2019-06-05 10:34:00 Wed ET
federal reserve monetary policy treasury dollar employment inflation interest rate exchange rate macrofinance recession systemic risk economic growth central bank fomc greenback forward guidance euro capital global financial cycle credit cycle yield curve
Fed Chair Jay Powell suggests that the recent surge in U.S. business debt poses moderate risks to the economy. Many corporate treasuries now carry about 40% debt as part of equity market valuation. St Louis Federal Reserve Bank recent data indicate that the corporate-debt-to-EBITDA ratio has risen to the upper range of 2.3x to 3.1x.
Powell warns that the current level of business debt can cause financial stress to borrowers if the economy weakens. However, Powell adds the cautionary caveat that business debt may not present imminent risks to U.S. financial system stability, household consumption, and business growth. As the Federal Reserve continues to assess the main amplification of business debt deterioration, short-term liquidity risk remains moderate in the core U.S. financial sector. In the meantime, the Trump administration seeks to raise fiscal deficits to support ambitious public programs on infrastructure, education, residential estate, health care, and social security etc. This public debt accumulation may crowd out intertemporal business debt capacity at the margin. If the U.S. aggregate debt capacity remains invariant over time, the government either has to tolerate higher inflation in the form of seigniorage taxes, or needs to reconsider the ripple effects of incremental corporate debt on the real economy.
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.
2020-06-10 10:35:00 Wednesday ET
Most lean enterprises should facilitate the dual transformation of both core assets with fresh cash flows and new growth options. Scott Anthony, Clark Gi
2019-10-29 13:36:00 Tuesday ET
The OECD projects global growth to decline from 3.2% to 2.9% in the current fiscal year 2019-2020. This global economic growth projection represents the slo
2018-12-17 08:43:00 Monday ET
Apple files an appeal to overturn the recent iPhone sales ban in China due to its patent infringement of Qualcomm proprietary technology. This recent ban of
2017-07-13 08:35:00 Thursday ET
President Donald Trump has announced that a major Apple iPhone upstream supplier, Foxconn Technology Group (aka Hon Hai Precision Group), will invest $10 bi
2020-06-24 09:32:00 Wednesday ET
Several business founders and entrepreneurs take low risks with high potential rewards to buck the conventional wisdom. Renee Martin and Don Martin (2010
2019-01-25 13:34:00 Friday ET
Netflix raises its prices by 13% to 18% for U.S. subscribers. The immediate stock market price soars 6.5% as a result of this upward price adjustment. The b