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Strategies & Market Trends : Waiting for the big Kahuna -- Ignore unavailable to you. Want to Upgrade?

To: William H Huebl who wrote (75086)	3/28/2007 10:08:32 AM
From: Real Man	Read Replies (1) \| Respond to of 94695

No. Rather, some anticorrelation. WS believes lower dollar will bail out exporters. I expect it to emerge, and that would be the key signal that BK is approaching. Such correlation will signal that foreigners have started to unload their huge bond holdings. Until then, the party will go on due to excessive printing, forgiven by the currency markets. -g-

To: William H Huebl who wrote (75086)	3/28/2007 2:38:14 PM
From: Real Man	Read Replies (1) \| Respond to of 94695

There is one little thing that the bears seem to be forgetting, and it's the p/e ratio. Currently e/p on SP500 is a lot greater than the 10-year interest rates, which makes stocks "cheap", on the basis of portfolio allocation. In fact, due to increase in earnings, e/p is currently the same as in 2002! So, no real alignment is possible, like one that happened in 2000 or in 1987, when that was REALLY out of whack (e/p 36% greater in 1987, 50% or more in 2000). For stocks to go down, either the earnings need to come down due to slowdown in the economy, bank losses, etc., or the 10-year interest rates will need to go up. I think there is also a small possibility of a disconnect developing, i.e, p/e and stock prices moving up, while 10-year interest rates move higher, until we reach 36% overvaluation on a relative basis or something, prior to BK. They sure can get cheaper on a relative basis as well, as they have been cheaper historically. But that ratio is currently not really too bearish.