Financial Professionals

Market Insights

A A A

Goodbye September

09/30/2009


The first trading day of September certainly played into the fears of those expecting a significant 2009 market correction to line up perfectly with the historically challenged month of September. My opinion heading into the September/October period was that, like a good boxer, the market just needed to take "the jabs" and stay on its feet. Happily, the market did just that and survived the month. October now lies ahead. Like any other month, it will be fraught with obstacles. But again, the key is to "cover up" and not take the big, knockout blow. I am confident the market can. It all sets-up for a potential November/December resumption of the rally. Stay on your feet!

Some Housekeeping Notes:

As of September 28:

The Russell 2000® Index (small-cap) maintains a modest lead over the S&P 500® Index (large cap) this year (+21% vs. +19%). Looking further inside, small cap energy is a clear outperformer over large cap energy. It is interesting that large cap financials maintain a sizeable lead over small cap financials.

Growth, as represented by the Russell 1000® Growth Index is +25% YTD while Value, as represented by the Russell 1000® Value Index is +13%.

According to Bloomberg, money market mutual fund assets total $3.5 trillion, the equivalent of 37% of the S&P 500 equity market cap. Significant cash is still sitting on the sidelines. Also, Inflows continue with the consecutive positive flows streak intact for fixed income, international equities, gold, and natural resources.

Recently, the media has been chattering about the resilient and robust equity issuance market. First of all, Asia Pacific has accounted for over 50% of that global market so far this year. Domestically, I disagree with "topping market" implications of a resurgent equity issuance market. Let's remember that the best month so far for domestic issuance was May. Think stress tests! How easily did those financial institutions raise cash? Over $45 billion that month - clearly the best month year to date. By the way, June was second best so far - north of $25 billion. The third best month doesn't even top $20 billion. The market has performed extremely well since those excellent issuance months of May and June.

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.