Friday, June 02, 2006

No Predisposition from the FED

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 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 .

The market is extremely undervalued but that dosnt mean it wont stay that way it is just very cheap ie look at all the take overs and public companies going private .The market needs the FED to be more constructive to really get going. 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. So perhaps the rally of the last couple of days is saying 1/2 a loof is better than none.

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...hummm

James

1 comment:

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