Biweekly Research Note from S&P Valuation and Risk Strategies Delivers Institutional Market View of Fundamentals, Fixed-Income, Equities, Derivatives and Capital Markets

NEW YORK, Oct. 24, 2011 /PRNewswire/ -- In the most recent issue of the Lookout Report -- a biweekly research note from S&P Capital IQ that draws upon the firm's unique analytical assets, including Capital IQ, S&P Indices, S&P Leveraged Commentary and Data, S&P Equity Research and S&P Valuation and Risk Strategies Research --  analysts observe that third-quarter earnings season is shaping up to be a repeat of the second quarter, already suggesting that reported earnings will not break the seven-quarter streak of double-digit earnings growth.

The Valuation and Risk Strategies (VRS) research team continues to expect slow GDP growth in 2011. As stated in the previous issue of the Lookout Report, if third-quarter earnings exceed analyst expectations--as they have for the past two years-- the case for growth over recession will solidify.

This research is published in the Lookout Report for October 21, 2011.  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 the October 21, 2011 issue of the Lookout Report:

S&P Index Equity Commentary: Consistency In Reporting Is Paramount

Firms and investors use different earnings calculations to evaluate different aspects of a business. For S&P Indices and S&P Capital IQ, accuracy is paramount, but so is consistency. A methodological approach to reporting earnings gives investors insight and allows them to better utilize the information.

Leveraged Commentary And Data: As LBO Market Sags, Higher Equity Contributions Become Standard

Because of the current conditions in leveraged finance, outsized equity contributions have become necessary to play in today's leveraged buyout (LBO) market. Indeed, among the three large-cap LBOs that private equity firms have struck since Labor Day, contribution capital accounts for no less than 40% of total sources.

R2P Corporate Bond Monitor

Since the beginning of October, risk-reward profiles--as measured by average Risk-to-Price (R2P) scores--affirm the slowly improving trend that began in September in most sectors. Excluding the financials, telecommunication services, and utilities sectors in the U.S., and the health care and materials sectors in Europe, scores have increased across the board.

Market Derived Signal Commentary: France's Vulnerability Fans CDS Market Fears

We think France's CDS will remain vulnerable to market volatility and ongoing news about the debt crisis. And as long as the threat of a ratings action remains, the spread is likely to remain elevated. We will continue to monitor the spread for significant moves in either direction, but we would not be long the CDS at this time.

Capital Market Commentary: Weak IPO Equity Performance Sends Chills Across The Market

Only two domestic company IPOs, priced on a major U.S. exchange and excluding real estate investment trusts, funds, and banks, managed to be completed since mid-August. The scant quantity of deals, along with the fact that a majority of this year's IPOs are trading lower than their offer price, is likely sending chills across the IPO market.

S&P Index Commodity Commentary: Backwardation Into The Future

Commodity prices have recovered along with other risk assets at this early stage of the new quarter, following sharp declines in September.

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 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, Valuation & Risk Strategies and S&P Equity Research, S&P Capital IQ sharpens financial intelligence into the wisdom today's investors need.

SOURCE S&P Capital IQ