U.S. markets led a global rally, surging for the second straight day yesterday as the Dow Jones Industrial Average gained roughly 5 percent (Chicago Tribune). The gains came following President-elect Barack Obama’s announcement of several important members of his economic advisory team, including New York Federal Reserve chief Timothy Geithner for Treasury Secretary, former Treasury Secretary Lawrence Summers as the head of Obama’s National Economic Council, and Berkeley economist Christina Romer to chair the Council of Economic Advisers. Obama also indicated he will seek to push through a large economic stimulus plan (WSJ) in an effort to boost long-term spending and economic recovery.

Stocks across Asia surged following the U.S. gains, but indices in Europe were mixed in morning trading (IHT).

Despite the cheery day for many traders, new economic indicators offer few signs of short-term relief, particularly in developed economies. New estimates from the Organization for Economic Cooperation and Development reckon the United States and Eurozone are both likely to suffer four straight quarters (FT) of declining economic output that will not end until the middle of 2009. Meanwhile, the World Bank estimated that China’s growth will continue to slow (AP), dipping next year to roughly 7.5 percent, its lowest level of growth since 1990.

For more on the credit crisis and its international implications, including new analysis of Barack Obama’s team of economic advisers, please see the website of CFR’s Center for Geoeconomic Studies.

President-elect Barack Obama said in his weekly address on Friday that his economic team is forging a two-year Economic Recovery Plan that will create 2.5 million new U.S. jobs. Here is the video of Obama’s address:

AFGHANISTAN: Obama told Afghan President Hamid Karzai in a phone call on Saturday that he will increase U.S. aid (WSJ) to Afghanistan, according to a statement from Karzai’s office. The call was the first reported contact between Karzai and Obama.

APEC: The Washington Post reports leaders at this weekend’s Asia-Pacific Economic Cooperation forum focused their attention on U.S. President-elect Barack Obama, cautioning him not to take too protectionist a tack on trade.

“The reality is that the economic crisis we face is no longer just an American crisis, it is a global crisis – and we will need to reach out to countries around the world to craft a global response. [Tim Geithner's] extensive international experience makes him uniquely suited for this work.  Growing up partly in Africa and having lived and worked throughout Asia; having served as Under Secretary of the Treasury for International Affairs – one of many roles in the international arena; and having studied both Chinese and Japanese, Tim understands the language of today’s international markets in more ways than one.”

–President-elect Barack Obama, in remarks Monday introducing his pick of New York Federal Reserve Bank President Timothy Geithner for Treasury Secretary.

Congressional Quarterly reports the potential appointment of Gov. Janet Napolitano (D-AZ) to Homeland Security Secretary could indicate a “shift in focus away from the war on terror and toward domestic concerns, especially immigration,” on the part of the Obama team.

AUTO INDUSTRY: President-elect Barack Obama’s transition team is considering a “prepackaged” bankruptcy (Bloomberg) for auto makers.

The Obama-Biden transition team announced its policy working group leaders on Wednesday. Among the leaders are Daniel Tarullo on economic issues, Carol Browner on energy and the environment, T. Alexander Aleinikoff and Mariano-Florentino Cuéllar on immigration, and James Steinberg and Susan Rice on national security.

DHS: CNN reports Arizona Governor Janet Napolitano will likely be the next secretary of the Department of Homeland Security.

SENATE: Sen. John Kerry (D-MA) will be named chairman of the Senate Foreign Relations Committee, the Boston Globe reports.