Money will always chase yield...Even if after tax cuts...this money can find better yields abroad it will stay there.. Perhaps there is no linear relationship..
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Money will chase POST-TAX yield. Massive change in one of the variables no? Apparently the tax cut will be from 35% to 20% (though some reports say 22%)
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Yields in USA anyways very low say the US 10 year yields 2.5% compared to a 6-7 in EMs. So the investable surplus might move out again. Plus onshre cash in USA ($1.9 tr) is already very high with few benefits...
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Fair point. But what about currency risks on EMs?
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Yes they do exist but can be hedged although not completely. Even after hedging costs, they do provide better returns. But if one is predicting a dooms day scenario in currency mkts then no one can help...
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Apna Kirana ka dukan kholne ka time aa gaya hai. Entrepreneurship jindabad.
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US domt have anything at backup As we have gold. So federal bank print as much dollar as they want. It will impact at time of crisis.
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Growing Market N demand outside US will keep them invested
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Our stock market might get affected and US will again gain a picture of 'good investment territory'. The reason why FIIs are coming to India is Long Term gains exemption & 15% tax rate for Short Term Gains. If FII move their money to USA, our stock market might see a fall.
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Tax cuts are only one half of the equation. Rising treasury yields and a stronger dollar are a significant prompt.
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I’m hearing 20% and the focus on post-tax, dollar adjusted returns will put pressure on in-flows of FDI
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