"by bringing the royal treasures to Rome in his Alexandrian triumph he made ready money so abundant, that the rate of interest fell, and the value of real estate rose greatly."
Suetonius on Octavius (Augustus) in The Lives of the Twelve Caesars
Not a lot, it seems, has changed in two thousand years, at least in terms of the impact of an expansion in money supply on the cost of capital and thereby on all assets being priced against it. Prices now, as in first century Rome, are established by the marginal buyer, or seller, with Suetonius highlighting two inter-related drivers under-pinning this. The third element however, is the one that determined the relative appeal of a particular asset class, including its relative yield. For modern equity instruments, that would be a function of the base yield, together of course, with the anticipated growth.
In this section, we will explore this trinity of macro drivers and hopefully also offer some additional insight into their inter-relationship and impact on equity valuations