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<blockquote data-quote="Up In Smoke" data-source="post: 5299686" data-attributes="member: 79702"><p>President Powell in his statement yesterday echoed the opinion that the underlying economy is strong, the consumer continues to spend at near record levels and that employment continues to improve.&nbsp; Wage and energy increases will continue to way on employers until spending is reduced because of cost of credit.&nbsp; He went on to say that price to earnings multiples will continue to be compressed as companies consider their free cash flow and access to operating capital.&nbsp; In plain English, for the last 14 years it was better for their companies (stock price) to continually refinance debt, invest their free cash flow (buy back stock) and allow their P/E ratios to become bloated to unsustainable multiples.&nbsp; The raising of rates, the reduction of subsidies and the selling of government assets is forcing the market back down to a reasonable multiple.&nbsp; I believe I read 15 times forward earnings is a sustainable multiple.&nbsp; If that&#039;s true we are looking at 3200 on the S&amp;P to find that support.</p></blockquote><p></p>

[QUOTE="Up In Smoke, post: 5299686, member: 79702"] President Powell in his statement yesterday echoed the opinion that the underlying economy is strong, the consumer continues to spend at near record levels and that employment continues to improve. Wage and energy increases will continue to way on employers until spending is reduced because of cost of credit. He went on to say that price to earnings multiples will continue to be compressed as companies consider their free cash flow and access to operating capital. In plain English, for the last 14 years it was better for their companies (stock price) to continually refinance debt, invest their free cash flow (buy back stock) and allow their P/E ratios to become bloated to unsustainable multiples. The raising of rates, the reduction of subsidies and the selling of government assets is forcing the market back down to a reasonable multiple. I believe I read 15 times forward earnings is a sustainable multiple. If that's true we are looking at 3200 on the S&P to find that support. [/QUOTE]

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