12.04.2023
Is China Guilty of Category Fraud?
With movie awards season around the corner, some entertainment pundits may use the term “category fraud” to describe races in…
As the Federal Reserve maintains interest rates at all time lows, corporate balance sheets continue to benefit from this accommodative environment, as the low rate environment combined with a bull market has allowed corporations to add leverage to their balance sheets at an alarming rate. With borrowing costs so low, corporations have used this debt to finance stock buybacks, dividend growth, and M&A deals.
The growth of net debt among the S&P 500 constituents has hit levels not seen in the past 10 years, rising significantly against EBITDA levels. Thus, corporations’ operational cash flows are not expanding quickly enough to keep pace with their growing debt loads. This type of imbalance in past cycles has led companies to cut back on spending and hiring.
While consumers have deleveraged since the 2008 housing crisis, corporations have taken advantage of the low rates and subsequent cheap financing. If the Federal Reserve begins to raise rates or economic growth continues to slow, corporations could struggle to cover interest payments on their outstanding debt, which would likely translate to subpar returns for both equity and debt investors.
12.04.2023
With movie awards season around the corner, some entertainment pundits may use the term “category fraud” to describe races in…
11.30.2023
The holiday spending frenzy is well underway as some of the biggest shopping days of the year, including Black Friday…
11.16.2023
October proved tumultuous for investors as all major U.S. equity indices were negative and the CBOE VIX Index, which serves…
11.08.2023
Earlier this year, the regional banking crisis and eventual collapses of Silicon Valley Bank, Signature Bank, First Republic Bank, and…
11.01.2023
U.S. equities declined for the third consecutive month in October amid an environment of higher yields and underwhelming earnings reports…
10.13.2023
This video is a recording of a live webinar held on October 26 by Marquette’s research team, featuring in-depth analysis…
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