Economy - Wednesday

Greenspan: Fed can't save U.S.

Ex-Fed chief Alan Greenspan doubts the central bank's ability to prevent a U.S. recession. He put the chances of a recession at 50%. He said real long-term rates have much more influence over economic activity than national decisions, while central banks have "less and less power to influence long-term rates." The Fed cut rates half a point 15 3% on Wed. after last week's emergency 75-basis-point cut.

Factory execs' optimism about the U.S. economy fell in Q4, said the PricewaterhouseCoopers Manufacturing Barometer. The poll found 29% of execs were upbeat, the lowest since the survey started in '03. Mortgage application activity rose 7.5% in the week ended Jan. 25, the Mortgage Bankers Association said. The MBA said refinancing applications soared 22.1% to the highest since July '03. But applications for buying a home retreated. British mortgage approvals for buying a home fell for a 7th month to 73,000 in Dec. from a downwardly revised 81,000 in Nov. That puts more pressure on the Bank of England to cut rates next week. Japan's output up, outlook weak

Dec. industrial output rose 1.4% vs. Nov., below views for a 2% gain. Manufacturers expect output to fall in early '08. The data suggest Japanese firms are starting to feel the pinch from slowing U.S. growth and a housing slump at home.

Russian fears of foreign investment

Two of Russia's top economic leaders made a rare public call that the Kremlin needs to adjust its hawkish foreign policy because it was affecting foreign investment. They called for Russia to pursue greater int'l cooperation. Russia will see its robust account surplus cut to zero in the next few years as imports surge and oil output stagnates, increasing Russia's dependency on foreign capital.

COMING UP THURSDAY

Employment cost index for Q4, 8:30 a.m. EST (forecast: 0.8%). Personal income and spending for Dec., 8:30 a.m. EST (forecast: income up 0.4%, spending up 0.1%, core PCE deflator up 0.2%). New jobless claims for the week ended Jan. 26, 8:30 a.m. EST (forecast: 320,000). Chicago PMI for Jan., 9:45 a.m. EST (forecast: 52).