2018-09-23 08:37:00 Sun ET
stock market competition macrofinance stock return s&p 500 financial crisis financial deregulation bank oligarchy systemic risk asset market stabilization asset price fluctuations regulation capital financial stability dodd-frank
Bank of America Merrill Lynch's chief investment strategist Michael Hartnett points out that U.S. corporate debt (not household credit supply or bank capital shortage) can cause the next financial crisis.
U.S. public corporations have gradually accumulated more than $6 trillion debt with low interest rates since the global financial crisis from 2008 to 2009. This corporate debt binge helps fund the recent recovery in new capital investment and equipment, full employment, and stock buyback in America.
Corporate default rates are minuscule, and U.S. companies now sit on hefty cash stockpiles primarily due to robust U.S. economic output gains and corporate tax cuts under the Trump administration. At some inflection point, however, economic growth and corporate income may start to slow down. U.S. companies then would have less firepower to pay back debt, and it is not easy for these companies to roll over their debt in due course. Debt-laden companies would be vulnerable to higher costs of capital as the Federal Reserve continues the current interest rate hike.
These high costs of capital can translate into a new corporate credit crunch, which adversely affects both employment and capital investment as the U.S. economy slides into an economic recession.
If any of our AYA Analytica financial health memos (FHM), blog posts, ebooks, newsletters, and notifications etc, or any other form of online content curation, involves potential copyright concerns, please feel free to contact us at service@ayafintech.network so that we can remove relevant content in response to any such request within a reasonable time frame.
2019-04-19 12:35:00 Friday ET
Federal Reserve proposes to revamp post-crisis rules for U.S. banks. The current proposals would prescribe materially less strict requirements for community
2019-07-25 16:42:00 Thursday ET
Platforms benefit from positive network effects, scale economies, and information cascades. There are at least 2 major types of highly valuable platforms: i
2019-07-29 11:33:00 Monday ET
Blackrock asset research director Andrew Ang shares his economic insights into fundamental factors for global asset management. As Ang indicates in an inter
2019-02-25 12:41:00 Monday ET
Chicago financial economist Raghuram Rajan views communities as the third pillar of liberal democracy in addition to open markets and states. Rajan suggests
2021-02-01 10:19:00 Monday ET
In recent times, the International Monetary Fund (IMF) predicts that the fiscal-debt-to-GDP ratio of most rich economies would rise from 95% in 2018 to 135%
2017-10-15 07:38:00 Sunday ET
Ivanka Trump and Treasury Secretary Steven Mnuchin both press the case for GOP tax legislation as economic relief for the middle-class without substantial t