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Our disipline always drives us to look past the headline noise and try to decipher the fundamental issues that will effect the US domestic economy and financial markets. Here are some of the current issues that we believe have some bearing on our investment decisions. The Return to Economic Growth 2011 Continued low interest rates (10 year note 3.06%) Three quarters of economic expansion, Q3 2.2%, Q4 5.6% and Q1 2010 2.72% S&P earnings expected to be $90.92/share in 2011, up 20.8% from $75.26 in 2010 Using a forward P/E of 11.9x+target of 1364on S&P 500 for year end 2010 Synchronized global upturn Case-Shiller 10 city home price index showing improvements Yield curve is positive and argues for sustained moderate growth into 2011 Capital goods companies seeing an up-tick in demand Strong Corporate earnings Strong productivity and historically low unit-labor-costs will help profit margins for recovering U.S. companies
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