Dicing with debt
It is difficult to overestimate the impact of cheap and abundant credit on US equity market performance. A thorough examination of the relationship between the use of debt, profits and stock price appreciation reveals that the winning combination is worsening net debt and profits improvement. Those companies that have availed themselves of the opportunity to load up on debt have reaped the reward of share price outperformance, while those that have abstained or reduced their use of debt have been punished.
Economic Perspectives is a trusted provider of global macroeconomic and financial research with clients in North America, Asia and the UK.
EP research weaves complex and diverse information into coherent macro narratives, providing clear analysis and original market insights for global investors. Our clients benefit from our long experience in connecting economic developments with the credit and financial market outlook.
The analysis of developments in global private sector credit markets is fundamental to our understanding of the global economic and financial outlook. However, the actions and interventions of central banks and government have become increasingly important to our economic assessment.
For several years we have maintained that the only credible resolution of the 2008 global credit crisis is a resurgence of global inflation. We take an eclectic approach to the inflation outlook, considering political and socio-economic factors alongside macroeconomic drivers. We provide the multi-dimensional appraisal of the inflation outlook that is critical to formulating a successful investment strategy, at a time when inflation complacency is rife.
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