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Politics : Ask Michael Burke

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To: Michael Bakunin who wrote (41985)	1/4/1999 11:08:00 AM
From: Mike M2	Read Replies (1) of 132070

mb, I didn't click on your link but keep in mind that in the past high PE's have been based upon depressed earnings. In the current mkt not only are PEs high but earnings peaked one year ago. Wall st cannot make a case for higher earnings in 1999 unless they base it on hope. Not only are PEs high but I would argue that the quality of those earnings is the lowest on record due to very aggressive and misleading accounting like esops and share buybacks. In addition, the decline in interest expense has been a major factor in the improvement of earnings power in the US -a factor which will be of little benefit going forward. The US economy has been powered by a debt fueled consumption bubble due to easy credit and the wealth effect of the stock mkt. Mike

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