Subject: Re: Bubble Watch
The stock earnings will be growing, historically at 4% real rate. Treasury yields will be unchanged till maturity and capital gains if any prior to maturity from lower interest rates would boost stock earnings and P/E too.

If you reinvest payouts then the earnings on your treasuries also grow at 4% (if that is the interest rate you are getting on them).

Stock earnings growing at 4% presumably reflects companies re-investing some of their earnings, just like buying more treasurie with the interest you earned would be.

R: