Mon, Feb 13, 2023

Cost of Capital Ramifications of the Russia-Ukraine War and Global Inflationary Pressures Podcast

Subject matter experts James Harrington and Carla Nunes, CFA, ABV, from Kroll’s Valuation Digital Solutions practice were keynote speakers at the 2022 AICPA & CIMA Forensic & Valuation Services Conference. During the conference, they were interviewed by Mark Smith, Director of Valuation Services, AICPA-CIMA. Carla and James discussed how we entered this unprecedented period in economic history. They also highlighted the cost of capital ramifications of Russia’s war on Ukraine, post-pandemic global inflationary pressures and more.

Cost of Capital Ramifications of the Russia-Ukraine War and Global Inflationary Pressures Podcast

The following points were discussed:

  • 2:37: How was cost of capital impacted by global economic and political changes since the outbreak of COVID-19?
  • 4:36: Shifting in the U.S. central bank’s stance in monetary policy: how have interest rates affected the U.S. financial markets in general?
  • 9:15: Uncertainty around when U.S. high interest rate hikes will peak. Building inflationary pressures had an impact on future interest rate policy and on long-term rates.
  • 14:59: The regime of artificially low interest rates in the U.S. is shifting. The Fed has held interest rates artificially low for years but that is changing. Risk-free rates are normalizing.
  • 25:13: While the entire globe is dealing with various crises, the U.S. market fundamentals are still positive. U.S. markets have still recovered at a faster pace than markets in other economies.
  • 26:15: The rise of private equity and venture capital benefits U.S. markets. M&A activity may still continue in the coming year.
  • 28:10: European’s economic dependence on Russia for energy and China’s ability to attract global investment inflows.
  • 30:52: Human innovation may help solve the energy problem.
  • 32:20: Trends for the future: ESG and impact on companies. Advisors will need to be prepared to deal with regulatory, taxation and other related changes.

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The Kroll Cost of Capital Navigator is an online platform that guides you through the process of estimating the cost of capital, a key component of any valuation analysis. You can subscribe to any or all four cost of capital modules, each offering three annual subscription levels–Basic, Pro and Enterprise. Additional products offered by Kroll include the annual Stocks, Bonds, Bills and Inflation® (SBBI®) Yearbook which provides historical U.S. capital markets data.

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