Stocks are bubbling along. Earlier this week stocks rose because the economic data was so bad that investors decided that the Fed will cut interest rates 1/2 point next week. Today’s report, stocks are rising because the really bad economic data, though worse than expected, wasn’t as bad as it could have been. “Stocks ticked higher in late morning trade on Friday as October’s momentum swept into a fresh month with investors reckoning that weak jobs and manufacturing data could have been worse.”

The new Standard & Poors “core earnings” – earnings without lots of gimmicks and tricks – showed the S&P 500 at a P/E ratio of 57 last week. Stocks are up since then. The current non-core PE of the S&P 500 is 23.6. For perspective, the PE of the S&P in October 1929 was 21, and of the DOW was 17 – BEFORE THE CRASH. Stocks are currently priced higher than where stocks crashed from in 1929. Using “core earnings” we are higher by a factor of about 2.3 times.