarter. The Euro-appears to have slipped into its first recession, which incidentaa deep one, since the inception of European Monetary Unio1999.

Most major countries in the Euro-zone also release their indiviGDP growth figures on Friday, and the results are not expectbe pretty. We project that the German, French, and It

economies (among others) all contracted markedly in the foquarter.

Euro-zone Real GDPBars = Compound Annual Rate Line = Yr/Yr % Change

-1.0%

0.0%

1.0%

2.0%

3.0%

4.0%

5.0%

2000 2001 2002 2003 2004 2005 2006 2007 2008

-1.0%

0.0%

1.0%

2.0%

3.0%

4.0%

5.0%

Compound Annual Growth: Q3 @ -0.8%

Year-over-Year Percent Change: Q3 @ 0.6%

Previous: -0.2% (not annualized) Wachovia: -1.0%

Consensus: -1.3%

G-7 Meeting FridayFinance ministers and central bank governors will gather in Romenext weekend for their semi-annual meeting. With the globaleconomy mired in its worst recession in the post-World War II era,nvestors anxiously await steps that governments can take on aoordinated basis to help bring the current financial crisis to an

end. G-7 meetings often serve as forums in which policymakersrom major countries pledge cooperation to tackle pressing

economic and financial problems.

t is expected in many corners that U.S. policymakers will announceteps next week to buy toxic assets from U.S. banks and place the

assets in a bad bank. If so, pressure will be on other countries toannounce similar steps. In addition, more fiscal stimulus measuresould be announced next weekend.

OECD Industrial ProductionYear-over-Year Percent Change

-9%

-6%

-3%

0%

3%

6%

9%

96 97 98 99 00 01 02 03 04 05 06 07 08

OECD Industrial Production: Oct @ -4.8%


6/8

Point of View Economics Grou

Interest Rate Watch Topic of the Week

Central Bank Policy Rates

0.0%

1.5%

3.0%

4.5%

6.0%

7.5%

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009

0.0%

1.5%

3.0%

4.5%

6.0%

7.5%

US Federal Reserve: Feb - 6 @ 0.25%ECB: Feb - 6 @ 2.00%Bank of Japan: Feb - 6 @ 0.10%Bank of England: Feb - 6 @ 1.00%

Yield CurveUS Treasuries, Active Issues

0.00%

0.50%

1.00%

1.50%

2.00%

2.50%

3.00%

3.50%

4.00%

3M 2Y 5Y 10Y

30Y

0.00%

0.50%

1.00%

1.50%

2.00%

2.50%

3.00%

3.50%

4.00%

February 6, 2009

January 30, 2009

January 6, 2009

Weak Jobs Suggest Continued FedEasing

Todays weak employment reportreinforces our view that the Fed willkeep the funds rate in the 0-25 basispoint range. Moreover, given the

weakness in consumer spending, weexpect that the Fed will continue tosupport consumer related asset backedfacilities by buying commercial paperand asset backed paper. Financialstability and economic recoverycontinue to be the primaryintermediate-term policy targets for theFed. The recession will continue atleast through the first half of this year.

Because of continued economicweakness we expect that the Fed willmaintain its expanded balance sheet tosupport financial markets. The Fed will

continue with its outright purchases ofGovernment Sponsored Enterprise(GSE) debt and Agency mortgagebacked securities and asset-backedpaper. Monetary policy continues toadjust to an environment of economicrecession, lower inflation expectationsand the imbalance of asset valuations.

But Weak Jobs Also Raise CreditConcerns

Credit quality will be challenged.Weak jobs suggest weak consumerspending and rising delinquency rates

for all consumer-related debt. Formany businesses top line revenuedeclines will reflect lower consumerspending. For many firms, the hit tocash flow and ultimately profitsdictates wider credit spreads in themarketplace.

Finally, weaker economic growthdictates weaker public sector revenuesand thereby a squeeze on publicfinances. Longer dated federal andstate debt will begin to reflect thiscredit/revenue issue in a steeper yieldcurve and perhaps even creditdowngrades al l California.

Forward Rates90-Day EuroDollar Futures

1.00%

1.25%

1.50%

1.75%

2.00%

2.25%

Jun 09 Sep 09 Dec 09 Mar 10 Jun 10 Sep 10

1.00%

1.25%

1.50%

1.75%

2.00%

2.25%

February 6, 2009January 30, 2009January 6, 2009

Economic Downturn Challenges Sand Local Tax Revenue

The recession is taking a heavy tolstate and local tax revenue. Wroughly 77 percent of total tax revenationwide coming from inco

property and sales tax recerevenues are under pressure on neevery front. Layoffs are cutting income tax receipts, while falling hprices and the faltering stock maare hitting a whole variety of taxesfees.

Personal income tax receipts will libe reduced considerably during coming year due to a weakened lmarket. The economy has shed mthan 3.5 million jobs since the recesbegan, with more than 1.5 million eliminated during the fourth qua

alone. With layoff announcempicking up at the start of the year,expect total job losses to eventureach more than five million.

To meet balanced-burequirements, many state and lgovernments are either pulling bacspending, raising taxes or bSpending cuts are one of the options open to state and lgovernments in the short term, many have cut spending dramaticUnfortunately, more cuts are li

unless funding can be secured fromfederal government. Raising taxesrecession often creates more problthan it solves.

The recovery for state and localrevenue should lag the oveconomic recovery as unemployment rate tends to peak after the recession ends. We expectunemployment rate to peak in earlmid-2010, which means state and ltax revenue will likely remchallenged until 2010.

Read our report on the topic here.

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7/8

Market Data Economics Grou

Market Data Mid-Day FridayU.S. Interest Rates Foreign Interest Rates

Friday 1 Week 1 Year Friday 1 Week 1 Year

2/6/2009 Ago Ago 2/6/2009 Ago Ago

3-Month T-Bill 0.28 0.23 2.08 3-Month Euro LIBOR 2.02 2.09 4.36

3-Month LIBOR 1.24 1.18 3.13 3-Month Sterling LIBOR 2.12 2.17 5.59

1-Year Treasury 0.49 0.47 1.82 3-Month Canadian LIBOR 1.50 1.62 3.92

2-Year Treasury 0.96 0.95 1.92 3-Month Yen LIBOR 0.66 0.67 0.87

5-Year Treasury 1.92 1.88 2.65 2-Year German 1.40 1.53 3.25

10-Year Treasury 2.95 2.84 3.59 2-Year U.K. 1.70 1.50 4.13

30-Year Treasury 3.65 3.60 4.35 2-Year Canadian 1.13 1.41 3.05

Bond Buyer Index 4.96 5.16 4.33 2-Year Japanese 0.42 0.41 0.58

10-Year German 3.36 3.30 3.90

Foreign Exchange Rates 10-Year U.K. 3.74 3.70 4.46

Friday 1 Week 1 Year 10-Year Canadian 3.00 3.05 3.79

2/6/2009 Ago Ago 10-Year Japanese 1.34 1.30 1.41

Euro ($/) 1.287 1.281 1.463

British Pound ($/) 1.477 1.454 1.962 Commodity Prices

British Pound (/) 0.871 0.881 0.746 Friday 1 Week 1 Year

Japanese Yen (/$) 91.794 89.920 106.540 2/6/2009 Ago Ago

Canadian Dollar (C$/$) 1.241 1.230 1.006 W. Texas Crude ($/Barrel) 39.43 41.68 87.14

Swiss Franc (CHF/$) 1.168 1.162 1.098 Gold ($/Ounce) 912.31 927.85 900.60

Australian Dollar (US$/A$) 0.670 0.638 0.896 Hot-Rolled Steel ($/S.Ton) 475.00 475.00 670.00

Mexican Peso (MXN/$) 14.168 14.333 10.819 Copper (/Pound) 157.20 146.20 330.75

Chinese Yuan (CNY/$) 6.835 6.852 7.184 Soybeans ($/Bushel) 9.73 9.61 12.78

Indian Rupee (INR/$) 48.691 48.875 39.520 Natural Gas ($/MMBTU) 4.64 4.42 7.99

Brazilian Real (BRL/$) 2.259 2.323 1.752 Nickel ($/Metric Ton) 11,386 11,349 26,575

U.S. Dollar Index 85.716 85.999 76.141 CRB Spot Inds. 339.33 331.60 478.12

Next Weeks Economic Calendar

Monday Tuesday Wednesday Thursday Friday

9 10 11 12 13

Wholesale Inventories Trade Balance Retail Sales Univ. of Mich. Confidenc

November -0.6% November -$40.4B December -2.7% January 61.2

December -0.7% (c) December -$36.0B (W) January -0.2% (W) February 61.0 (c)

Retail Sales Less Autos

December -3.1%

January 0.6% (W)

Business InventoriesNovember -0.7%

December -0.9% (c)

Japan UK Euro-zone

Machine Orders (MoM) Unemployment Rate GDP (QoQ)

Previous (Nov) -16.2% Previous (Nov) 6.1% Previous(3Q) -0.2%

China

Trade Balance (USD)

Previous (Dec) $38.98 B

Note: (W) = Wachovia Estimate (c) = Consensus Estimate

U.S.Data

GlobalData


8/8

Wachovia Economics Group

John E. Silvia, Ph.D. Chief Economist (704) 374-7034 [email protected]

Mark Vitner Senior Economist (704) 383-5635 [email protected]

Jay H. Bryson, Ph.D. Global Economist (704) 383-3518 [email protected]

Sam Bullard Economist (704) 383-7372 [email protected]

Anika Khan Economist (704) 715-0575 [email protected]

Azhar Iqbal Econometrician (704) 383-6805 [email protected]

Adam G. York Economic Analyst (704) 715-9660 [email protected]

Tim Quinlan Economic Analyst (704) 374-4407 [email protected]

Kim Whelan Economic Analyst (704) 715-8457 [email protected]

Yasmine Kamaruddin Economic Analyst (704) 374-2992 [email protected]

Wachovia Corporation Economics Group publications are distributed by Wachovia Corporation directly andthrough subsidiaries including, but not limited to, Wachovia Capital Markets, LLC, Wachovia Securities, LLC andWachovia Securities International Limited.

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weekly economic financial commentary feb 62009

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