No More Fed Rate Hikes in 2019… Sandwichman | March 20, 2019 3:25 pm US Economics The fundamentals are “sound”?: PICTURE = 1000 WORDS Comments (3) | Digg Facebook Twitter |
Why had corp equity taken such a dive?
FRED shows this in level form:
$108 trillion as of 2018QIII but then only $104 trillion by 2018IV. A 4% drop sounds bad. A $4 trillion drop sounds deadly!
Per Daniel Becker’s question, let’s take a look at what has recently happened to the interest rates on long-term corporate debt rated BBB:
These rates used to be 4.2% but are now near 5%. Yes an increase in the cost of capital tends to lower discounted cash flows.