January 13 – We have to say that the pace of dour news slowed a bit this week, a trend that we are hopeful will continue. However, there is still much misery out there, and expectations are that the underlying fundamentals of the U.S. economy will continue to erode as businesses circle the wagons around their cash positions and remaining available credit, which will result in more jobs lost.

Our expectations for this recession are for it to run pretty deep in light of the fact that there is so much consumer infrastructure built in the U.S. which just needs to be shut down as consumers, we hope, begin finding more of a balance and start saving. Savings rates as a percentage of disposable income have fallen in recent years to 0.4% and when consumer credit gets factored in, it turns negative. This was an unsustainable pace. We are hopeful that Washington is learning the lessons and will begin advocating a more balanced approach for the nation. Obamarsquo;s stimulus plan seems to get it, because if consumers, who represent more than 70% of GDP arenrsquo;t going to be the ones that get economy kick-started again, government investments in infrastructure just may. And at least in this case this is a move towards investments in asset bases like our energy infrastructure, which just may create more jobs down the road.

middot;nbsp;nbsp;nbsp;nbsp;nbsp;nbsp;nbsp;nbsp; Consumer Confidence ndash; The Michigan Consumer Confidence Survey said its confidence rating slid to 56.2 in February from 61.2 in January. The record low was set in May, 1980 at 51.7.nbsp;nbsp;

middot;nbsp;nbsp;nbsp;nbsp;nbsp;nbsp;nbsp;nbsp; Job Cuts ndash; KV Pharmaceutical (700 jobs), Beazer Homes (300 jobs), GM (150 jobs and then announced another 10,000 jobs for the year ndash; so, with 3,400 U.S. jobs), FedEx (900 jobs), InterContinental Exchange (40 to 55 jobs), Wal-Mart (700-800 jobs), Zenith National (100 jobs), Sensata (100 jobs), Alcon (260 jobs), Greenbriar (150 jobs), Toro (100 more jobs), Bryan Cave (laying off 58 lawyers and 76 staff), TRW Automotive (45 jobs), BlueScope (53 jobs),nbsp;nbsp;

middot;nbsp;nbsp;nbsp;nbsp;nbsp;nbsp;nbsp;nbsp; Weekly Jobless Claims ndash; The Labor Department reported that 623,000 initial claims were filed last week, higher than expectations of 610,000. Continuing claims rose to 4.81 million from 4.78 million ndash; the highest level since records began back in 1967.nbsp;nbsp;

middot;nbsp;nbsp;nbsp;nbsp;nbsp;nbsp;nbsp;nbsp; Samp;P Performance ndash; Samp;P sales fell 9.8% in the October-December period and on average, companies lost $10.44 per share.nbsp;nbsp;

middot;nbsp;nbsp;nbsp;nbsp;nbsp;nbsp;nbsp;nbsp; Business Inventories ndash; Business inventories fell by 1.3%, more than the 0.9% expected.nbsp;nbsp;

middot;nbsp;nbsp;nbsp;nbsp;nbsp;nbsp;nbsp;nbsp; Ratings Downgrades ndash; Moodyrsquo;s cut the oilfield services sector, Moodyrsquo;s cut Cisco, Samp;P cut Hartford Financial, Samp;P cut Starbucks, Moodyrsquo;s cut CNA, Samp;P cut Freescale Semi, Samp;P cut Unisys, Samp;P cut Estee Lauder, Samp;P cut Cytec, Fitch cut Textron, Moodyrsquo;s cut Ameristar, Moodyrsquo;s cut FelCor, Fitch and Moodyrsquo;s cut Alcoa,nbsp;nbsp;

middot;nbsp;nbsp;nbsp;nbsp;nbsp;nbsp;nbsp;nbsp; Chapter 11 ndash; Crescent Oil, Samp;K Famous Brands, Charter Communications, Midway Games, Aleris, Pliant Corp.nbsp;nbsp;

middot;nbsp;nbsp;nbsp;nbsp;nbsp;nbsp;nbsp;nbsp; Bank Closings ndash; Regulators closed Sherman County Bank in Nebraska, Riverside Bank of the Gulf Coast in Florida, and Corn Belt Bank and Trust Co. in Illinois, bringing the number of failures so far this year to twelve. Twenty-five banks failed last year.nbsp;nbsp;

middot;nbsp;nbsp;nbsp;nbsp;nbsp;nbsp;nbsp;nbsp; Housing Industry ndash; The National Association of Realtors said the median sales prices of homes declined in 134 out of 153 metropolitan areas in the Q4, compared with the Q4, 2007. The nationwide median home sales price was $180,100, down 12% Y/Y. Hawaiirsquo;s foreclosure rate in January rose 174% Y/Y.nbsp;nbsp;nbsp;

middot;nbsp;nbsp;nbsp;nbsp;nbsp;nbsp;nbsp;nbsp; Publishing Industry ndash; The Audit Bureau of Circulations said that combined single-copy magazine sales at newsstands and other retail outlets are down 11% for the second half of 2007. Overall circulation was basically flat on 2008 over 2007.nbsp;nbsp;

middot;nbsp;nbsp;nbsp;nbsp;nbsp;nbsp;nbsp;nbsp; Retail Sales ndash; The Commerce Department said that retail sales grew 1% in January. Expectations were for a 0.8% decline.nbsp;nbsp;

middot;nbsp;nbsp;nbsp;nbsp;nbsp;nbsp;nbsp;nbsp; Trade Deficit ndash; The Commerce Department said the trade deficit in December fell 4% to $39.9 billion, from $41.6 billion in November. For the year, the deficit contracted by 3.3% to $677.1 billion.
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