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To: Bill Harmond who wrote (152330)	2/2/2003 12:35:29 AM
From: GST	Read Replies (1) \| Respond to of 164684

2 variables, revenue growth and projected earnings, are volatile and relatively unpredictable at this point, requiring a much stiffer risk premium (discount) than anything reflected in Yardeni's estimates as per your post. At this point, optimistic estimates of growth and earnings appear to be collapsing. Cheap oil could turn the tide in favor of a new bull market -- much depends on the US quickly and effectively seizing the Iraqi oil fields and crushing any regional opposition to the US occupation of an Arab country. If oil fields are blown up in Iraq, Kuwait, and/or Saudi Arabia, growth estimates for the US economy will come down, possibly pushing us back into recession.

To: Bill Harmond who wrote (152330)	2/2/2003 12:43:00 PM
From: hueyone	Read Replies (1) \| Respond to of 164684

The so called "earnings" Yardeni uses in the Fed Model include a large dollop of phony "earnings" that did not comprise a very significant portion of GAAP earnings in decades past when the Fed model was applied, but they clearly do today. S&P's GAAP earnings, heavily inflated by failure to expense stock options, were overstated for the market as a whole by approximately 31% as of mid year 2002 for the preceding year, and even much more so for the tech sector. I suspect the Fed model would produce decidedly different results were it applied to Standard and Poor's Core Earnings. Explanation of Core Earnings: www2.standardandpoors.com Core Earnings for various companies: bwnt.businessweek.com Regards, Huey