The last time CME US Treasury Bond futures were bid up to 128, the S&P 500 was around 1100, it was the beginning of October 2008.
The trailing as reported EPS of Q4 2007 through Q3 2008, was $47.18. (PE = 23) The next quarter, the market ended up losing $23.13 per unit, and over the next year, the market ended up making only $13.13 per unit. (FPE = 84)
Right now…
The trailing EPS of Q2 2009 through Q1 2010, was $61.95. (PE = 16.62)
That means, it’s a much harder decision, for investors to buy Treasuries over the S&P, today, than it was for them to buy them in October. Assuming, you subscribe to the theory that the FPE on the S&P is actually smaller than the trailing. Which is easy to do, with 2010 as reported earning top down estimates at $67.38 and 2011 at $77.64.
Front month Oil was at 120. Oil is cheaper today.
Front month Gold was 850. Gold is more expensive today.
Money flows to stocks and oil here…soon.
Update: Using Operating Earnings per share and bottom up estimates for the same,
07Q4-08Q3 = $64.82, 08Q4-09Q3 = $39.61
09Q2-10Q1 = $66.16, 10Q2-11Q1 = $84.26 (estimates)