By Matthew Kerkhoff
Today we’re going to dig into the state of corporate earnings, but before we do, consider this.
For the last however many decades, investors have generally turned to stocks for capital appreciation, and bonds for income. Has this dynamic reversed? Think about it for a moment.
Currently over $7 trillion worth of sovereign bonds trade at negative yields. That doesn’t translate into very much income. Why would investors own negative yielding bonds? They’re either trying to make a profit from capital appreciation (bond prices continuing to rise and yields drop further below zero), or they’re pretty confident they’ll lose more money elsewhere.