U.S. Recession in the Offing?

A recent Bloomberg article reports that an economic contraction could be coming as soon as next year, citing the Fed, the flattening yield curve, corporate leverage and tariffs as contributing factors. “Other than in the most abstract way, there aren’t a lot of people talking about a coming U.S. recession,” the article states. But the fact that policy makers are raising rates and are reducing the central bank’s balance sheets reflects a more aggressive stance.… Read More

S&P Says High Corporate Debt Could Trigger Defaults

According to S&P Global Ratings, tightening credit conditions could lead to increased defaults by companies with heavy debt loads. This according to a recent article in Bloomberg. The article cites a February 5th report issued by the rating agency that says removing the “easy money punch bowl” could trigger a rash of defaults since heavily leveraged borrowers are more sensitive to rate hikes. It cites a global sample of 13,000 business entities showing that 37… Read More

Buyer Beware of Companies Carrying Heavy Debt Loads

A decade of historically low interest rates has encouraged businesses to increase leverage and this could prove dicey for investors, says a recent Barron’s article. According to Morningstar fund analyst Kevin McDevitt, companies have been refinancing or borrowing for share buybacks, not necessarily to invest in existing businesses. “The leverage,” he says, “is an added risk not only to the individual companies, but also to the funds that own them.” Morningstar research found that, in… Read More