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Microstrategy – Impact of Rising Inequality
Jefferies believes rising inequality, driven in part by technology, will impact companies directly through CEO compensation, buybacks, leverage, effective tax rate, global exposure, historic margin expansion and industry concentration. Based on the firm’s scenario analysis, U.S. past 10-year EPS growth would have been significantly lower compared to Asia ex-Japan if more had been done to address inequality, and the U.S. would be trading at a 96% P/E premium. This makes the case for Asia equities. Jefferies also finds that IT, consumer discretionary and healthcare would be most at risk globally in case of greater efforts to combat inequality and that after a lost decade, value would gain at the expense of quality.
— Desh Peramunetilleke, Head of Microstrategy Research