Greenspan is exuberant on prospects for US stock prices
FORMER Federal Reserve chairman Alan Greenspan said US stocks offer good value and are likely to rise as corporate earnings increase over time.
"Stocks are very cheap," Greenspan said yesterday at the Bloomberg Washington Summit hosted by Bloomberg Link, citing "very low price-earnings ratios".
"There is no place for earnings to grow except into stock prices," said Greenspan, who served as Fed chairman from August 1987 to January 2006.
Stocks have rallied on better-than-forecast corporate profits and signs of economic strength. The Standard & Poor's 500 Index has risen more than 12pc this year, the best start to a year since 1998.
The index rose 1pc to 1,411.57 yesterday in New York after a report showed that US manufacturing unexpectedly expanded in April at the fastest pace in 10 months.
The S&P 500 trades on 14.3 times reported income from its companies, or 13pc below the average since 1954, according to data compiled by Bloomberg News. Bloomberg