Bloomberg Intelligence's Equity Market Minute 10/16/2023

Gina Martin Adams discusses the impact of monetary and tax policies on equities, highlighting that tax policy has a more significant effect on earnings than interest rates. The average effective tax rate for the S&P 500 has reached its highest level since the mid-2010s, with cash taxes paid increasing by over 70% since 2019. Tax expenses now account for a larger share of earnings before interest and taxes (EBID) compared to interest expenses, which have remained relatively flat despite rising interest rates. The video concludes with a summary of these financial trends.

What has been a major concern for equities over the past year?

• Rising inflation rates

• Falling GDP

• Decreasing stock prices

• Increasing interest rates

Which policy is currently having a larger impact on earnings trends?

• Monetary policy

• Environmental policy

• Tax policy

• Trade policy

What is the current average effective tax rate for the S&P 500?

• 28%

• 25%

• 30%

• 20%

By how much have cash taxes paid increased since 2019?

• 50%

• 60%

• 70%

• 80%

What percentage of EBITDA do tax expenses currently represent?

• 8%

• 10%

• 12%

• 14%