Bearish or Bullish: Reader Comments

In the July 29th issue of Daily Profit we asked what you think about
P/E’s for the S&P 500. Here’s the exact question:

I’m curious to hear whether you’re bullish or bearish on the stock market.
The Wall Street Journal has the current P/E for the S&P 500 at 17 and
the forward P/E based on earnings estimates at 13. Let me know what you
think.

The emails came streaming in…

We’ve posted below some of the more engaging comments (and certainly
excluded the most inflammatory, off topic, or just too long comments). Take a
look and see what investors like you have to say.

Are You Bullish or Bearish?

The parade of positive earnings reports marches on. The
number of companies in the S&P 500 that are beating expectations
continues to run at a better than 70% clip.

It’s interesting how sentiment was so conflicted coming into
2Q earnings season. We discussed at length here in Daily
Profit
how analysts had lowered estimates and investors appeared to
be expecting earnings growth to slow.

At the same time, there were virtually no
pre-announcements that earnings would miss. And investors then, like now, were
having a hard time getting bullish on the stock market.

Fighting With Bears

I have to hand
it
TradeMaster Daily Stock Alerts’ Jason Cimpl. Yesterday, his morning
alert to
his traders was titled "The Biggest Story You Didn’t Read Yesterday".

And I’ll admit, I
missed
this story. But Jason, ever on the lookout for events that can lead to
solid
profits for his readers, was all over it.

Of course the
biggest story
yesterday, which was the failed auction in China,
received no coverage from the U.S.
media. China’s
finance ministry could not come up with enough bids in yesterday’s $4
billion
1-year auction. Over the past year there has been much debate as to
whether or
not China’s
yuan is undervalued. Speculators have slowly priced in a currency
adjustment,
but yesterday’s auction could indicate that the adjustment will happen
this year.

The PBC has
gradually raised
reserve requirements on Chinese banks for the past year and it is widely
expected that the bank will raise interest rates for the first time in
three
years this quarter. In that environment banks favor long-term debt,
which typically
have higher yields, but the notion that a 1-year auction did not receive
enough
bids is bizarre.