It appears that the economy is headed towards the dreaded synthesis of inflation and deflation known as ‘stagflation.’ Gold is rising. Oil has already risen. Up, up, up and yet, the economy can barely get out of bed in the morning. Consumers are running out of money to spend. And financial assets are going down instead.

The number of Americans entering into contracts to buy previously owned homes during the month could prove to be more disappointing than expected, and prices of existing homes, which make up about 85 percent of the US housing market, likely have much further to fall.

Currency strategist Boris Schlossberg analyzes the major currencies for the week of January 7.

This week John Mauldin looks at the housing market, the continued implosion of the credit markets, and the deteriorating employment picture, and highlights what he thinks will be the next looming problem in the growing credit crisis.

Bill Bonner follows the theme of the first week of the year, and offers his forecast for 2008, or as he calls them, the financial obituaries.

After the release of December non-farm payrolls, the market started to price in as much as 100bp of easing over the next 4 months, which would bring rates down to 3.25 percent, the lowest since June 2005.

On Monday, sentiment figures for the Euro-zone are expected to show dwindling confidence amongst consumers and businesses alike.

The minutes from December’s FOMC meeting were released yesterday, showing that the Feds believe they may need to cut rates again. According to the minutes, “tighter credit conditions, higher gasoline prices and the continuing housing correction might be restraining growth in real consumer spending.”

On Friday, the all-important US non-farm payrolls report will hit the wires, and while this release hasn’t been extremely market-moving in recent months, it may play a large role in the Federal Reserve’s next rate decision at the end of the month.