Apocalypse ,its 666

2006-06-06(oh my)

Hello,

Folks its may look like it but it’s not 666 for this market.The current earnings are of much higher quality than in a very long time as for P/E's the market multiply is lower than any time since the 1970's .P/E's in the 1980's and 1990's was more like the low 20's. I hate to burst everyones bubble but this aint the 1970's or the 1930's as for the market making a move ,tranistions from long term bear to bull create a lot of volitility and a lot of false starts ,yesterdays rally may not signal a trend but it was still a broad based rally

So it is not the 1970’s but what everyone should be asking is ,is it 1982 all over again? With the largest US corporations sitting on a record $640 billion in cash it is no wonder that many market observers are calling this 1982 all over again. 375 companies in the S&P 500 have over 62 weeks of income in there pockets which could be used to fuel, mergers acquisitions and leveraged buyouts (LBO’s).Merger mania in the early 1980’s preceded the 1982-2000 bull market. This creates an explosive combination where a low equity valuation meets lots of cash rich and low debt companies.

The market needs the FED to be more constructive to really get going. And as of yet the FED is not giving what we want to hear. It is a stock pickers market both for short and long's . Recent FED minutes seem to imply that the FED is as much confused by the conflicting data as you or I, but the silver lining is that the minutes suggest that the FED no longer has a predisposition to raise or to stop raising. The current FED policy seems to resemble the Yogi Berra advise “if you see a folk in the road take it”. The FED talks tuff but I am not sure that represents policy as much as it reasures investors that the FED is hawkish on inflation.

Interesting to note that the bond market does not seemed confused and is telling us that there is NO global inflation because of the enourmous productivity gains the last several years...hummmJames