Damodaran Trashes Fed Rate Debate as 'Pointless'

Aswath Damodaran, known as Wall Street's 'Dean of Valuation,' has dismissed the debate over the Federal Reserve's interest-rate policy as 'pointless.' He claims that Fed Chair Kevin Warsh and Treasury Secretary Scott Bessent have little control over borrowing costs without a shift in inflation expectations or economic growth.

The 10-year Treasury yield rose from 4.18% to 4.75%, while longer-term yields crossed 5%. Damodaran argues that higher interest rates do not always hurt stocks, as companies can adjust their cash flows to compensate for the increased discount rate.

Damodaran credits stronger profits for the market's resilience in the face of rising oil prices and interest rates. He notes that analysts raised aggregate S&P 500 earnings estimates by over 11% for both 2026 and 2027 during the first eight months of this year.