Salient to Investors:

Morgan Stanley said leverage among equity managers climbed to the highest level to start any year since at least 2004. Margin debt at NYSE firms rose in November to the highest since February 2008.

James Dunigan at PNC Wealth Mgmt said leverage is increasing among hedge-funds. Gross leverage at hedge funds was 153 percent last week versus an average 152 percent in 2012 and 143 percent average since 2005. Hedge fund leverage has tended to rise and fall with the S&P 500.  Dan Veru at Palisade Capital Mgmt said many managers are just behind their benchmarks so to catch up they’re trying to utilize leverage.

Hedge Fund Research and International Strategy & Investment Group said the 15 percent rally in the S&P 500 since June was mostly missed by professional investors.

Timothy Ghriskey at Solaris is bullish on equities as valuations are extremely attractive and earnings looks good.

Peter Sorrentino at Huntington Asset Advisors sees too much optimism given earnings growth has started to slow.

Laszlo Birinyi at Birinyi Associates is bullish, and sees a greater than 50 percent chance the index will pass the record in 2013 as individual investors return somewhat.

Anurag Bhardwaj at Barclays said indicators are bullish and equity hedge funds are jumping on the bandwagon.

The S&P 500 traded at 14.8 last week versus an average 15.5 since the bull market started four years ago and the six-decade average of 16.4.

Analysts expect S&P 500 profits to increase 1 percent for Q1 2013 versus 2.5 percent forecast for Q4 2012. 22 of 27 S&P 500 companies so far reporting have exceeded analyst projections.

Equity analysts have increased price targets for S&P 500 companies that would produce a reading of 1,618.90 versus the record of 1,565.15. 15 Wall Street strategists expect the index to rise 7.6 percent to 1,534 in 2013.

The median economist expects the US to grow 2.8 percent in 2014 versus 2 percent in 2013.

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