I was wrong in my comment above. As the corporate tax rate...

I was wrong in my comment above. As the corporate tax rate increases, the tax shield to the cost of debt component of WACC increases, the WACC decreases, and the present value of future cash flows increases, and market multiples increase.

In a bizarre way, the market may already be pre-pricing in the possibility of US corporate tax rates increasing and this is helping to drive the market higher.

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Rf is typically 10yr gov bond yields. The other bit of Re is theoretical stock specific risk. Its the fairy floss part of WACC imo and can be ignored when looking at the larger picture.

With 10yr gov yields at rock bottom, Re is no longer a downward force on WACC. With central banks such as Australia's managing their point of influence out along the curve to the 3 yr point, this will hold the 10 yr down. So the risk with the 10yr is it remains flat for years until inflation expectations rise. Thats a whole separate topic to discuss over time...

With both components of WACC held low by central banks, corporations in general will continue to feed on debt.

It is bizarre. The whole system is now perfectly set up to thrive on more and more debt.

If we start at the company level. Boards and executives are incentivised by shareholders to drive eps growth. One of the easiest ways they can achieve this is by increasing the debt component of their WACC and using the debt to buy back shares. This drives up eps pleasing all vested interests. Such has been the case in US for last decade. This will only continue. Perhaps at a greater rate.