Friday, April 08, 2011

Market comments for April 8th

Still think the market should be going up and is undervalued? Well this chart below and commentary should give you great pause and concern. This from Chart of the Day:

With first-quarter earnings season set to officially kick-off on Monday when Alcoa reports first-quarter earnings, today's chart provides some long-term perspective to the current earnings environment by focusing on 12-month, as reported S&P 500 earnings. Today's chart illustrates how earnings declined over 92% from its Q3 2007 peak to Q1 2009 low which brought inflation-adjusted earnings to near Great Depression lows. Since its Q1 2009 low, S&P 500 earnings have surged (up an inflation-adjusted 994%) and currently come in at a level that is greater than what occurred at the peak of the dot-com bubble and not far from its credit bubble peak. It is interesting to note that the original run up in real earnings from Great Depression lows to dot-com highs took over 67 years. The current spike has taken 20 months.

The 10 year Treasuries are now up to almost 3.60% on the day the government shutdown is expected to happen at midnight tonight. Silver has surpassed $40 and ounce and continues to go up.

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