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For the week of October 26

10/27/2009

The ECONOMIC DATA that matters most to investors

Tuesday October 27
CaseShiller Home Price Index 9:00am - Recently, it has been all about the rate of decline in home values. A measure of home values in 20 large US cities continues to return from the January abyss. The market will be demanding further improvement. 

CaseShiller Home Price Index

Source:  Bloomberg

Consumer Confidence 10:00am - What is on the mind of consumers? I truly believe it is incorrect to simply say 70% of GDP is consumer spending. Yes, this is an accurate number, but it is a similar idea to the one that says roughly the top 5% of wage earners foot the bill for over 50% of the country's income tax bill. Understand that earners with over $200,000 in income have continued to spend and have started to feel much more optimistic about the economy's direction.   

Wednesday October 28
Durable Goods Orders 8:30am - A great measure of how willing corporations are to invest in new equipment. A Reuter's survey is expecting a 1% rise for the month of September. Given recent third quarter earnings from industrial names such as General Electric, 3M, Caterpillar, and Bucyrus, I would expect continued improvement in Durable Goods Orders.

 New Home Sales 10:00am - For the month of July, new home sales rose at an annual pace to 426,000. August followed with a modest increase to 429,000. For the month of September, bullish optimism for housing should only continue with a figure north of 450,000.

New Home Sales

Source:  Bloomberg

Oil Inventory Report 10:30am - Once again, and important to the overall economy, recent data suggests that supplies of "consumer fuels" - distillates and reformulated gasoline - are on the decline. Those inventory draw downs have jump-started energy prices during the month of October. Rising energy prices are bullish for the S&P 500 Index, considering the heavy energy weighting of the Index. 

Thursday October 29
GDP 8:30am - The highlight of the week! Growth again, finally! After four contracting quarters in which the economy shrank 3.8% (it's been about 70 years since the economy experienced a similar contraction period). Analysts are expecting that the economy grew over 3% for the 3rd quarter.  My take is that the corporate balance sheet strength, auto incentives, home buyer credits and capital market improvement drove growth beyond 3% with a potential surprise in the cards north of 3.5%. 


Virtus Investment Partners provides this communication as a matter of general information. The opinions stated herein are those of the author and not necessarily the opinions of Virtus, its affiliates or its subadvisers. Portfolio managers at Virtus make investment decisions in accordance with specific client guidelines and restrictions. As a result, client accounts may differ in strategy and composition from the information presented herein. Any facts and statistics quoted are from sources believed to be reliable, but they may be incomplete or condensed and we do not guarantee their accuracy. This communication is not an offer or solicitation to purchase or sell any security, and it is not a research report. Individuals should consult with a qualified financial professional before making any investment decisions.