Wdg Newsletter November2009 Vs2

WDG MarkeT Update
NOVEMBER 2009

The month in brief. We saw weakness develop in Both notable consumer confidence indices declined
the Investment Model from 10/19 through 11/4 with in October – the Conference Board index dipped to
several key measures turning negative. However, the 47.7 from a 53.4 in September.9 The Reuters survey
markets have once again bounced back from the went from 73.5 in September to 70.6 at the end of last
multi-day declines experienced as October ended. We month.10 With unemployment at 9.8% in September,
have now begun to see some slight improvement in it was understandable.11 Economists discussed the
the Investment Model, but not enough to call for possibility of the Fed raising the key interest rate – in
increased equity exposure just yet. If the model fact, a few even called for it – but there was no hint of
continues to improve, we may begin reallocating a shift in Fed policy.
assets to the equity markets soon. For now we will
continue to monitor the model, and wait for Global economic health. Evidence showed that
additional trend confirmation, along with manufacturing was picking up abroad as well as in
participation from market breadth before re- the U.S. The Eurozone’s manufacturing sector
deploying assets. expanded in October for the first time since April
2008. China’s Purchasing Manufacturers Index hit
Questions about the strength and speed of the 55.4 in October, an 18-month peak. England’s PMI
recovery hampered stocks by Halloween, although also showed growth, and so did the PMIs in India and
positive economic news continued to surface. The South Korea.12 The International Monetary Fund
service sector and the manufacturing sector were adjusted its growth forecast for the Asia Pacific region
both growing; consumer spending, however, was up about 1.5% - it predicted 2009 growth of 2.8% and
lagging. It was a fine month for most hard assets, and 2010 growth of 5.8%.13
a mixed month for global financial markets. Finally,
one notable statistic seemed to indicate the recession The jobless rate in the Eurozone was 9.7% in
was done. September; consumer prices fell for the fifth straight
month, nice for shoppers but certainly not indicating
Domestic economic health. Let’s get to that demand. New data showed the EU economy shrank
statistic. The Commerce Department announced the 0.2% in the second quarter.14
3Q preliminary GDP: +3.5%. U.S. GDP hadn’t been
so strong since 3Q 2007. America’s longest stretch of World financial markets. Emerging markets
economic contraction since 1947 was history.1 fared better than indices in Europe and the U.S. The
DAX descended 4.58% in October, and the CAC 40
Backing up that statistic, we had the Institute for fell 4.98%. In the U.K., the FTSE 100 lost 1.74% for
Supply Management’s manufacturing index hit 55.7 the month. The Nikkei 225 lost 0.97%, the Australian
in October (a 3½-year high point) after a 52.6 in All Ordinaries 1.95%, and the Kospi (South Korea)
September (anything over 50 equals growth).2 We lost 5.53%. As for gains, the Hang Seng rose 3.81%
saw the ISM service sector index turn positive for the and the Shanghai Composite ascended 7.79%.
first time in a year, coming in at 50.9 for September Argentina’s MERVAL rose 2.06% and the Bovespa
with its new orders index at 54.2.3 The Federal gained 0.02% in Brazil.15 MSCI’s World Index and
Reserve informed us that industrial production went Emerging Markets Index were both down for the
up by 5.2% in the third quarter – the best quarter in month, respectively losing 2.31% and 0.49% for
four years, and the first positive quarter since the October.16
recession began.4
Commodities markets. Oil prices rose 9.05% last
As for consumers, prices and purchases, the data was month, ending October at $77.00 per barrel. Natural
mixed. Personal spending fell 0.6% in September, gas futures advanced 4.21% in October, leaving that
even as durable goods orders rose by 1.0%.5,6 Retail commodity at -10.26% YTD through October’s end.
sales were down 1.5% for that month, but up 0.5% Diesel futures gained 7.41% in October, putting them
minus automotive purchases (economists felt the up 41.00% for the year. Turning to metals, silver
decline was partly due to the end of the C.A.R.S. actually lost ground last month (-2.42%) but gold did
program).7 Year-over-year inflation was still negative: just fine (+3.08%). Copper could not be stopped –
from September 2008 to September 2009, CPI fell copper futures were +4.84% in October and (are you
1.3% (though core CPI rose 1.5%). CPI rose 0.2% for sitting down?) +109.61% across the first ten months
September.8 of the year. Palladium has done exceptionally well,

WDG MarkeT Update
NOVEMBER 2009

too: +8.04% for October, making it +71.30% YTD. Major indexes. The Dow hit a 2009 high of
The U.S. Dollar Index was down 0.34% in October.15 10,119.47 in October, but finished the month with
only a miniscule gain; the NASDAQ and S&P 500
One crop has done almost as well as copper this year: both slipped. It was a challenging month for stocks,
sugar. Sugar futures fell 5.56% in October, but that unusual as Octobers go. At month’s end, the major
left them up 92.89% for 2009. Orange juice futures indices were still showing impressive gains off their
rose 26.17% last month.15 March lows – the DJIA, +48.4%; the NASDAQ,
+61.2%; the S&P 500, +53.2%.15
Housing & interest rates. The latest existing, new
and pending home sales numbers were mostly
% Change 1-Month Y-T-D
encouraging. First the downside: according to the
Commerce Department, new home sales fell 3.6% in DJIA +0.005 +10.67
September, a decline many chalked up to the looming
potential expiration of the $8,000 first-time buyer NASDAQ -3.64 +29.68
credit offered by the federal government.17 Existing S&P 500 -1.98 +14.72
home sales rocketed north 9.4% in September,
marking gains in five of the last six months of data.18 10YrTIPS Real
-0.06 -37.33
Pending home sales (like existing home sales, Yield
monitored by the National Association of Realtors) (Source: CNBC.com, ustreas.gov, 10/30/09)15,21
were up 6.1% in September after a 6.4% rise in Indices are unmanaged, do not incur fees or expenses, and cannot be
invested into directly. These returns do not include dividends.
August, marking the eighth month in a row of
improvement. Construction spending also increased
by 0.8% in September.19
Riddle of the month. Who is the only woman ever
Let’s see what Freddie Mac found when it came to to appear on U.S. paper currency?
surveying U.S. mortgage rates. On October 1, the Contact my office or see next month’s Update for the
national average interest rate for a 30-year FRM was answer
4.94%. By October 29, it was 5.03%. Average rates on
15-year FRMs also rose slightly in that time frame,
from 4.36% to 4.46%. The 5/1-year ARM? No change,
a 4.42% average interest rate in both surveys. As for
the 1-year ARM, the average rate on that loan type
moved north from 4.49% to 4.57%.20

WDG MarkeT Update
NOVEMBER 2009

___________________________________________________________________
Please feel free to forward this article to family, friends or colleagues.
If you would like us to add them to our list, please reply with their address
and we will contact them and ask for their permission to be added.
___________________________________________________________________

Citations.
1 thestreet.com/story/10618752/1/gdp-stunner-35-growth-in-third-quarter.html?cm_ven=GOOGLEN [10/29/09]
2 reuters.com/article/ousiv/idUSN0243717320091102 [11/2/09]
3 news.yahoo.com/s/ap/20091005/ap_on_bi_ge/us_economy [10/5/09]
4 marketwatch.com/story/oil-futures-tap-fresh-one-year-high-atop-78-2009-10-16 [10/16/09]
5 marketwatch.com/story/consumer-spending-retreats-after-clunkers-ends-2009-10-30 [11/2/09]
6 latimes.com/business/la-fi-briefs29-2009oct29,0,456350.story [10/29/09]
7 money.cnn.com/2009/10/14/news/economy/September_retail_sales/?postversion=2009101409 [10/14/09]
8msnbc.msn.com/id/33344177/ns/business-businessweekcom/ [10/15/09]
9 conference-board.org/economics/consumerConfidence.cfm [10/27/09]
10 abcnews.go.com/Business/wireStory?id=8956838 [10/30/09]
11 cbsnews.com/stories/2009/10/21/business/main5405768.shtml [10/21/09]
12 reuters.com/article/economicNews/idUSN0243555320091102?sp=true [11/2/09]
13 nytimes.com/2009/10/30/business/global/30imf.html [10/30/09]
14 google.com/hostednews/ap/article/ALeqM5ipzZ-ZVFuBCVK810-PpiBUogE45wD9BLGRD03 [10/30/09]
15 cnbc.com/id/33555251/page/2/ [10/30/09]
16 mscibarra.com/products/indices/stdindex/performance.html [10/30/09]
17 bloomberg.com/apps/news?pid=20601068&sid=aPXIvh4rYY60 [10/28/09]
18 realtor.org/press_room/news_releases/2009/10/rebound_shows [10/23/09]
19 bloomberg.com/apps/news?pid=20601087&sid=aVHuhXWfKh5M&pos=3 [11/2/09]
20 freddiemac.com/pmms/ [11/2/09]
21 ustreas.gov/offices/domestic-finance/debt-management/interest-rate/real_yield.shtml [10/30/09]
22 cnbc.com/id/33586664 [11/2/09]
23 foxbusiness.com/story/markets/futures-start-week-positive-note/ [11/2/09]

Wdg Newsletter November2009 Vs2

More Related Content

What's hot (18)

Similar to Wdg Newsletter November2009 Vs2 (20)

Recently uploaded (20)

Wdg Newsletter November2009 Vs2