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*                         3/17     3/24     3/31     4/7/25
S&P 500 Index             5638.94  5667.56  5580.94  5074.08
Trailing 12 month PE      25.98    26.11    25.63    23.24
Trail Earnings yield      3.85%    3.83%    3.90%    4.30%
Forward 12 month PE       21.87    21.93    21.55    19.54
Fwd Earnings Yield        4.57%    4.56%    4.64%    5.12%
90 day tbill yield        4.33     4.33     4.33     4.28
10 year tbond yield       4.31%    4.25%    4.27%    4.01%
Arezi Ratio               1.12     1.13     1.11     0.99
Fed Ratio                 0.94     0.93     0.92     0.78

The Arezi Ratio is the 90 day tbill yield divided by the trailing
earnings yield of the S&P500. A low ratio means that stocks are undervalued.

The 'Fed Ratio' is the 10 year treasury bond yield divided by the
forward estimated operating earnings yield of the S&P500. A low ratio
means that stocks are undervalued. Thus, a ratio of 0.71 for example
means, according to Yardeni, that stocks are cheaper than 'fair value'
by 29%.

The 'S=120-50*Arezi Ratio' formula indicates an allocation of 70%
stocks, 30% cash this week.

Other timing indicators:
The S&P index is below its 200DMA. - Bearish
We are in the Nov-Apr part of the year. - Bullish
The trailing PE ratio of the S&P is above 17. - Bearish
The treasury yield curve is inverted. - Bearish

A composite allocation may start with the Arezi formula and subtract 10%
for each bearish indicator. The current target allocation is 40%.

An alternative allocation, using S=120-30*Arezi Ratio and the first
two of the other timing indicators, produces a target of 80%.

Elan

The Arezi ratio, relying on projected forward 12 month earnings, is not yet tracking current events. Projected earnings will be rapidly ratcheted down to account for the tremendous global trade barriers that have just been erected, with more coming by the day.

The Arezi ratio, relying on projected forward 12 month earnings, is not yet tracking current events. Projected earnings will be rapidly ratcheted down to account for the tremendous global trade barriers that have just been erected, with more coming by the day.

Absolutely true, probably. But I'm in no position to correct the numbers being reported on the S&P web site. It typically takes a long time, many months after a recession has set in, for as-reported and forward looking earning estimates to reflect the changing business environment. In a deep recession like we saw in 2008 aggregate earnings of the S&P500 companies can actually turn negative.

Elan

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