Ghost of Igloi wrote:
Sure, drove the cost of capital to zero. Worse than that lead to malinvestment and stock buybacks. Earnings growth you quote is non-GAAP, stock buyback, peak margin, and tax cut fueled. Unsustainable with any sane policies.
cost of capital zero? Investment quality corporate paper pays a percent or two over the inflation rate and non-investment quality corporate paper pays 3-5% over inflation. Hardly zero unless I'm missing something.
malinvestment? Part of the problem with the slowness of recovery is that companies didn't invest enough. Malinvestment? Not sure I buy that.
buybacks? Sure ok. But those are good for the shareholder. Less good for the economy, but we're talking the benefits of owning stocks here.
peak margin: yeah probably. but that's not related to the fed. And who's to say that tech has permanently raised margins? It certatinly should increase margins.
tax cut fueled: yes. probably earnings growth is 9% without the tax cut. hardly bad.