Market valuation redux

File this one in the E category of the PE ratio:

Analysts are currently estimating 2008 profit growth of 11 percent for S&P 500 companies, down from 15 percent at the start of the year, according to Bloomberg data. The index has declined 15 percent since reaching a record in October...

After-tax corporate profits relative to U.S. gross domestic product are ``well above sustainable levels,'' Morgan Stanley strategist Gerard Minack wrote in a report today. He said a U.S. recession and increased competition will cause earnings to decline.

These guys are bloody geniuses.