Now Is The Time For Companies To Deleverage Rather Than Face The Dual Squeeze

Now is the time for companies to reduce balance sheet debt rather than face the dual squeeze of higher interest expense and lower revenue growth in 2024.

Many investors and management teams believe that the Fed will reduce interest rates beginning early next year. I don’t necessarily see it that way. The Fed will be slow to reduce interest rates in my view and the long-end of the yield curve is likely to move higher as Yellen’s Treasury ramps up its auctions again in December. 2024 earnings estimates are too high as they don’t reflect economic reality nor do they reflect the Fed’s monetary policy stance nor Treasury’s cash requirements.