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Worrisome Signs Series: High corporate debt levels and rate hikes from Fed

When the Federal Reserve says that they are going to hike rates by as much as 75 basis points, the one thing that should worry every investor is the level of debts gorged by companies since the Great Recession of 2008/09.

The net debt to earnings before interest, tax, depreciation and amortization (EBITDA) for non-financial corporations for High-Yield companies are currently above 4 percent, which is higher than the previous peak in 2001. The ratio for the lower investment grade corporate is currently just below 2.5 percent, which is above the 2008 peak and just shy of that of 2001. For higher investment grade corporates the ratio is just around the 2001 peak at 2 percent. Currently, the dollar denominated debt around the world stands at $52 trillion, which is almost three times the size of the US economy. A 75 basis points increase in the interest rate would lead to an additional burden of additional $390 billion on those debts, which is larger the GDP of Norway.

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May 26 14:30 UTC Released

USECRI Weekly Annualized*

Actual

5.1 %

Forecast

Previous

5.0 %

May 26 14:30 UTC Released

USECRI Weekly Index*

Actual

144.1 %

Forecast

Previous

144.5 %

May 28 15:00 UTC 15171517m

SAM3 Money Supply YY*

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Forecast

Previous

0.0 %

May 28 15:00 UTC 15171517m

SAPvt Sector Loans YY*

Actual

Forecast

Previous

-0.1 %

May 29 08:00 UTC 25372537m

EZLoans to Households*

Actual

Forecast

Previous

2.4 %

May 29 08:00 UTC 25372537m

EZLoans to Non-Fin

Actual

Forecast

Previous

2.3 %

May 29 08:00 UTC 25372537m

EZMoney-M3 Annual Grwth*

Actual

Forecast

5.2 %

Previous

5.3 %

May 29 23:30 UTC 34673467m

JPAll Household Spending MM*

Actual

Forecast

1.1 %

Previous

-2 %

May 29 23:30 UTC 34673467m

JPAll Household Spding YY*

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Forecast

-0.7 %

Previous

-1.3 %

May 29 23:30 UTC 34673467m

JPJobs/Applicants Ratio

Actual

Forecast

1.46 %

Previous

1.45 %

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