Negative rates abroad are driving down bond yields in the U.S., which could make the stock market multiple expand. Investing always carries risk, and current financial economic conditions are unprecedented. For the first time in modern history, you have to pay the bank to hold your money in Europe! You have to pay a bond issuer to hold your money. Here's a factual analysis of factors driving what's happening and how it might affect your portfolio.
Here's the simple math formula behind the complex economics altering current financial conditions: The growth rate of a nation's working age population — its labor force — plus its growth in productivity is equal to its economic growth rate, the growth of its total domestic product.
Keeping this fundamental formula of economics in mind, this chart shows that Europe, Japan, and China face a shrinking working-age population in the decades ahead, according to World Bank data. In contrast, the U.S. is about to benefit from the echo boom generation and an expanding labor force.
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