It is quite straight forward. Interest rates will only decline if inflation is receding. Thus the cause of receding inflation matters the most in determining what happens to equities.
If inflation is receding because economy is weakening, then equities will not do well. As ,even though valuations will appreciate for equities, the earnings will decline which would mean prices will decline.
If inflation is receding without weakening of economy, then equities will do well. earnings will sustain, the valuations will rise leading to a rise in equity prices.
Subscribe To Our Free Newsletter |