Tuesday, December 16, 2008

To Follow-Up: Left is Right and On is now Off...

The Fed took some drastic steps today and I'll have more commentary later:

"The Federal Reserve slashed its target interest rate to a range just above zero and promised to march ahead with unconventional measures to combat a recession that has deepened in the past few weeks."

They clearly are seeing the same evidence that I see, that the economy has fallen off a cliff in November and December. So because the news is so dire, stocks exploded on the news up over 300 pts.

The markets are now closing back in on that 9,000 level that we've bumped up against a couple of times. Maybe a good car bailout rumor could push the markets up to new highs just before Xmas.

I think there is increasing evidence that the S&P 500 companies may earn as little as $50/share next year. With an average multiple of 8-10 times earnings, I can see an another ugly scenario for 2009.

Cheers!

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