Excerpt from latest CNBC article quoting DataTrek Nick Colas:
….. “The debt increase and push on interest rates is coming as companies report near-record growth, with profits for S&P 500 companies tracking 24 percent higher year over year for the second quarter of 2018.
Corporations also happen to have more than $9 trillion in outstanding debt. At some point, investors may wonder when higher financing costs will start cutting into profitability.
“Pulling this discussion back to US equity prices, we have one question from all this: are markets ready for higher US Treasury rates if they are caused by incremental issuance and (perhaps) overly optimistic revenue estimates?” Nick Colas, DataTrek’s co-founder, said in a note. “Long-term rates are important mechanisms that allow the economy to self-correct in a recession. And whenever that comes, deficits will be larger than during any other non-recessionary period in history”…..
Read the whole article here on CNBC!