

WILL RATE CUTS MAKE A DIFFERENCE TO THE ECONOMY AND THE STOCK MARKET
When it comes to what a company’s stock is priced at in the market, it all comes down to two things: what that company earns and the level of interest rates. For this reason, company stock prices are a reflection of the estimated future earnings and cash flows generated by the company, discounted back to the present at current interest rates (typically the interest rate on a long-dated government bond plus a risk premium). As interest rates decline, future cash flows become m