Pay No Attention to the 140 P/E Behind the Curtain

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Includes: IVV, SPY
by: Rich Hartmann
Yes folks, it’s time to dust off those party hats… It’s Dow 10,000 time! Pay no attention to anything else folks. Especially not the S&P 500 P/E ratio…
As of Oct 7, The S&P P/E Ratio is 140.82. Yep, 140!!! This isn’t my data; this is directly from the New York Fed. Here’s the link (pdf).
So, remember that little thing called dot.com? Remember all that irrational exuberance that was “the bubble”, where the P/E basic fundamentals went from the 15 range, and shot all the way up to 47…
Well now, we're at 140! The funny thing is, it doesn’t even fit on the Fed’s chart. (Look for yourself) The line goes to the top, and then there is text telling you that the P/E is at 140. It is absolutely comical.
There are no fundamentals, just fake money floating around, created from thin air, looking for a place to land. (note to the Fed, when you create money, it needs to be dispersed! It doesn’t just need to be spun around the fractional reserve system of the debt, creating greed whores who will cash out bonuses of false profits from stimulus floatation …or, you get what we have today, fundamentals that fall completely out of whack.)
Pricing the S&P at 140 falls into what I call unattainable true price discovery. I discuss this at length in my “Evaporflation Theory” as true price discovery (even for stocks) will soon become unattainable. You can’t mess with the economic forces of nature. Much like Mother Nature, you don’t know how this force will punch back! An S&P P/E of 140 will likely lead to missed expectations on earnings. (Hmmmm does that sound good for all the massive pension funds that are looking to capitalize on this fake bull run, in order to recoup losses from there soon to come shortfalls?)
The bulls will argue against me, saying: look at the financials… their numbers aren’t bad, they’re recovering!
Let’s face it folks, when your financial institutions refinance all their debt at anywhere from 0.5% to 0.015% via the government/taxpayer loans/bailouts, and then re-loan that money out to taxpayers at 5% or don’t refinance existing taxpayers loans from their 6-10%, it becomes a built in profit that borders on criminal. Until the public realizes that this simple concept: I owe the bank money. I’m now going to take money from other parts of my paycheck, and give it to the government, so the government can loan it to the bank I owe at a really cheap rate… Just so that the bank I owe, can make a larger profit margin on the money I still owe them. …and after they make a larger profit, they can give themselves a bonus above and beyond the addition profits they made by cutting costs through layoffs.
P.S. I’ve lost so much interest in economics and finance in the last year. When the financial world started to resemble something as comical as the “professional wrestling” it gets hard to take yourself serious as an analyst of that venue. For me, (or the pros like Nouriel, Krugman, Schiff) or anyone else to sit here and make realistic prognostications on what will or should happen is as ridiculous as talking about whether Hulk Hogan was really better then Andre the Giant. It’s all fake people. Whether we are fundamentally right, momentum can irrationally go another way. Even if we are wrong, governments can intervene, “manipulate/correct” or “save” the economy for whatever reason.