S&P P/E

This graph is from Nate Martin's blog that I linked to yesterday.

The run up in stock prices since the March low has launched the P/E to something over 120! This is over the historical average by almost times 10. Can you imagine earnings recovering significantly any time soon?

Look for a HUGE decline in stock prices.

Update:
From Naked Capitalism

"Until the median wage improves relative to the cost of living, there will be no recovery."

In other words, look for a big decline in everything.

Update 2:
From Mish

"Currently, commercial real estate bankruptcies are growing at a massive rate. So too are bank failures, foreclosures, and credit card defaults. And bankruptcies, foreclosures, and credit card defaults result in the destruction of credit, the very essence of deflation."

So, in case you were wondering, the bottom is a long way off.