Why is no one talking about the S&P500 P/E ratio?
- Thread starter MrDODGE
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Quote from Landis82:
Especially as "Daal" points out, coming out of a huge recession where there was tremendous cost-cutting going on by corporate America.
Thank You.
Even Wal-Mart's rev missed today.
After taking out the butcher knife, saw and scalpel, and using all aggressively for quite some time, how much longer can companies meet (if barely) earnings expectations on falling revenue (amidst growing unemployment, falling home prices still, wage deflation, rising foreclosures, etc?).
You continue to view the markets through the "rear view" mirror. The market is looking ahead. It always does.
And the $141 BILLION that got slashed in inventories in Q2 was absolutely staggering. There will be top-line growth simply from rebuilding inventories.
Once the BEARISH "cut and paste" posts on ET subside, we might be ready for a correction in the stock market. Until then, the trend is still up.
If anyone here on ET actually trades off of all of those BEARISH "cut and paste" articles that have littered these forums for month after month, I suspect that they'd all be bankrupt given how many times they got "short" and watched their money "evaporate".
Try being short any of the coal, steel, or drilling names since July 4th and let me know if you have any money left. Same for the financials, same for tech.
Good Luck.
You are correct (Q4 2008 was -$23.25). If my memory is correct, the Financial sector pushed earnings into negative territory because of their year-end write-offs.
At $6.86, the S&P 500's 12-month earnings through March 2009 were the lowest on a nominal basis since 1973 ... and on an inflation-adjusted basis since 1933. Its 12-month earnings are currently forecast to decline to $5.46 in Q3, which will be the last quarter that includes the negative result mentioned above.
In Q4 2009 -- when Q4 2008's negative earnings roll out -- the S&P 500's 12-month earnings are forecast to "jump" to $36.44.
when Fed started lowering rated
oil was 68 and ended up to 148 in less than a year
I bet if they didn't lower rates or lowered them modestly oil would be in 30s by that time
which would saved to American consumers much more than current stimulus provides
and yes the landing would be soft
That's a good question and i don't know the answer. They also leave food out. And of course these are the two things that are most important to the average consumer. I suppose it has to do with what happens on average. On average, energy costs rise with a falling dollar, and now that we are in a global economy, that's true of food prices also. I imagine that if you and i know this, the Federal government and the Fed also know it. And, of course the Fed and Treasury know that monetizing debt usually leads to a weakened currency, even though by tradtion the Treasury Secretary takes a strong dollar stance. This has become rather laughable in recent years, particularly from Snow on. Remember when Sec. Snow was traveling around saying that the Treasury was holding to a strong dollar policy which he "personally favored", while the groundwork was being laid for a weaker dollar? I chuckled at that.
I have heard a variation on your explanation for why the Fed leaves out food and energy. It is claimed by some that it is because these fluctuate so much that they can't tell if their policies are working if they include food and energy. But naturally this is a bogus argument, because the Fed can compute inflation anyway they want for internal use. So you can see how really silly these arguments are. The only reason that makes any sense to me is that it saves billions and thus helps hold down the deficit while at the same time perhaps helping to hold down interest rates and make it less costly for the Treasury to borrow.
Maybe an economist will weigh in here and tell us why we use core inflation.
Edit: Well, that was fast! Thanks to Trefoils post below. The economist says the original reason for the new measure "core inflation" was to provide a justification for holding down interest rates. Thanks Trefoil.
Paul Kasriel weighs in (old, but so what?)
Entirely a political concoction.
BTW, I once did a regression on crude, and figured out the long-term real rate of increase in oil is about 5%, not much less than the alleged 7% - with dividends reinvested - increase that the stock market shows in real terms over the long term.
So, if you're really putting together an index that shows the core movement of inflation, I'd think you'd really really want to include oil in that measure.
Entirely a political concoction.
BTW, I once did a regression on crude, and figured out the long-term real rate of increase in oil is about 5%, not much less than the alleged 7% - with dividends reinvested - increase that the stock market shows in real terms over the long term.
So, if you're really putting together an index that shows the core movement of inflation, I'd think you'd really really want to include oil in that measure.
Stock markets are not linear correlated to macroeconomic data.
By the way :
http://www.bloomberg.com/apps/news?pid=newsarchive&sid=auEEAXh55Dxk