Effective corporate tax rates in America have
continually declined over the past 36 years.
The drop from the highs of 45% in 1987 to 17% in 2023
has contributed +20% of the real EPS growth for US
Equities during this period.
The most recent decrease occurred as part of the
Trump tax cuts in 2017, which reduced the top
corporate tax rate from 35% to 21%, leading, in most
cases, to lower effective tax rates for many businesses.
Whilst this tailwind for US earnings may not become a
headwind, despite record US fiscal deficits, the room for
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The Fed’s decision to hold rates steady in December
was in line with expectations. On the back of declining
inflation, the Dot Plot indicated that the Fed expects to
“pivot” to interest rate cuts in 2024, with a reduction of
0.75% by the end of the year.
The market was already expecting double that, with
1.5% of cuts priced in by the end of 2024. Following the
“pivot,” yields continued to fall, and equity markets
rallied on the hope of more accommodative monetary
policy and a soft landing.
At the end of December, the Bloomberg Financial
In November the mix of declining inflation and strong
US GDP growth in Q3 fuelled optimism in markets,
supporting the idea of a “soft-landing”.
This optimism was further bolstered by dovish talk from
members of the Federal Reserve, leading markets to
price in an additional 1% of interest rate cuts over the
next year, with a total anticipated cut of 1.5% by January
2025.
The combination of these rate cut expectations, and
resilient U.S. economic performance sparked a
significant rally in both global equities (+10%) and
Unfortunately, the release of the Medium-Term Budget
Policy Statement on the 1st of November, provided us
with a rather bleak outlook for SA’s long-term debt
trajectory. Lower tax revenues (primarily due to lower
commodity prices) coupled with higher debt service
costs and wage settlements increased the budget deficit
for FY 23/24 to 4.7% from 3.9% earlier in the year.
Even with rosy GDP growth numbers being factored in by
National Treasury, the level of debt to GDP is now
expected to plateau at just under 78% in 2026. We’re now
The combination of easing supply chains, lower
commodity prices together with powerful base effects
saw inflation continue to soften over the last 3 months,
down from the highs in the middle of 2022.
The improved inflation outlook was enough for central
banks pause rate hikes this quarter, bringing a much-
welcomed breather from what has been one of the
sharpest hiking cycles in history.
Falling inflation has the effect of tightening real policy
rates without further changes to interest rates.
In post-match interviews with winning sports teams or players, one often hears a version of ‘I trusted my process’ or ‘I relied on my structures’. Spectators have come to appreciate that while victory is the outcome, it is the preparation and work behind the scenes that paves the way to success. This is true for many other facets of life, including investing. In this article, we discuss long-term investing .
CoreShares by 10X now offers a Bond ETF that enables investors to gain exposure to the highest-yielding South African government bonds, mirroring an established unit trust offering the same exposure: the CoreShares Yield Selected Bond ETF In this article, we look at the CoreShares Yield Selected Bond ETF
The market for exchange-traded funds (ETFs) has exploded in recent years as institutional and retail investors seek to diversify their portfolios while keeping costs in check. However, given the wide range of funds available, many investors are apprehensive about how these funds work and where to start. In this article, we unpack some of the ways that investors can use ETFs in their portfolios.