Morning Reading – December 7, 2010

Value Expectations: Revenue Growth Expectations Look Rich For S&P 500 (INDEXSP:.INX) – Is The Index Overvalued?

When using the Value Expectations framework to solve for the implied sales growth for every company within the S&P 500 (assuming EBITDA and Asset Turns remain constant), we found that the average implied sales growth for the overall index is right around 13%. This is much greater than what the S&P 500 has been able to deliver over the last 10 years (10 year median sales growth for every S&P 500 company is 9.1%) which would suggest the index currently has high expectations.

Distressed Debt Investing: High Yield Strategy: Expectations for 2011

While I am not a top down kind of guy, it is important to remember some of the factors that will contribute and detract from total returns next year: Assumptions of default rates, Treasury curve, Prices and call prices, Relative value, X Factors. Let’s take a look at these in turn.

Business Insider: What Inflation Means To You: A Deep Dive Into What’s Inside The CPI

The Fed is operating at the macro level, trying to influence the overall economy. But what does an increase in inflation mean to your household? Let’s do some analysis of the Consumer Price Index, the best known measure of inflation. Alphaville: Taxing times

President Barack Obama has given his explicit approval for a deal that would allow all Bush-era tax cuts to be extended for two years as long as unemployment benefits were also continued, as lawmakers from both parties edged towards a compromise. Alphaville: Obama announces compromise on Bush tax cut extension

Barack Obama has just given a speech announcing a compromise between Democrats and Republicans over the extension of the Bush tax cuts. It’s mostly what we (and everyone else) reported earlier would probably happen — a two-year extension of all the Bush tax cuts plus a 13-month extension of unemployment insurance. But there were also a few unexpected provisions. BeyondBRICs: China: watch out for credit growth goals

China-watchers are taking for granted an early interest rate hike, with one probably coming in the next few days. So speculation has switched to another crucial parameter of monetary policy – the 2011 loan growth target.

Macro Man: Swimming with the Sharks

So TMM have dusted off their trusty Gold-Real Rate charts and found to their surprise that since the QE2 set sail sank, Gold has diverged significantly from real rates.

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