Holiday Issue

December 24, 2012

Below is a publication from Citi’s global equity strategy team.  QE, financial repression, and a global snapshot of valuations…oh, and corporate payout mixes too!

Here are a few charts and quotes from the piece:

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 Ultra-low Interest Rates — Policy-makers have adopted aggressive methods to push interest rates and bond yields down to unprecedented levels. It is hoped that these low rates will trigger a stronger recovery in corporate capex and jobs. Evidence of this remains sketchy.

 Global Search For Yield — Unprecedented monetary policy has created a global search for yield. Reasonable dividend yields have attracted some of this income seeking capital into the global equity market.

 Implications For Policy-Makers — Income-seekers are more interested in dividends and share buybacks than financing capex and job creation. They may be reducing the pro-growth impact of QE.

 Implications For Companies — Those CEOs who do not give this income-seeking capital what it wants may find themselves replaced by a CEO who does.

 Implications For Investors — While the outlook for future economic growth remains uninspiring, global equities should remain supported by dividend yields and share buybacks. Subdued capex means that profitability mean-reversion is not imminent. Within the equity market, income strategies should remain popular.

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Download the PDF here: