With 493 of the S&P 500 having reported 2nd quarter earnings, the "forward 4-quarter" estimate slipped a whopping $0.05 this week to $126.28 from last week's $126.33.
With the S&P 500 closing at an all-time high today of 2003, the PE ratio on the S&P 500 increased this week to 15.9(x), while the PEG ration finished the week and month at 1.73(x).
The earnings yield on the S&P 500 fell this week to 6.305 from last week's 6.35%.
The y/y growth rate on the forward estimate fell again this week to 9.18%, has now fallen for 5 straight weeks and has declined 40 bps from 8/1/14′s peak of 9.58%.
The July 11, 2014 y/y growth rate was 8.53% so the growth rate accelerated through July '14 and has now decelerated through August '14. Am I worried ? No, given the absolute growth rate is still a healthy 9.18% and close
Interested in some data that may shed some light on the future direction of both stock as well as bond prices?
An analysis of the relationship between the annual rate of return between long-term treasury bonds and the return of the S&P 500 index during 1999 and 2013 shows a huge inverse relationship over the period.
Specifically, when long-term government bonds have done very well, the S&P has done very poorly, and vice versa. Consistent with this, somewhat average returns for bonds corresponded to near average returns for stocks. Such a strong degree of negative correspondence between stocks and bonds could have only happened by chance one time in a thousand, according to statistics.
Since long-term bonds are doing extremely well this year, if this relationship continues to hold true in 2014, one would expect that by year's end, stocks may have lost much of their gains this year thus