Building on the late afternoon gains of yesterday, Wall Street is looking to open higher this morning as investors believe the fallout from the United Arab Emirates debt crisis will be contained.

Dubai World said it is in “constructive” talks with banks to restructure $26 billion of debt, which the Wall Street Journal notes is less than half of the company's $59 billion of obligations.

Meanwhile, the FT reports that the government itself will not back the debt. 

“Dubai’s government will not guarantee the debts of Dubai World, the state-owned holding company struggling with $59bn in liabilities, arguing that lenders were mistaken to think there would be sovereign backing,” the report said.

Over at Slate, Daniel Gross is asking if Dubai World is “The Lehman Bros. of the Persian Gulf.”  READ MORE

As of 7:15, equities are firmly higher. The Dow looks to open 76 points higher at 10,410 while futures on the S&P 500 are up 8.75 points to 1,104. Spot Gold has hit record highs overnight and now trades up $14.96 at $1,194.56. WTI Crude oil is up $1.01 but remains below the $80 threshold at $78.29 per barrel.

Key Events Today:

10:00 ― The ISM Manufacturing Index is expected to show growth for the fourth consecutive month in November. Regional indexes have been slightly mixed this month but overall they point to clear growth. The Philly Fed index beat expectations at 16.7 (up from 11.5 in October), the Empire State survey came in weaker than predictions at 23.5 (down from 34.6), and most recently the Chicago PMI rose to a 15-month high. Each survey was well into positive territory, hence the consensus forecast for the ISM is a strong 55.0 (compared with 55.7 in October.)

“While demand is picking-up slowly, the need to replenish the extremely low levels of inventories could also be stimulating activity,” said forecasters at BBVA. “Furthermore, the ISM acts as an indicator of overall economic performance and will come in at a level consistent with economic growth for the seventh consecutive month, which is in line with our forecast of economic expansion in 4Q09.”

A more suspicious interpretation comes from HFE’s Ian Shepherdson, who said the composition of the index is out of step with the general economy. “We remain profoundly skeptical . . . that the ISM is currently a reliable signal of the state of the broad economy, because it tells us next to nothing about the condition of small, non-exporting, nonmanufacturing companies, which account for a much bigger share of GDP than the businesses responding to the survey,” he said.

10:00 ― The jump in Construction Spending in September isn’t expected to be repeated in October. Forecasters see the 0.8% gain being followed by a 0.4% dip as commercial real estate continues to weaken.

“While the decline in spending on residential construction appears to have reached a bottom given the improvement over the past three months, commercial real estate construction spending will continue to deteriorate,” wrote economic forecasters from BBVA. “Residential construction is expected to improve further in the near term due to low inventories of new homes and the pick-up in demand, but levels will remain below those of the previous year.”

10:00 ― The Pending Home Sales Index could be misleading this month. The index tracks contracts for existing home sales that have been signed but not finalized, and those number could be skewed in October. The government tax incentive was set to expire at the end of November but on Nov. 6 it was extended to mid-2010.

“The then-impending end of the first-time buyer tax credit means expect pending sales to drop by about 5%, but this is largely a guess; anything could happen,” said Ian Shepherdson from HFE.

The consensus expects contracts to fall 0.8%.

12:20 ― Charles Plosser, president of the Philly Fed, speaks on the economic outlook to in Rochester, NY.

  • Treasury Auctions:
  • 11:30 ― 4-Week Bills