31–40 of 73 posts
Earlier quoted context omitted.
Central banks will just buy them onto their balance sheets. Its already begun: https://ftalphaville.ft.com/2020/04/30/1588254981000/How-sho... https://www.afr.com/markets/debt-markets/why-the-rba-is-lend...
This is really worrying. There is no central bank of central bank, so this really is the last lifeline. The system has been pushed to its limit.
Companies were over-leveraged and didn't have cash stockpiles. They're trying to get liquid cash so they don't have to divest of assets in a market that isn't buying or go into chapter 11. All the same, people are willing to extend loans because they are long on the economy, recovery, and return to normalcy. The engines are starting again. The biggest issue was that companies were over-leveraged with debt. Maybe we'l…
Companies were over-leveraged and didn't have cash stockpiles. They're trying to get liquid cash so they don't have to divest of assets in a market that isn't buying or go into chapter 11. All the same, people are willing to extend loans because they are long on the economy, recovery, and return to normalcy. The engines are starting again. The biggest issue was that companies were over-leveraged with debt. Maybe we'l…
To play devil's advocate, how are companies over-leveraged during an environment of such low interest rates? Companies will optimize their capital structure for the lowest cost of capital, and if the cost of debt decreases, companies should rationally leverage accordingly. That's why we see Apple issuing $8B of debt (at ~135bps over 30 year Treasury bonds!) despite having over $200B of cash on hand. If your hurdle ra…
And this is exactly why you should have a cash stockpile, either as a company or an individual: You can never tell when a random event will completely wipe out your earnings for 6 months.
I'm no corporate financier, but I've certainly heard arguments in favor of borrowing money during times of low interest rates in order to have a cash stockpile. But borrowing to do stock bybacks when you don't have a stockpile is just skating further out onto thinner and thinner ice.
Earlier quoted context omitted.
Central banks will just buy them onto their balance sheets. Its already begun: https://ftalphaville.ft.com/2020/04/30/1588254981000/How-sho... https://www.afr.com/markets/debt-markets/why-the-rba-is-lend...
This is really worrying. There is no central bank of central bank, so this really is the last lifeline. The system has been pushed to its limit.
Bank of International Settlements is the central bank of central banks. https://en.wikipedia.org/wiki/Bank_for_International_Settlem...
Earlier quoted context omitted.
Hertz is on the verge of bankruptcy so it only follows that the risk premium for Avis is high. Just think - if nobody is flying, who is renting all those cars?
No one, they dont even have enough parking for them to all be idle simultaneously. The airport rental agencies near me have been renting out all the stadium parking nearby to use as overflow storage.
Companies were over-leveraged and didn't have cash stockpiles. They're trying to get liquid cash so they don't have to divest of assets in a market that isn't buying or go into chapter 11. All the same, people are willing to extend loans because they are long on the economy, recovery, and return to normalcy. The engines are starting again. The biggest issue was that companies were over-leveraged with debt. Maybe we'l…
Taxing interest on corporate debt should be a DNC agenda item.
Are you arguing we should tax all of that as well? Or just one specific type of expense?
I don’t find yields over 10% given the current economic climate to be unreasonable or evidence of “desperation” on the part of sellers. I would probably find rates of under 10% as evidence of desperation on the part of buyers...
In the 80s, we were borrowing money for mortgages (secured by houses with tenants and 20% downpayments) at rates over 15%. I don’t find yields over 10% given the current economic climate to be unreasonable or evidence of “desperation” on the part of sellers. I would probably find rates of under 10% as evidence of desperation on the part of buyers...
In the 80s, we were borrowing money for mortgages (secured by houses with tenants and 20% downpayments) at rates over 15%. I don’t find yields over 10% given the current economic climate to be unreasonable or evidence of “desperation” on the part of sellers. I would probably find rates of under 10% as evidence of desperation on the part of buyers...
In order to draw a conclusion, we should look at the _real_ interest rate vs. the nominal one.