The discussion about p/e ratios and other valuation ratios derived from Company-issued GAAP accounting financials is idiotic. The GAAP accounting allowances have been liberalized beyond a Bernie Sanders wet dream over the last 20 years. The p/e ratio at the peak of the tech bubble is completely different from the p/e ratio at the top of the 2007 stock bubble which is completely different then the p/e ratio now.
If 1999’s or 2007 GAAP standards were applied to today’s earnings, the P/E ratio on the S&P 500 would be at least as high as 65 p/e ratio registered in 2007. By several other metrics, most notably market cap/sales ratio, the current stock market is by far the most overvalued in history.
And that does analysis does not incorporate any adjustments for the fraud component of contemporary corporate accounting.
The S&P 500 and Dow are hitting all-time highs this week. This was triggered by the Ben Bernanke influenced Bank of Japan decision to engage in “helicopter money” activity in an attempt to stimulate economic activity. Notwithstanding the fact that Bernanke is likely the most destructive Central Banker in history, Japan’s decision will end in destruction of its currency. Maybe that’s what the NWO’ers are working toward achieving anyway.
Interestingly, the U.S. stock market reacted counter-intuitively to Japan’s move. The yen and other Asian currencies plunged vs. the dollar, making U.S. manufactured exports to Japan/Asia more expensive and making Asian imports into the U.S. cheaper. This in turn will further depress U.S. corporate revenues and earnings, which have dropped 5 quarters in a row – likely a 6th quarter when we get to see Q2 earnings reports. To label this response by the U.S. stock markets “idiotic” is an insult to the word “idiotic.”
Beneath the glow of a stock market on fire, the U.S. economy is collapsing, especially the consumer. I’ve detailed the decline in a key consumer spending metric, dining out, to demonstrate that middle class disposable income is shrinking quickly. The Canadian brokerage firm, Canaccord, released a report this morning which stated that, “said the firm’s checks indicate a material decline in sales and traffic trends in casual dining restaurants was seen in June LINK.
June auto sales came in below expectations. This is despite a new record in auto debt issuance. The auto debt bubble is starting to look a lot like the housing mortgage bubble of 2005-2008.
The price of oil is starting to drop quickly again. Refiners are cutting crude oil orders quickly as demand for refined products slips as another oversupply condition has accumulated: LINK. The Fed and the TBTF banks have been working hard to keep the price of oil propped up. They know all too well that a big bank balance sheet disaster looms if too many junk-bond financed companies go tits up all at once. That will happen anyway and for that we can soon expect Helicopter Money in this country.
Speaking of Helicopter Money, Cleveland Fed President, Loretta Mester, gave a speech in Australia in which she alluded the possibility of using “Helicopter Money” to stimulate economic activity. Mester is a voting member of the FOMC. This tells us that the FOMC itself has been discussing the possibility of dropping bags of money on the population.
This reflects a Fed that is in a complete state of desperation about the collapsing economy. $4 trillion in direct money printing plus several multiples of that amount of money injected into the system in the form of credit failed to stimulate real economic activity. Why are they talking about even more? Sure, housing and auto purchases using DEBT were stimulated, but that ship has sailed unless the Fed wants to give out money for down payments.
The Fed is even more desperate to keep the stock market elevated. If the stock market collapses, or just drops over 10% for an extended period of time – as in a few months – every single pension fund and insurance company in this U.S. will collapse. It’s a simple as that.
In other words, the stock market is one big weapon of Mass Wealth Destruction. You can protect yourself by unloading your non mining stock dollar-based “investments” and moving your money into physical gold and silver.
I am expecting a MONSTER move in the precious metals between now and the end of the year. I will lay out an overview of my views later this week…I save details behind my analysis for subscribers to my Mining Stocks and Short Seller Journals…
I noticed that amongst my silver mining stocks, since 20.50 was first tapped and capped, they are all higher now… so if that trend continues as spot prices climb the remainder of the year, holders of mining shares will actually benefit from Cartel / Fed Agent capping efforts. Voila.
Spot hasn’t closed as high as $20.50.
“The Canadian brokerage firm, Canaccord, released a report this morning which stated that, “said the firm’s checks indicate a material decline in sales and traffic trends in casual dining restaurants was seen in June.”
Is that just for Canadian restaurants or are US based restaurants included?
I work at a Darden restaurant here in the greater Seattle area (Ticker symbol DRI) and we are having record sales the past few years. We do have a great brand and a unique restaurant with great brand recognition ans loyal repeat customers. Some of the increase in sales can be written off to increased menu prices but only a few percent. I’m just guessing here on the numbers because I’m not privvy to that info but were probably up 20+ percent over the last few years. We are constantly hiring new staff. Partly because we are busier but partly because my managers need to work on and understand the concept of employee retention. I was talking to my regional supervisor who had just flown in from Florida and he’s the one that told me we are breaking sales records consistently.
But keep in mind I live in a very resilient area that can basically be self sustaining but also has big companies headquartered here that span the globe selling very high tech advanced products and services of great value.
On anothet note, the S&P closed just lower today then yesterdays close. Anyone have thoughts in what that means from a chartists perspective?
>> I am expecting a MONSTER move in the precious metals between now and the end of the year. I will lay out an overview of my views later this week…I save details behind my analysis for subscribers to my Mining Stocks and Short Seller Journals…
We all have been expecting something for so many years (I mean the people who read blogs such as yours).
Yet, the stuff keeps holding together and the value of PM keeps being hammered.
It would be a relief to see your prediction hold true.
Let’s wait & see….
When the Gubberment drops a bag of green paper on me
I plan on going to my local bullion dealer, post haste.
Death to the money changers, the sooner the better.
Its’ a scorched earth policy here in Dave, but when you think about it they now have the largest military machine ever in known history& no choice, it has to be payed for, the alternative is to be hung from lamp posts’. Its’ gonna end with currency collapse& an attempt at some sort of binary payment system.
But your right IMO about capital destruction, i think this will create un heard of poverty in our life times i’ve had this hunch that actually from a macro & Micro perspective capital, including the technology that drives the engine of production increases’ actually takes centuries to build up. JMO But I do think ultimately this proves that Government is truly the guy with the gun to the head of the bankers here. It vindicates things that people like Greenspan & Bernanke (not defending their corruption ) have been trying to say all along, that they can provide the liquidity in perpetuity but obviously the purchasing power of currency can’t be guaranteed…it truly is the politicians and bureaucrats driving this complete catastrophe…it will be currency collapse.
Loretta Mester was interviewed on TV here, earlier in the evening.
Listen to her answer, when questioned about the Fed having its decision-making process, dictated by the markets. It is at 4.45.
“… the current stock market is by far the most overvalued in history.”
I like reminders like this article of where the stock markets stands. Repeat articles along these lines again please.