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Strategies & Market Trends : Classic TA Workplace

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To: Joseph Silent who wrote (33579)	3/7/2002 3:01:20 PM
From: Terry D	Read Replies (1) of 209892

JS A declining dollar and rising rates really screw with the very sensitive Greenspan model - and Wall Street happy talk. Making the leap that the 2003 mean estimate of $65.41 can be maintained through year-end (becoming, at that time, the prevailing 12-month forward estimate), the model shows that as little as a 75-basis-point increase in the ten-year Treasury note yield, to 5.75%, would imply a fair value for the S&P 500 of 1,137 on December 31, 2002, which is just about where it is today. Of course every WS economist believes that the year-end level for the ten-year Treasury yield will be 4.7%. At a yield of 4.75%, the $65.41 earnings estimate would support a S&P 500 value of 1,377 at year-end, roughly 20% above the current market price. A house of cards.

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