Very relevant Note from David Rosenberg last night:
"Zero interest rates and quantitative easing pushes the cost of debt to
historic lows. And investor portfolio preferences shifted post crisis towards
debt and away from equities. The result: the largest gap between earnings
yields and (after tax) debt yields. That means investors overvalue debt and
undervalue equity. And the coming corporate finance response means issuers have
historic incentive to issue debt and buy back equity. The gap in valuation
relative to history suggests a potential 50% increase in debt funded buyback
activity over the next year"
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