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To: J. P. who wrote (32934)	4/13/1999 8:58:00 AM
From: Real Man	Read Replies (1) \| Respond to of 86076

It is interesting to plug in earnings estimates from Yardeni into the Fed model (www.yardeni.com). Here is the result. Yardeni.com - Valuation Calculator Over the next 12 months, the consensus earnings forecast of industry analysts for the S&P 500 is $52.78 per share, according to the latest weekly data compiled by I/B/E/S International. This is a 19.1% increase over the latest available four-quarter trailing sum of earnings. The fair-value of the S&P 500 Index was 1045.15 yesterday, derived simply as the 12-month forward earnings divided by the 10-year Treasury bond yield, which was 5.05% yesterday. The S&P 500 closed at 1348.35 yesterday, suggesting that the market was 29% overvalued, i.e., above the fair value. Using your estimated -3.564% growth in corporate earnings and your chosen 5.03% bond yield results in a fair value of 849.9, suggesting that the stock market is 58.6% overvalued currently.