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Strategies & Market Trends : The Epic American Credit and Bond Bubble Laboratory -- Ignore unavailable to you. Want to Upgrade?

To: russwinter who wrote (37253)	7/29/2005 1:25:04 PM
From: ild	Read Replies (1) \| Respond to of 110194

Schaeffer's Media Outtakes: A Mile Wide and an Inch Deep Bernie Schaeffer 7/29/2005 8:32 AM ET "Corporate earnings have been surprisingly strong this earnings season. Yet to the chagrin of many small investors, the stock market has barely budged ... But Wall Street is sitting on its hands -- a sign that investors remain skittish. Though the Dow Jones Industrial Average bounced 57 points yesterday, which brings it up a bit more than 1% for the quarter -- it still remains down more than 1% for the year. And the price/earnings ratio on the S&P 500 has been moribund in the 15 to 16 range for essentially the past year -- even though earnings growth in each of the last four quarters have reached well into the double digits ... For investors, a key question is whether to sit on the sidelines and wait for an indication that the Federal Reserve is done raising interest rates, or whether to get into the game knowing that returns could be flat for an undetermined period ... The S&P 500, in fact, closed at 1237 yesterday, a four-year high. Yet during that span -- when the market has essentially gained no ground -- corporate profits are up about 35% and short-term borrowing costs are down about 30%, according to (the chief investment strategist at a money management firm). By his estimation, the S&P 500 is undervalued by about 25%." ---(The Wall Street Journal - 7/28/05) Schaeffer's addendum: If you'd like some insight into the "mile wide and inch deep" thinking that dominates Wall Street these days, this piece might be considered "best in class." In no particular order, let's review its numerous biases and omissions: Since when does the stock market move in lock step with the growth in corporate earnings, except over very long time periods? The "meat" of the sharp rally off the 2002 market bottom was not accompanied by strong earnings growth, yet Wall Street was more than willing to accept the legitimacy of that rally on the faith that the market was anticipating such growth. Might the market now be anticipating a deceleration of earnings growth? The S&P price/earnings ratio "in the 15 to 16 range" is moribund? Might this particular P/E be based on "operating earnings," the fiction that corporate America creates to keep earnings smooth and growing and as high as possible? Might this particular P/E be based on projections for earnings growth over the next year that will be far in excess of actual growth? If so, it would be business as usual on Wall Street. Investors who "get into the game" now are apparently at risk for "returns that could be flat for an undetermined period." In other words, the "risk" of being fully invested in blue-chip stocks these days does not involve what used to be known as "downside." So the S&P is "undervalued by about 25%," apparently because earnings have grown and interest rates have declined? But what if earnings growth decelerates sharply? What if (as most on Wall Street are predicting) interest rates rise sharply? Or what if the refusal of the bond market to cave is an indication of a weakening economy? You've got questions? Wall Street sure doesn't. Bernie Schaeffer schaeffersresearch.com

To: russwinter who wrote (37253)	7/29/2005 3:26:41 PM
From: Crimson Ghost	Read Replies (4) \| Respond to of 110194

Bonds getting hammered again today. TNX near 4.3%. Andy Xie thinks that 4.5% would trigger a sharp correction in global equity markets. Works for me.

To: russwinter who wrote (37253)	7/29/2005 6:04:31 PM
From: Ramsey Su	Respond to of 110194

Russ, that is a law that I am not familiar with but I am quite certain it is intended to protect the defaulting property owner from being further victimized. I have no doubt that when the volume of defaults increases, all those crooks will be back to jump on the carcasses. As for that foreclosure website, I would not pay any attention to that data. In California, it is very simple. Terms such as "foreclosure" or "preforeclosesure" are totally meaningless. A real website should state the number of NODs (notice of defaults), NTS (notice of trustee's sale) and REOs, when there are no bidders at the trustee's sale and the lender becomes the successful bidder.