Bill Bonner: The Fed Was Right…


“Corporate earnings rose. But behind that story lurked another sordid tale. Since the March 2009 low, nearly two-thirds of the rise in operating earnings for S&P 500 companies has come from neither higher sales nor increased productivity. Instead, it has come from lower interest expenses on corporate debt. Corporate America is a debtor. It benefits from lower interest rates, while savers lose.  Second, as the so-called “risk free” return on bonds falls, future earnings streams from stocks look more attractive on a relative basis. Third, by evaporating the yields off bonds, the Fed has forced investors to ‘reach for yield’ elsewhere. An obvious place to look is stocks.”

About The Freedom Watch Staff
News before it is news for the resistance from a trusted correspondent. The Freedom Watch Network

Comments are closed, but trackbacks and pingbacks are open.