NEW YORK, Sept. 4, 2012 /PRNewswire/ -- The most recent issue of the Lookout Report -- a biweekly research note from S&P Capital IQ's Global Market Intelligence (GMI) unit – concludes that although consensus S&P 500 2012 and 2013 earnings expectations have dropped to new lows for the year this week -- suggesting analysts have made substantial progress adjusting to the reality of 1.7% U.S.GDP growth at mid-year 2012 rather than the 4% growth recorded at year-end 2011 -- the U.S. is nowhere near the point of discounting the prospect of recession. "In our view, in addition to real progress in Europe, it is absolutely imperative that the U.S. economy continues to generate healthy rates of monthly job creation, as in July (163,000), if the "risk-on" trade is going to continue through the balance of the year," says the current report.
These views are published in the Lookout Report for September 1, 2012. The report, which also features market insights and commentary on corporate earnings, leveraged loan trends, commodity index activity and more is available here. A short video summary of this issue by GMI Director, Robert Keiser, is available here.
Following are additional highlights in this issue of the Lookout Report:
Economic And Market Outlook: North American And European Earnings
Although many North American companies have reported earnings well ahead of expectations during the second-quarter reporting season, companies have also tended to miss revenue estimates. Currently, the number of companies that have surpassed analysts' estimates stands at 65%, but only 40% of companies beat revenue expectations. The surprise ratios for these measures are drastically different as well, with companies beating earnings estimates by an average of 4.3% and only beating revenue expectations by 0.02%.
International Update: Declining Demand Abroad Could Weigh Further On Brazil's Economy And Stock Market
Although the unfavorable economic climate provides a compelling reason for investors to steer clear of Brazilian equities overall, the market is not without selective opportunities. The latest government initiative, for example, offers investors a way to generate some upside potential through equity interest in domestic companies participating in new infrastructure projects.
S&P Index Commentary: S&P 500 Index Returns Look Bleak Without Apple
On Aug. 20, shares of Apple Inc. closed at an all-time high of $665.15 per share with a market value of $623.52 billion, eclipsing the previous value record of $616.34 billion that Microsoft Corp. set on Dec. 27, 1999, during the technology stock bubble era. Apple stock has since eclipsed its Aug. 20 number, closing at $675.68 with a market capitalization of $633.39 billion on Monday.
Leveraged Commentary And Data: Off To The Races: August Volume Records A Tumble In The Hot Loan Market
This year, the dog days of summer proved to be more greyhound than basset hound. Amid strong demand, leveraged loan volume in August handily beat expectations. In all, arrangers inked $15.9 billion of new loans during the month (as of Aug. 24), including $11 billion of institutional tranches, making it the busiest August on record by both measures.
R2P Corporate Bond Monitor
Although the global economy is slowing down, market participants' expectations of further monetary stimulus from central banks to support economic growth could have helped risk-reward profiles--as measured by average Risk-to-Price (R2P) scores--across the board in the past two weeks ended Aug. 24, 2012. Scores increased due to a decrease in the 20-day historical bond price volatility, offsetting the increase in the probability of default.
Market Derived Signal Commentary: Risk Premiums For S&P 500 Companies Shrink After Second-Quarter Earnings
The credit market doesn't take cues only from corporate earnings--the U.S. economy and the eurozone debt crisis are other factors that have figured prominently in the collective sentiment of the CDS market. With that in mind, the GMI team looked at how each of the 10 S&P 500 sectors traded over the past three months. Our research yielded positive results.
Capital Market Commentary: Information Technology IPO Volume Shrinks
As the post–Facebook IPO environment takes shape, it appears that the information technology sector may be taking a back seat. In the periods following the Facebook deal, about one-quarter of offerings came from the tech sector. However, the proportion of tech filings among all filings since the start of July has shrunk to about 14% (four tech companies out of the 28 firms filing paperwork).
S&P Index Commodity Commentary: Petroleum Leads, Ags Sag, And Industrial Metals Lag
Energy has continued to lead commodity index gains in August, as agriculture prices have declined. Supply concerns remain a key issue as Middle East tensions have been a main driver of petroleum price gains, but the sharp increase in unleaded gas prices is beginning to worry economists. Of equal concern, weakness in industrial metals prices persists.
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 S&P.com, the S&P Capital IQ Global Credit Portal and the S&P Capital IQ Platform.
About S&P Capital IQ
S&P Capital IQ, a business line of The McGraw-Hill Companies (NYSE: MHP), is a leading provider of multi-asset class and real time data, research and analytics to institutional investors, investment and commercial banks, investment advisors and wealth managers, corporations and universities around the world. We provide a broad suite of capabilities designed to help track performance, generate alpha, and identify new trading and investment ideas, and perform risk analysis and mitigation strategies. Through leading desktop solutions such as the S&P Capital IQ, Global Credit Portal and MarketScope Advisor desktops; enterprise solutions such as S&P Capital IQ Valuations, and Compustat; and research offerings, including Leveraged Commentary & Data, Global Markets Intelligence, and company and funds research, S&P Capital IQ sharpens financial intelligence into the wisdom today's investors need. For more information visit: www.spcapitaliq.com.
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