The US Personal Income and Outlays report for June 2019 came out this morning. It showed personal income increasing 0.4% and wages and salaries increasing 0.5% last month. These are good numbers. And in conjunction with a lot of other data we have seen recently, it should put to rest worries we have seen about an imminent recession.
I don’t understand why lower discount rates are good for equities. I realize that yield and price are inversely proportional. Is it simply that the increase in price today due to low inflation continues into the future due to the lower discount rate of future money?
Could this lead to over-confidence in equites?