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To: mishedlo who wrote (233737)	4/5/2003 11:39:54 AM
From: Giordano Bruno	Respond to of 436258

Core earnings from Decision Point Decision Point Alert By Carl Swenlin April 5, 2003 ************************ Substantial portions of this report have been omitted in deference to paid subscribers. ********************* THE REAL P/E RATIO The "as reported" P/E for the S&P 500 (a.k.a. earnings based on GAAP -- Generally Accepted Accounting Principals) is the historical standard for reporting earnings. The normal range for GAAP P/E ratio is between 10 (undervalued) to 20 (overvalued). The investment sales industry would like us to think that "pro forma" or "operating earnings" is the same as GAAP, but operating earnings are a fabrication prone to gross distortion. There is no standard by which operating earnings can be judged because operating earnings are not based on real accounting -- all revenue is included, but selective expenses are ignored. This version is becoming known as EBBS (Earnings Before Bad Stuff). Standard & Poors has introduced a third version called "core" earnings, which is more critical and analytical than the other two, and is designed to reveal the true condition of the company. We can only use GAAP earnings for historical comparisons, because there is no historical record for the other two. Core earnings should be used for individual company value analysis. Pro forma earnings should be ignored. The following are based on S&P 500 12-month trailing earnings as of Q4 2002 (Source: Standard & Poors). The estimated P/E is calculated by dividing the most recent S&P 500 close by the EPS: "As Reported" (GAAP) EPS is $28.00; P/E is 31.39. "Core" EPS is $23.75; P/E is 37.00. "Pro Forma" EPS is $45.98; P/E is 19.11. Based upon the latest GAAP earnings the following would be the approximate S&P 500 values at the cardinal points of the normal historical value range. They are calculated simply by multiplying the GAAP EPS by 10, 15, and 20: Undervalued (P/E = 10): 280 Fair Value (P/E = 15): 420 Overvalued (P/E = 20): 560 EARNINGS UPDATE: According to the spreadsheet we download from the Standard & Poors web site, as of March 19, S&P 500 earnings reporting for Q4 2002 is 99% complete, and we note that these results are now being reported by S&P to Barron's, so we are using them in our current calculations (above). "As reported" earnings (based on Generally Accepted Accounting Principals, GAAP) are $3.41/share. This is down 60% from Q3 and down 37% from the same quarter a year ago. Looking forward to results for Q1 2003, we note that GAAP estimates are for $11.43/share, a mere 235% increase. Current GAAP estimates for 2003 are $34.86/share, a 25% increase over 2002.

To: mishedlo who wrote (233737)	4/5/2003 4:22:22 PM
From: UnBelievable	Read Replies (4) \| Respond to of 436258

He Is Either Misinformed or Misinforming The feat of misdirection that Mr. Mauldin has either fallen victim to, or is attempting to victimize his readers with, is the assumption that the PPT is hidden and secret. Such is not the case. It is hidden in the best hiding place of all, right out in full view. He need only look as far as the Federal Reserve Bank of New York's Trading Desk, and then "follow the money". As to arbitrage and program trading being why it couldn't work that exactly how it works. When the futures are bid up over fair value it causes the program trading firms to buy the market and sell the futures. This is exactly how and why the market goes up when the futures are bid up. As to costing billions what does he think is done with the billions of dollars that the Fed creates each day through RP's. The Trading Desk At The NY Fund Is the enabler and co-conspirator with the banksters (primary dealers) whose traders it is that place the trades which move the futures. The traders who move the futures in ways consistent with the objectives of the Federal Reserve (particularly the FOMC) are employed by banks and securities firms recognized by the Federal Reserve Bank Of NY (FRBNY) as primary dealers. The primary dealers are the organizations through which the Fed injects liquidity into the system when it engages in open market operations. Open market operations are one of the three ways in which the Federal Reserve implements monetary policy; the other two are determining the discount rate and determining reserve requirements. federalreserve.gov Open market operations, which are conducted on behalf of the Fed by the trading desk of the FRBNY, involve adding or reducing reserves into the system by trading in government securities. “Most often, the transactions the Trading Desk engages in are short-term repurchase agreements (RPs), which are used in situations that call for temporary additions to bank reserves. With RPs, the Desk buys securities from the dealers, who agree to repurchase them by a specified date at a specified price. When the RPs mature, the added reserves are automatically drained. newyorkfed.org RPs give the primary dealers cash that they use to influence the functioning of the markets. “At the New York Fed's Trading Desk, the staff starts each workday by gathering information about the market's activities from a number of sources. The Fed's traders discuss with the primary dealers how the day might unfold in the securities market and how the dealers' task of financing their securities positions is progressing.” (same as prior link). So basically each day the trading desk coordinates the collusion between the major banks and securities brokerages (collectively “Banksters”) concerning the direction of the stock market. Currently the primary dealers are: ABN AMRO Incorporated BNP Paribas Securities Corp. Banc of America Securities LLC Banc One Capital Markets, Inc. Barclays Capital Inc. Bear, Stearns & Co., Inc. CIBC World Markets Corp. Credit Suisse First Boston Corporation Daiwa Securities America Inc. Deutsche Bank Securities Inc. Dresdner Kleinwort Wasserstein Securities LLC. Goldman, Sachs & Co. Greenwich Capital Markets, Inc. HSBC Securities (USA) Inc. J. P. Morgan Securities, Inc. Lehman Brothers Inc. Merrill Lynch Government Securities Inc. Mizuho Securities USA Inc. Morgan Stanley & Co. Incorporated Nomura Securities International, Inc. Salomon Smith Barney Inc. UBS Warburg LLC. ny.frb.org Traders employed by these organizations then intervene (ramp) the markets using this cash in a manner intended to ensure that the market functions with the Feds objectives. The actual “heavy lifting” is done when the program trading firms react to the fact that the futures are trading in excess of fair value by buying the market and selling the futures. But keep in mind that the Fed determines its objectives based on the input it has received from these firms concerning the condition of the markets and the types of interventions which are needed to keep them functioning “smoothly”. Peter Fisher, Under Secretary Of The Treasury For Domestic Finance – is the person who as “liaison” between the Treasury Department and the FRBNY especially with regard to its open market operations. Prior to being appointed to this postion by George W. he was the Executive Vice President of the Federal Reserve Bank of New York where he serves as the manager of the System Open Market Account for the Federal Open Market Committee. treas.gov If he has any questions I'm sure Peter can answer them. As to the $100,000 reward he should keep it. Maybe he can use it to get himself one of those edjumacatons.