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Is Corporate America A Safer Bet Than The US Government?
This should go without saying, but US equities still aren't cheap.
I don't know why anyone would be
“Loaning money to the US government when Trump’s CEO”, that really sums it up.
I’ve been finding high-IG corporate bonds generally unattractive given the tiny spread, but maybe the spread is deceiving because the risk-free asset is no longer. Wow, things could get pretty unmoored. Perhaps in future a basket of AAA corporates defines the risk-free rate.
Or maybe we use a weighted basket of G7 or G20 DM government yields, adjusted by FX-to-USD swap rates, instead of Treasuries.
JL – the first chart shows why I always tell you that in the aggregate, corporate earnings usually don’t matter to share prices. It’s not absolute, of course, but that’s a hard thing for older folks steeped in the idea that profits drive share prices to accept.
Not if Australia passes the proposed tax on unrealized gains and that idea eventually becomes popular in the USA as a means to fund growing deficits. Yikes!
Not sure what your “not if” refers to but our H suggested the same thing ( a tax on unrealized gains) just a few months ago. Irrespective of how you do it, increasing overall tax rates to near the G7 average would do wonders for reducing the deficit, and thereby making USTs risk free again.