NEW YORK, Jan. 23, 2012 /PRNewswire/ -- In the most recent issue of the Lookout Report -- a biweekly research note from S&P Capital IQ's Global Market Intelligence unit that draws upon the firm's unique analytical assets -- analysts indicate that improving global economic prospects backstopped by coordinated pro-growth global central bank policies provides a foundation for the risk-on trade in 2012. Likewise, the GMI team believes that a lackluster and cyclically counterintuitive global economic response to these steps underscores the potential risks to the larger game plan and outlook.
These views are published in the Lookout Report for January 20, 2012. The report, which also features market insights and commentary on corporate earnings, leveraged loan trends, commodity index activity and more is available here.
Following are additional highlights in this issue of the Lookout Report:
Economic And Market Outlook: North American And European Earnings
As North American companies continue to report fourth-quarter earnings, miss rates and beat rates are running very close, with 34% of companies missing and 49% beating expectations. This represents the lowest beat/miss ratio seen in 10 years. Meanwhile, analysts expect European corporate earnings to remain strong in the next two years, with 2012 and 2013 growth forecasts of 9.6% and 9.5%, respectively.
S&P Index Commentary: The Power Of Dividends
Almost 13 years ago, the trailing operating price-to-earnings (P/E) ratio was 29.4, compared with the current 13.5, while the index yielded 1.3%, compared with 2.1% now. Now, here we stand at a much lower P/E, a much higher dividend yield, record earnings, record cash flow, and record cash, but an index level that is basically flat.
Leveraged Commentary And Data: Leveraged Loan Repayment Rate Climbs To Five-Year High In 2011
In 2011, strong market conditions lifted the repayment rate of S&P/LSTA Index loans to a five-year high of 40%, versus 27% in 2010 and a historical average of 36.6%. After four calendar years, a record 40% of 2007 vintage loans remain outstanding. By comparison, of loans originated between 1997 and 2006, 15.8% were still outstanding after four years.
R2P Corporate Bond Monitor
Despite substantial headwinds in the fixed-income markets, risk-reward profiles--as measured by average Risk-to-Price (R2P) scores--improved overall since the beginning of the year, from Dec. 30, 2011 to Jan. 18, 2012, excluding the U.S. utilities and the European consumer staples sectors.
S&P Index Municipal Commentary: Municipal Bond Defaults Are Headed In The Right Direction
In 2011, 44 bond deals experienced their first event of monetary default by missing a payment on all or part of the principal and/or interest due on their bonds. The total par value of these bond deals, at $1.247 billion, compares favorably with 153 deals totaling $3.234 billion in 2009 and 110 deals amounting to $2.65 billion in 2010.
Market Derived Signal Commentary: Homebuilders' CDS Spreads Show Positive Trend
Homebuilders' five-year credit default swap (CDS) spreads tightened 8.4% for the week ended Jan. 17, 2012, boosting a month-long trend. Although a real recovery in homebuilding has not yet gained traction, we think the trend in the CDS spreads for this group gives investors potential trade opportunities on a selective basis.
Capital Market Commentary: A 2011 Review Of Leaders And Laggards
Using S&P Capital IQ data, we determined the performance from offer date to year-end 2011 for IPOs priced on major U.S. exchanges. Of the top 10 leaders, six have given up ground in early 2012 trading. Among the 10 worst performers among U.S. IPOs priced last year, all but one have posted gains so far in 2012.
S&P Index Commodity Commentary: Industrial Metals Recover
Optimism has characterized the commodity market so far in 2012, illustrated by the sharp rally in industrial metals sector. In 2011, the industrial metals sector was the worst performing sector. Most market participants hope the recovery in industrial metals prices is sustainable, indicating an increasingly optimistic global economic outlook.
The Lookout Report provides cross-market and cross-asset class views of current data and forward-looking insights from leading S&P market specialists. Key areas of focus include aggregated corporate earnings, market and credit risk evaluation, capital markets activity, index investing and proprietary data and analytics. The report previews the issues most likely to drive market expectations or cause a market disturbance in the weeks ahead. It can be accessed on the S&P Global Credit Portal and Capital IQ.
About S&P Capital IQ
S&P Capital IQ, a brand of the McGraw-Hill Companies (NYSE:MHP), is a leading provider of multi-asset class data, research and analytics to institutional investors, investment advisors and wealth managers around the world. We provide a broad suite of capabilities designed to help track performance, generate alpha, identify new trading and investment ideas, and perform risk analysis and mitigation strategies. Through leading desktop solutions such as Capital IQ, Global Credit Portal and MarketScope Advisor desktops; enterprise solutions such as S&P Securities Evaluations, Global Data Solutions, and Compustat; and research offerings including Leveraged Commentary & Data, Global Market Intelligence, and company and funds research, S&P Capital IQ sharpens financial intelligence into the wisdom today's investors need.
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