The document discusses the valuation of bank stocks, emphasizing that they represent real entities with earnings that should rise with inflation. It explains how banks' earnings and dividends should grow with inflation over the long-term, even if none of the earnings are retained for reinvestment. The document also highlights the risks associated with unexpected inflationary or deflationary shocks and the impact of interest rate changes on banks' earnings. It compares banks to non-financial businesses in terms of their ability to adapt to interest rate shifts and discusses the role of retained earnings in producing returns inclusive of expected inflation.
documents/vol00010-efta01459638-pdf.pdf
{"title":"US Equity Insights","document_date":"2016-02-08","document_type":"other","key_organizations":["Deutsche Bank Securities Inc."],"reference_numbers":["DB-SDNY-0120204","SDNY_GM_00266388","EFTA01459638"]}