xjo weekend zoomba lounge, page-156

Rogerken


I was thinking of posting this chart and asking what is wrong with it? (aka Martis) haha:)

http://blogs.cfr.org/geographics/2011/08/17/arestockscheap/

Weak economic data, a Washington debt standoff, a downgrade of U.S. federal debt, and rising European default fears helped send the S&P 500 stock index down 16% between July 22 and August 6. As the figure above shows, equity prices of late imply the worst earnings growth rate expectations in 25 years�such expectations even turned negative last week.

This dour outlook stems partly from renewed risk-aversion, which ironically redirected cash into downgraded U.S. debt, but it also reflects a sharp rise in concerns about where new profits will come from. Operating margins and profits are near all-time highs, but revenues are still below their 2008 peak and real consumer spending has grown by only 2% over the past year. Corporations currently have strong balance sheets and the lowest net debt-to-revenue ratio on record, but this is largely the result of cost-cutting which may have run its course. In short, either stocks are very cheap or growth prospects very dim.