One's DCF should be based on the real yield https://fred.stlouisfed.org/series/DFII10. While it is clearly above the GFC-COVID level, it is not dramatically so - and far less than one might assume by looking at nominal levels cited in the press. Not that one shouldn't panic now, but we are within the pre-GFC levels and the levels sustained over the last 2 years.
One's DCF should be based on the real yield https://fred.stlouisfed.org/series/DFII10. While it is clearly above the GFC-COVID level, it is not dramatically so - and far less than one might assume by looking at nominal levels cited in the press. Not that one shouldn't panic now, but we are within the pre-GFC levels and the levels sustained over the last 2 years.
AI capex bubble bursts leading to lower stock prices and lower interest rates in the next couple of years.
1) Agree with Lao. Should be using real yields.
2) Relates to #1. Mkt thinks corporate profits are much more inflation proof versus 1970s industrial America. And I think they are correct.
3) Market thinks corp profits vs GDP going to keep going up due to deep moats and high marginal ROIC.