US Markets Closing Comments - 4th March 2008

Economic Summary

Today's unsettling mix of weak economic data, higher oil prices, and a falling
dollar kept equities near Friday's lows. Prices of Treasury coupon securities
fell, retracing only a small portion of last week's tremendous rally. The
dollar touched a new record low against the euro and fell for the fifth
consecutive trading day versus the yen.

The ISM Purchasing Managers Index met widespread expectations that it would
fall back below its neutral 50 level in February. The index dropped 2.4 points
to 48.3, slipping just below its previous trough of 48.4 for December. The
index hasn't been as low as 48.3 since the spring of 2003. The consensus was
looking for a slightly softer 48.0 level. The latest data suggest
manufacturing activity contracted in February.

Construction spending declined 1.7% in January, more than the consensus
forecast of a 0.7% decline. The surprise came in non-residential construction
activity, which had been quite strong of late. In January non-residential
construction dropped 1.2% after increasing in 23 of the previous 24 months.
Bad weather in January may have held back non-residential construction.
Alternatively, this could be the start of the slowdown in commercial
construction that we expect to take place this year.

With only a few small producers still to report, domestic car and light truck
sales in February were running at a sluggish 11.7mn rate. Sales rounded up to
6.6mn for light trucks and to 5.2mn for cars. If sustained after the late
reports are tallied, this would be the slowest annualized sales pace since
July, falling below the consensus call for an 11.9mn sales rate.

Economic Outlook

There are no major economic statistics scheduled for release in the US on
Tuesday, March 4.

Market Summary

The broad equity indexes found little opportunity to rally today in the face
of weak economic data, higher oil prices, and a weaker dollar. The best that
can be said is that equities did manage to climb from their 3pm lows to close
the day close to flat. Financial stocks performed the worst, losing 1.2%,
while basic materials outperformed (+1.6%). (DJ INDU 12259, -7; S&P500 1331,
+1; NASDAQ 2259, -13)