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Strategies & Market Trends : Roger's 1998 Short Picks
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To: Ploni who wrote (5337)3/22/1998 4:02:00 PM
From: Don Westermeyer  Read Replies (1) of 18691
 
Charles,

IMO the thing that will pop the bubble will be a modest in interest rates, may be even rising only to 6.5% or so.

I was reading an article recently that graphed the bond yield against the (S&P?) earnings yield concluding that they don't diverge for very long. Currently the stock market yield is already significantly lower than the earnings yield implying that either corporate earnings must increase or the bond yield must go down.

I think it is pretty clear that corporate earnings are not going to be all that great this year, so all that is left supporting the market is low interest rates. Who really knows what direction interest rates will go.

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