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For the Week of November 30 – December 4

12/01/2009

Monday November 30

In a separate blog post, I discuss the Dubai situation and its potential impact on investor portfolios. Monday November 30 will be the first full trading day since the news broke in the early hours on Thanksgiving. On the economic data front, The Chicago Purchasing Managers Index will be released @ 9:45am. Last month, the index rose to a 13 month high. The chart below looks at the time period from 11/30/05 through 10/30/09.

 

Source:  Bloomberg

Tuesday December 1

10am ISM Manufacturing
10am Pending Home Sales
10am Construction Spending
Total Vehicle Sales

The Institute for Supply Management factory index report hit a three year high last month @ 55.7. Expectations for this month are actually for a softening in the index, with a number below 55. With last week's unexpected drop in Durable Goods and the October decline in Factory Production, indications are that the dramatic recovery in Manufacturing is easing.

For Total Vehicle Sales, take a glance at the chart below - a picture is worth a thousand bucks - at least in rebates.



Source:  Bloomberg

Wednesday December 2

7am MBA Mortgage Applications
2pm Fed's Beige Book

Last week's Mortgage Application report was disappointing. Looking back at the weekly change over the past five weeks, volatility clearly still exists in the numbers (see below). Therefore, I caution investors not to read too deeply into these micro moves. Rather, heavily discounted and distressed "existing homes" are being sold, with an excellent reduction in monthly inventory.

However, challenges do persist, as "new home" inventories remain stubbornly high. I would also like to see an improvement in the "wealth effect." To date, the absence of any recovery in home prices is hindering the wealth effect improvement attempt. Overall, housing is, and will remain, a drag on economic growth.

11/20 (4.5%)
11/13 +0.3%
11/06 +3.2%
10/30 +8.2%
10/23 (12.3%)

Thursday December 3

One day before the monthly jobs report, President Obama will hold a jobs summit at the White House with business and labor leaders.

In addition, the weekly Initial Jobless Claims report will be released at 8:30am. It is the improvement in those weekly figures that creates the possibility for the peak in the unemployment rate to occur much earlier in 2010 than originally forecast. For this chart a "downtrend" is what we want and good for the labor market.

  

Source: Bloomberg

Friday December 4

8:30am November Unemployment Report

The components of the last month's report are as follows:

Jobs lost: 190,000
Rate: 10.2%
Manufacturing Jobs lost: 61,000

The expectations for this month's report are as follows:

Jobs lost: range 100,000 to 140,000 (possibly the smallest loss since January 2008)
Rate: range +0.2% to -0.1%
Manufacturing Jobs lost: 45,000 to 55,000

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.