Investment bank earnings estimates are truly bullish for 2011. Applying a 16x-18x multiple to these forward earnings brings you to S&P levels unseen since 2007. Unfortunately, something not included in these estimates is that for every $10 crude oil increases, S&P earnings fall by $3. This does not even factor in the fall in consumer confidence when citizens across the globe realize that they are soon going to pay $200 to fill up a mid-sized sedan. Once QE3 is unveiled and Middle Eastern governments are overthrown once and for all, who knows how high black gold could climb. After all this is done for, oil could easily reach $130+ on a supply disruption in Saudi Arabia.
Of course, BofA's Bianco will not discuss this. Neither will the analysts at Barclays, who just revised their S&P 500 earnings estimates up from 1,420 to 1,450.
Please view LA's blog entry to see the S&P earning's table below.
