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The Fed Model

The times in the last 40 years when the yield differential between earnings yields versus bond yields has been as small as this.


Year	Price	Earnings Est	Int Rate	Earnings Yield	Spread. E-I	S&P t+1 % Return
1976	107.46	9.91	0.07	0.09	2.4	-11.5
1979	107.94	14.86	0.10	0.14	3.4	25.8
1977	95.1	10.89	0.08	0.11	3.7	1.1
1978	96.11	12.33	0.09	0.13	3.7	12.3
1974	68.56	8.89	0.07	0.13	5.6	31.5

					Average	11.8
					Std Dev	17.6
					Count	5
					% Up	80%




Widest yield differential years
Year	Price	Earnings Est	Int Rate	Earnings Yield	Spread. E-I	S&P t+1 % Return
1983	164.93	14.03	0.12	0.09	-3.29	1.4
1999	1469.3	48.17	0.06	0.03	-3.16	-10.1
1991	417.09	15.91	0.07	0.04	-2.88	4.5
2001	1148.08	24.9	0.05	0.02	-2.88	-23.4
1992	435.71	19.09	0.07	0.04	-2.30	7.1

					Average	-4.1
					Std Dev	12.6
					Count	5
					% Up	60%