New Biweekly Research Note from S&P Valuation and Risk Strategies Delivers Institutional Market View of Fundamentals, Fixed-Income, Equities, Derivatives and Capital Markets
S&P Valuation and Risk Strategies today announced the release of its Lookout Report for August 12, 2011, featuring market insights on Q2 corporate earnings season, leveraged loan trends and more. The report, which is a biweekly research note that draws upon S&P’s unique analytics assets – Capital IQ, S&P Indices, S&P Leveraged Commentary and Data, S&P Equity Research and S&P Valuation and Risk Strategies Research – is available here.
The longstanding debate in the financial markets between defensive-minded investors and more optimistic growth-oriented investors reached a crescendo this past week as a market of cautious optimism quickly became a market dominated by negative uncertainty. While acknowledging and evaluating developing risks to the intermediate outlook for the economy and markets, the S&P VRS research team remains bullish on the U.S. economy for reasons outlined in research articles that are summarized below
Following are some of the highlights in the August 12, 2011 edition of the Lookout Report:
- S&P Indices Commentary: The Case For Dividends
With current volatility in mind, Standard & Poor’s Indices thinks there is a case to be made for long-term dividend investing. Over time, dividends add significant value to a stock, while they also carry lower betas, so they are less volatile in both good and bad markets. The appeal of dividend investing lies in the fact that an investor will get paid if the market is up or down.
- Leveraged Commentary And Data: The U.S. Downgrade Appears Negative To The Loan Market
The implications for default rates are neutral in the near term and negative for 2012 to 2013. In terms of fundraising, managers say the short-term effect of the downgrade will be negative, perhaps deeply so, but in the longer term, loans may continue to appeal to investors concerned about inflation.
- R2P Corporate Bond Monitor
Financial market instability has certainly increased both market and credit risks in recent weeks. According to two of the components of our proprietary Risk-to-Price (R2P) corporate bond value scoring algorithm, risks have risen considerably on both fronts.
- Market Derived Signal Commentary: Despite The Downgrade, The CDS Market’s View Of U.S. Creditworthiness Stabilizes
Despite Standard & Poor’s downgrade of the United States of America, the U.S. CDS appears to currently be the least risky sovereign in the world. Although we think the country’s CDS will remain sensitive to ongoing political discussions, we expect the spread to remain near current levels, barring an unforeseen catalyst.
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 Global Credit Portal and Capital IQ.
About Standard & Poor’s
Standard & Poor’s Financial Services LLC, a subsidiary of The McGraw-Hill Companies (NYSE: MHP), is the world’s foremost provider of independent credit ratings, indices, risk evaluation, investment research and data. With offices in 23 countries and markets, Standard & Poor’s is an essential part of the world’s financial infrastructure and has played a leading role for over 150 years in providing investors with the independent benchmarks they need to feel more confident about their investment and financial decisions. For more information, visit www.standardandpoors.com
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