Last year, Evidente published a report entitled The Dangers of Safety, which suggested that there had been an extended period of a rising equity risk premium. Since mid-2016, there has been a reversal of this trend, with the risk free rate moving higher and risk premium moving lower. In this post, Evidente suggests that a continued fall in the ERP will likely be associated with a revival of animal spirits in the US corporate sector, a long anticipated capital boom and ultimately compression of profit margins and the profit share in the United States from levels that are currently close to record highs. (VIEW LINK)


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