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  • Japan's Post-Bubble Rallies: New Update [View article]
    Paul, Thanks. Good suggestions that I'll reflect in the next update.
    Aug 25, 2010. 08:05 AM | 2 Likes Like |Link to Comment
  • Treasury Yield Snapshot [View article]
    John -- When we take a longer-term view of Treasuries, I wonder if the 0-0.25 Fed Funds Target Rate (recently at about 0.19) could be putting us in ""uncharted" territory as far as correlations are concerned:

    This is the main reason I've been following yields more closely in recent weeks.
    Aug 23, 2010. 12:28 PM | 2 Likes Like |Link to Comment
  • What if There Hadn't Been a Tech Bubble? [View article]
    Charlie. I focused on a single period of excessive over-valuation because the tech bubble was by far the extreme valuation outlier in US market history -- regardless of whether you look at cyclical P/E, Q Ratio, or deviations from the mean:

    There is no comparable single conspicuous under-valuation outlier.
    Aug 10, 2010. 11:36 AM | 2 Likes Like |Link to Comment
  • The ECRI Weekly Leading Index: A Historical Look [View article]
    Interesting analogy. With today's congressional politics, a retest of the 2009 lows might be required.
    Aug 8, 2010. 08:36 PM | 5 Likes Like |Link to Comment
  • The ECRI Weekly Leading Index: A Historical Look [View article]
    Kirk, Yes, I know. Seeking Alpha condensed my original article, which is posted here:
    Note my reference to the Ritholtz article.
    Aug 8, 2010. 10:22 AM | 5 Likes Like |Link to Comment
  • Inside the Consumer Metrics Institute's Growth Index [View article]
    Sorry -- here it is:

    I'll ask the Seeking Alpha folks if they can correct the local copy.
    Aug 6, 2010. 03:57 PM | Likes Like |Link to Comment
  • Japan, The U.S., Bubbles and Deflation [View article]
    chillNYC -- The twin peaks in the S&P 500 are more obvious in the nominal version:

    I'm puzzled that you interpreted the article as a prediction. To reiterate:

    "Of course the two countries differ in many respects. Both experienced stagflation during the 1970s, but the inflation charts during that period do not mirror one another. Likewise Japan's long-term post-bubble struggle with deflation does not preordain a similar fate for the US. The charts and commentary here merely constitute an observation that severe inflation is not the inevitable outcome of government efforts to manage the US financial crisis."
    Aug 5, 2010. 05:22 PM | 2 Likes Like |Link to Comment
  • Valuing the S&P 500: As-Reported Earnings Estimates [View article]
    Click this link:

    And click as show here:

    At some point you'll be required to log in. If you don't already have a Standard & Poor's account, you can set one up for free with your email address and password of choice.

    Hope this helps!
    Aug 5, 2010. 01:43 PM | 1 Like Like |Link to Comment
  • Japan, The U.S., Bubbles and Deflation [View article]
    John, I couldn't agree more. Last month Ben Bernanke said the economic outlook is "unusually uncertain". I'd say the degree of uncertainty is unprecedented.

    As for economic theory, the only one I subscribe to is that a well-selected $8 bottle of wine can put a smile on my face as well as a $40 bottle.
    Aug 5, 2010. 12:46 AM | 8 Likes Like |Link to Comment
  • The Q Ratio and Market Valuation [View article]
    coddy0 -- You're absolutely right. Inflation/deflation doesn't change the Q Ratio. I think the above discussion of inflation/deflation and interest rates is about the impact on investor behavior, namely the likelihood that the market price gets bid up/down depending on the "flation" and interest-rate environment.
    Aug 3, 2010. 11:17 PM | 2 Likes Like |Link to Comment
  • The Q Ratio and Market Valuation [View article]
    Thanks for the interesting discussion. It inspired me to draft a couple of charts showing the correlation between inflation and the cyclical P/E ratio and the Q-Ratio:

    I opted to use inflation in the correlation, but I could have used 10-year yields, since I have that data for the entire time frame.

    Of course, there is a fairly stong correlation between inflation and interest rates, although, particularly in the early 20th century, inflation was the far more volatile of the two.
    Aug 3, 2010. 03:25 PM | 2 Likes Like |Link to Comment
  • Update: Is the Stock Market Cheap? [View article]
    John, thanks for the suggestion. I'd be happy to collaborate on the topic. I think, however, that it puts a rather different spin on the concept of valuation from what I'm addressing the these charts. Low risk-free returns may drive alpha-seekers to invest in higher risk assets, which may in turn prolong periods of high P/E10 ratios and increase the ratios themselves. But the fundamental valuation remains the ratio itself.
    Aug 2, 2010. 05:29 PM | 3 Likes Like |Link to Comment
  • The ECRI Weekly Leading Index: Negative Growth for Seventh Straight Week [View article]
    Hi John -- Yes, I think that's a very plausible explanation for what we're seeing in the WLI. Likewise when I look at the much newer (and narrower) Consumer Metrics Institute's Growth Index, I see a similar pattern of oscillation:
    This coming Friday we get the first read on Q2 GDP from the BEA, which should be interesting. Of course, Q1 GDP was initially put at 3.2%, then dropped to 3.0%, and finally recorded at 2.7%. So I'll take the July 30th number for what it is -- an opening negotiation with reality.
    Jul 24, 2010. 04:52 PM | 6 Likes Like |Link to Comment
  • ECRI Registers Yet Another Week of Negative Growth [View article]
    Here you go:
    Jul 22, 2010. 12:12 PM | Likes Like |Link to Comment
  • ECRI's WLI Shows Unprecedented Decline: Leading Indicator or False Negative? [View article]
    Charlie, Thanks for your thoughtful response. Personally, I wouldn't bet the farm one way or the other on the strength (or weakness) of the ECRI indicators. Perhaps it's the greater concern about the impact than the odds that makes the business of recession forecasting so fascinating.
    Jul 5, 2010. 05:43 PM | 3 Likes Like |Link to Comment