Saturday, August 22, 2009

Corporate earnings decline

Robert Schiller at Yale Department of Economics updates the above, an inflation adjuted S&P500 earnings value. This explains the presently extraordinarily high P/E value of 140+. Simply unprecedented.

Some propose the Federal Reserve interventions lately have upheld the bubble despite the deteriorating economy, evidenced with GDP at -3.9%, inflation at -2.1%, and escalating Jobless Claims ( Sooner or later, reality will set in and the horrifying mean reversion will come.

It will take place with either extreme inflation, dramatic equity price drops. Given that inflation stands negatively today, the decline will probably occur first, then the dollar crisis. Nice to have some excitement to look forward to, huh!

0 Reflections: