Financial Professionals

Market Insights

A A A

China PMI & U.S. ISM

10/31/2010

China PMI

  1. China's October PMI rose to 54.7 from 53.8; the consensus estimate was 53.7
  2. This month's reading is the highest since the month of April's 55.7 was reported on April 30
  3. New Orders increased from 56.3 to 58.2
  4. The Output Index increased from 56.4 to 57.1
  5. The Export Order Index declined from 52.8 to 52.6

U.S. ISM

  1. The Institute for Supply Management factory index unexpectedly rose to 56.9 from 54.4, beating the consensus estimate of 53.5
  2. The critical "New Orders to Inventory" gap improved from minus 4.5 to plus 5.0
  3. New Orders rose from 51.1 to 58.9
  4. The Production Index rose from 56.5 to 62.7
  5. The Employment Gauge rose from 56.5 to 57.7
  6. The Inventory Index fell from 55.6 to 53.9, which alleviates some fear regarding inventories building

 


COMMENTARY
Excellent surprises in both the China PMI and U.S. ISM.  The ISM New Orders to Inventory, in particular, supports my belief that the odds for a double dip recession are less than 10%; in fact, today's reports suggests the odds are closer to 5%. There is nothing within these reports to suggest a reversal in the September / October risk asset appreciation.

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.