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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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July 26 06:45 UTC Released

FRConsumer Confidence

Actual

104 %

Forecast

108 %

Previous

108 %

July 26 02:00 UTC Released

IDFDI Growth YY*

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10.6 %

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Previous

0.90 %

July 26 08:00 UTC 6868m

ITCPI YY*

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107.0 %

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107.3 %

July 26 08:00 UTC 6868m

GBGDP Prelim QQ

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Forecast

107.0 %

Previous

107.3 %

July 26 08:00 UTC 6868m

GBGDP Prelim YY

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Forecast

106.2 %

Previous

106.4 %

July 26 08:00 UTC 6868m

ITRBA Weightd Medn CPI QQ*

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Forecast

106.2 %

Previous

106.4 %

July 26 08:30 UTC 9898m

GBRBA Trimmed Mean CPI YY*

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Forecast

Previous

40.347 %

July 26 08:30 UTC 9898m

USGDP Prelim QQ

Actual

Forecast

0.3 %

Previous

0.2 %

July 26 08:30 UTC 9898m

USGDP Prelim YY

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Forecast

1.7 %

Previous

2.0 %

July 26 08:30 UTC 9898m

CABBA Mortgage Approvals

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Forecast

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40.347 k

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