President Trump has escalated the trade war with China, and nearly everyone has been wrong-footed by the move.
According to the Federal Reserve's “Financial Stability Report” of May 2019, not only has the outstanding debt of nonfinancial businesses outpaced nominal GDP during the past 10 years (or since 2008), but the growth of debt has been skewed toward riskier firms.
New escalation of the U.S.-China trade war makes a number of scenarios possible, including one in which the global economy suffers recession later this year.
The Federal Reserve have released its scenarios for the 2019 CCAR stress test. Listen as Mark Zandi and Cristian deRitis discuss the narratives behind the Fed's scenarios under forecasts of detailed economic variables.
Using the Moody's Analytics model of the global economy, we consider the fallout if current negotiations break down and trade tensions between the two economic giants reignite.
In 2018's final quarter, the 22 downgrades of U.S. investment-grade companies included nine that were at least partly ascribed to mergers, acquisitions and divestitures and three that were linked to equity buybacks. Only half, or 11, of fourth-quarter 2018's U.S. investment-grade downgrades were primarily driven by worsened operating or market fundamentals.