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Snap AV: US corporate return on equity falls to new low

Summary:
Torsten Slok of Deutsche Bank charts the return on equity for US corporates, which has fallen to a new low:On the one hand, perhaps the trend shouldn’t be too surprising given the continued rally in equities, which of course has coincided with sluggish overall economic growth.On the other hand, you’d think that the impressive rise in corporate debt issuance and relative paucity of initial public offerings in the past half-decade would have offset some of the trend. (Higher leverage should push up ROE, all else equal.) This is especially the case given how much of the borrowings from that debt has been used to fund buybacks.So we’re not entirely clear what to think about this, but it’s one more indicator to worry people who are already nervous about the sustainability of equities at current

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Torsten Slok of Deutsche Bank charts the return on equity for US corporates, which has fallen...

Cardiff Garcia
Cardiff writes mostly about US macroeconomic issues, with daily excursions into other topics about which he claim no expertise. Before Alphaville, Cardiff spent a little more than two years as a reporter at Dow Jones Financial News covering investment banking, asset management, and private equity. Along the way he has written freelance pieces on a variety of other topics from behavioural psychology to Muay Thai, the latter also being a personal interest that involves frequently getting kicked in the shins (and torso, and head).

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