February 21, 2020
STUMBLING INTO AN INSIGHT:
Companies are behaving like it's a recession (Dion Rabouin, 2/21/20, Axios)
Despite historically low interest rates, U.S. companies are being unusually frugal, holding back on issuing new debt and pumping up their balance sheets with cash.Why it matters: Historically, when interest rates are low and the economy is strong, companies have levered up to increase capital expenditures and buy assets in order to expand. The opposite is happening now.
Of course, the fact that we are in the midst of a deflationary epoch means that rates are not especially low and that the dollar you borrow today will buy more tomorrow, not less. Not borrowing is simply market wisdom.
Posted by Orrin Judd at February 21, 2020 12:00 AM