Inflation

Using history as a guide, today’s low inflation environment is no justification for the current P/E.

• Read more

T-bond achieves Leuthold long term target of 5%: hedge fund turmoil and Asia induced flight to quality has helped drive rates down too far, too fast. When some of the short term distortion subsides, yields could pop back up.

• Read more

Bear market or steep correction? Rising inflation could actually be good for equity market over next few years. FASB arrives at a decision which could spell the end to the repricing options practice by making it prohibitively expensive.

• Read more

T-bond ahead of itself, fueled by flight to credit quality...Yields could back up should Asia outlook improve, or equity market rally significantly.

• Read more

Bond market still ahead of itself, fueled by flight to credit quality...But money flows could slow, should Asia outlook improve, or Japan act decisively.

• Read more

Bond market getting ahead of itself, fueled by flight to credit quality...But money flows could slow, should Asia outlook improve or Japan act decisively.

• Read more

Low inflation environments versus “new era” valuations. Examining low inflation environments only, with our “Upside/Downside” factors, there is still 34%+ downside to median valuation levels (1957 to date).

• Read more

Asian crisis not helping much (yet), putting brakes on strong U.S. economy (except on earnings)...Asia (including Japan) will become heavier “drag” on U.& in next six months...Inflation likely to increase slightly but still viewed as tame.

• Read more

Near term, bond market now stabilizing after being roughed up during most of April…We see no imminent Fed loosening or tightening in the cards at this point.

• Read more

Some clients suggested that our use of normalized earnings distorted last month’s study of P/E ratios in low inflation environments. Using a three year centered average of earnings produces results quite similar to last month’s study.

• Read more

Low Inflation and the justification of expanded P/E ratios. Low inflation does justify expanded P/E ratios...However, how much of an expansion is warranted?

• Read more

Near term, bond market now stabilizing after being somewhat ahead of itself...No Fed loosening or tightening in the cards at this point.

• Read more

Steve’s thoughts on 1998 Stock Market Leadership, Volatility, Japan, Gold and Inflation.

• Read more

Asian crisis not yet applying brakes to strong U.S. economy...Asia should be bigger “drag” on U.S. in next six months. Near term, bond market still correcting from being somewhat extended.

• Read more

The U.S. yield curve could mildly invert in 1998, even with a passive Fed.

• Read more

Long term rates are "normally" higher than short term rates to compensate investors for the likely risk that inflation will undermine the value of their bonds.

• Read more

Yield curve typically inverted about 62% of the time.

• Read more

Long treasuries are still well above the underlying interest rate (real rate of 4%-5%). The inflation outlook remains tame.

• Read more

Employee stock option excesses (continued from last month), different viewpoints on options repricing (also continued from last month) and current updated inflation views.

• Read more

Among the industrial nations, U.S. bond market offers highest yields, a reversal from earlier in the decade. Inflation outlook positive.

• Read more