Useful chart from Crestmont of S&P 500 earnings-per-share over time, and how that has oscillated around a historical trendline tied to GDP growth.

It provides support for my view that mean reversion plus an overshoot could easily get us to $45 in earnings on the S&P 500 next year. The upshot? A conservative multiple makes the current S&P 500 look like something other a trough valuation.

Eye-opening airline industry factoid from Foreign Policy:

More airlines around the world have gone belly up this year than in the aftermath of September 11.

Some quick links to items of interest:

• Survivorship bias in capital markets: Why your market isn’t what you think it is (HSotM)
• Europe most exposed to emerging market debt – more than twice as big as subprime (Morgan Stanley)
• Volatility returns with a vengeance; VAR is the mind-killer (FT/Tett)
• Iceland Raises Key Rate Six Points (WSJ)
• The Online Finance 30 (II)
• Dubai real estate boom is ending (WSJ)
• Nifty free financial data streaming server (Liberator)
• The biggest deals of PE’s golden era, and how they’re doing (The Deal)
• Famous last words: “No-one has ever lost money in a triple-A CLO investment” (The Deal)
• World has “six days to save Pakistan” (FT)
• The U.S. political map before/after the Depression (PI)

I continue watching company news releases for air pockets, companies that aren’t just seeing revenues go lower on a glide path, but are seeing a complete disappearance of their core business. Today’s example: Wolfson.

Wolfson Microelectronics (Edinburgh, Scotland) has again slashed its fourth-quarter revenue forecasts, warning revenues would be down to almost half their level a month ago.

Earlier this month, it signalled a first warning for its fourth quarter.

Wolfson released third quarter results Monday (October 27) showing pre-tax profits in the quarter " crucial because it includes pre-Christmas sales " down to $8.3million, from $14.7 million in the corresponding quarter of 2007.

Revenue for the quarter fell to $60.5 million from $70.4 million last year.

Wolfson said that since the trading update on 2 October, the market environment has continued to weaken and it had experienced a further "broad based deterioration in order intake and rescheduling of orders."

The company now expects fourth-quarter revenues to be between $35 million and $45 million. Earlier this month, it said it expected fourth-quarter revenues of $45 million to $50 million. Market expectations before that had been for revenues in the three months of around $60 million.

[via EE Times]