how about swap rate vs swap spread The swap rates are based on LIBOR, and the spread is over Treasuries in that currency, usually the USD.
bannisja Wrote: ------------------------------------------------------- > oh sweet google: > > Basically, Yardeni’s Fed model compares bonds (the > 10-year Treasury note) and stocks (those in the > Standard & Poor’s 500 index), the premise being > that their values should never be too out of whack > with each other. Yardeni first calculates the > “earnings yield” for stocks, or the amount > investors get in earnings for each dollar they > pay. (The earnings yield is nothing more than the > earnings/price ratio, which is the reverse of the > more commonly used price/earnings ratio.) Yardeni > then compares the earnings yield on stocks to the > yield on the 10-year Treasuries. The idea here is > that if the earnings yield on stocks is above the > 10-year Treasury yield, then stocks are a better > value. If the yield for Treasuries is higher, then > they are the better buy. Is it? So we again compare simple yield to IRR of the trearsury – the implicit assumption of reinvestment at the same rate applies? S
cfaboston28 Wrote: ------------------------------------------------------- > molodovsky: low P/E in up market and high P/E in > down market > > Correct? What is the intution behind this?
there is no intuition. price of security does not change so much - but in the low cycle - you have low earnings - so you have a high P/E and in the up part of the cycle - you have high earnings - so P/E is low there.