<font size="4">What's Wrong With This Picture?</font>

What's wrong with this picture? At a time when the economy was supposedly recovering, year-over-year sales of the S&P Industrials in the first quarter were plunging at a record 10.4%. This is the real thing, and it's therefore no wonder why corporate executives are far gloomier than economists. It also explains why these managers are selling their own company stock at a ratio of 4-to-1 over purchases. July is the time when government economists and statisticians make their annual benchmark revisions to the GDP data, and we have a feeling that they will make some significant downside revisions. Almost all of the initial reports of the various components of the GDP are based on sampling, and the rest is a guess based on past experience. Historically, we have seen some important revisions, and the lackluster S&P Industrial sales strongly hint that the revisions this time will be on the downside. The changes are scheduled for release on July 31. Stay tuned.

Even on data reported so far, the economic recovery seems to be wavering. The University of Michigan Consumer Confidence Index for June was down, with the expectations sector at its lowest point since February. Monthly mass layoffs were up for the third straight month, and are at the highest level since January, while a number of the purchasing managers' regional surveys showed a slowdown in growth for June. May retail sales were off by 0.1%, the worst results since last November. Even the first quarter GDP annualized growth rate of 6.1% was not as strong as it seemed since 65% of the rise reflected a swing in inventories. The only really strong sector is housing, and this is ironically being helped by the drop in mortgage rates as a result of weakness elsewhere in the economy.

Some economists and strategists think that there is a disconnect between a strong economy and a weak stock market. We think that the disconnect may go the other way. A market selling at over 40 times trailing 12-month earnings is far too highly valued for an economy where S&P Industrial sales are falling 10.4% over a year ago.

Quelle

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><font size="4">What's Wrong With This Picture?</font>
> What's wrong with this picture? At a time when the economy was supposedly recovering, year-over-year sales of the S&P Industrials in the first quarter were plunging at a record 10.4%. This is the real thing, and it's therefore no wonder why corporate executives are far gloomier than economists. It also explains why these managers are selling their own company stock at a ratio of 4-to-1 over purchases. July is the time when government economists and statisticians make their annual benchmark revisions to the GDP data, and we have a feeling that they will make some significant downside revisions. Almost all of the initial reports of the various components of the GDP are based on sampling, and the rest is a guess based on past experience. Historically, we have seen some important revisions, and the lackluster S&P Industrial sales strongly hint that the revisions this time will be on the downside. The changes are scheduled for release on July 31. Stay tuned.
>Even on data reported so far, the economic recovery seems to be wavering. The University of Michigan Consumer Confidence Index for June was down, with the expectations sector at its lowest point since February. Monthly mass layoffs were up for the third straight month, and are at the highest level since January, while a number of the purchasing managers' regional surveys showed a slowdown in growth for June. May retail sales were off by 0.1%, the worst results since last November. Even the first quarter GDP annualized growth rate of 6.1% was not as strong as it seemed since 65% of the rise reflected a swing in inventories. The only really strong sector is housing, and this is ironically being helped by the drop in mortgage rates as a result of weakness elsewhere in the economy.
>Some economists and strategists think that there is a disconnect between a strong economy and a weak stock market. We think that the disconnect may go the other way. A market selling at over 40 times trailing 12-month earnings is far too highly valued for an economy where S&P Industrial sales are falling 10.4% over a year ago.
> Quelle

Hier das letzte Summary:

S&P 500 Statistics
As of May 31, 2002

Total Market Value ($ Billion)
9,789
Mean Market Value ($ Million)
19,578
Median Market Value ($ Million)
8,201
Weighted Ave. Market Value ($ Million)
88,266
Largest Cos. Market Value ($ Million)
309,396
Smallest Cos. Market Value ($ Million)
709
Median Share Price ($)
36.155
P/E Ratio
43.22
Indicated Dividend Yield (%)
1.5

Quelle: S&P

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Hi Popeye,

dazu passt noch folgender Text....

<FONT SIZE="4" COLOR="#030368" FACE="Verdana, Arial">LIMBO LIMBO, HOW LOW CAN IT GO?
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<FONT SIZE="2" COLOR="#030368" FACE="Verdana, Arial">Most investment professionals believe the US stock market and economy will reverse direction and rise once the lower rates kick in and Bush gets his tax cut package through Congress. We have tried to explain in these comments why we believe that the stock market will not be bailed out this time by either the Fed or fiscal policy (tax cuts). The reason it will not work this time (while the Fed was successful in the past) is due to the severity of the NASDAQ's bubble finally bursting and the reverse wealth effect kicking in. At the peak, the NASDAQ stock valuation was over $6.7 trillion. We have just gone through almost $4 trillion of that over the past year. Once a financial bubble as large as this one finally breaks it is very hard to stimulate demand. The only financial bubbles that even compare to this one have been in 1929 and in Japan in 1989. In both cases, interest rates were driven down to almost zero without stimulating demand. Since the recent financial bubble was greater than either of the other two, the stimulation of demand will be even more difficult, and the stock market could go much lower.


This brings us to the question that is repeated in the chant of the Limbo game or dance,"How low can you go?" We have tried to answer this question in the attachment to today's comment. With the help of the charts and statistics of Ned Davis Research, we went back over the past 75 years of history to look for periods of time, which most resembled today's condition(some stats were not available). As we stated before, the 1929 experience is probably the closest, but there were 9 clear bull markets that peaked and were followed by bear markets. In each of these 9 periods of time we identified 5 different stock market metrics----1. Price to Dividends 2. Price to Sales 3.Price to Cash Flow 4. Price to Book Value 5.Price to Earnings. We measured these metrics at the peak of the bull market and also identified where these same metrics troughed in the bear market that followed.


In order to determine"How low this stock market can go", all you have to do is to determine if this is a normal bear market. If you do, you might want to use historical averages (the average of the troughs). If you are as bearish as we are, you might want to use the lowest historical troughs since we believe this is the greatest bubble of them all. Lastly, if you are bullish (a new paradigm thinker) pick the average of the prior market peaks, or even the highest market peak. The various indices used in this study will have to fall another 50% from here to reach any of the bear market troughs. Any way you want to look at it... you will be shocked at how low it can go.

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~ <FONT SIZE="2" COLOR="#030368" FACE="Verdana, Arial">Click here for Market Peaks - Last 75 years Attachment (PDF) </FONT>


~ <FONT SIZE="2" COLOR="#030368" FACE="Verdana, Arial">DJIA Price/Dividend Ratio (Monthly)</FONT>


~ <FONT SIZE="2" COLOR="#030368" FACE="Verdana, Arial">S&P Industrial Average Price/Sales Ratio</FONT>


~ <FONT SIZE="2" COLOR="#030368" FACE="Verdana, Arial">S&P Industrial Price/Cash Flow Ratio</FONT>


~ <FONT SIZE="2" COLOR="#030368" FACE="Verdana, Arial">S&P 500 Price/Book Value Ratio</FONT>


~ <FONT SIZE="2" COLOR="#030368" FACE="Verdana, Arial">S&P 500 Price/Earnings Ratio (Monthly)</FONT>


~ <FONT SIZE="2" COLOR="#030368" FACE="Verdana, Arial">NASDAQ Composite Price/Earnings Ratio vs Margin Debt (excludes negative earnings)</FONT>
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Der Vergleich zum Limbo ist genial.
Hoffentlich klappt das mit den Links - alles pdf-Dateien.

herzliche Grüsse
Cosa

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