Five charts to start your day

For the first time in 20 years, it is cheaper foto sell shares than issue bonds

Under the glow of dawn's first light, he couldn't contain his excitement. His eyes sparkled at the final numbers. Outside, the city was waking, oblivious to his moment of victory. “Forget the bond market” the CFO said, “we just need to sell shares”.

There's a seismic shift underway: for the first time in 20 years, it is cheaper for blue-chip US companies to raise finance by selling shares than issuing bonds.

Let me explain.

Rising interest rates change everything. The allure of the equity market has once again returned. It’s a trend that’s not only pragmatic but also laden with potential benefits, from loosening private equity's stronghold to enhancing corporate transparency through increased public ownership.

That’s what the first chart is about, published yesterday by Bloomberg. It shows the S&P 500 earnings yield – a gauge of the cost of issuing shares which is now at just over 4.0 percent – versus as higher yielding (cost) Bloomberg US Corporate Bond index at 5.5 percent.

Source: Bloomberg

Coming up:

• Japan’s Nikkei finally returns after 30 years

• Retail trading surged in 2023 caused a series of short squeezes

• New college graduate average salaries

• The best performing stock in the S&P 500 over 5, 10, 15 and 20 years

If you like the sound of that line up, this is usually a paid newsletter. You basically get all my best ideas daily. Hit the subscribe button if you are interested and this will be sent to your inbox daily.

---