US corporate results boosted by “ultra-low” interest rates

That is what market watchers at Bankinter believe after Mr Bullard’s (Fed) and Mr Haldane’s (BoE) interventions on Friday. However, they add,

“it is one thing if falls are softened or even stopped, and a different thing altogether to see a rebound.”

Markets have lost pace and it will take time to recover it, for which more stimuli are necessary. However, it is important to mention that it is not a problem of market valuations but a problem of markets per se. Experts at Bankinter explain that companies are now much more valuable than before, yet not thanks to an improvement in  profit expectations, but thanks to  “ultra-reduced” interest rates.

Nonetheless, bonds have even more value because inflation has decreased, which doesn’t favour company values because it limits an increase in income.

“Such falls will bring spectacular opportunities because the rhythm of the economic recovery has slowed down,” the experts explain.

*Related content: US companies: When having too much money is a bad sign (I)

About the Author

The Corner
The Corner has a team of on-the-ground reporters in capital cities ranging from New York to Beijing. Their stories are edited by the teams at the Spanish magazine Consejeros (for members of companies’ boards of directors) and at the stock market news site Consenso Del Mercado (market consensus). They have worked in economics and communication for over 25 years.

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