Leroy N. Soetoro
2023-10-21 21:36:44 UTC
https://www.yahoo.com/news/finance/news/live-real-world-kevin-oleary-
120000167.html
Kevin OLeary is worried about a crisis emerging in the United States.
In a recent interview on Fox Business, the entrepreneur and television
personality was asked if the small and mid-sized businesses he works with
are becoming more optimistic about the economy.
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No, thats not what I hear, and I live in the real world, he said.
OLeary expressed his concern with rising interest rates, and with further
rate hikes still on the table, he worries it could push some businesses
into deep distress.
Small business outlook
Optimism among small businesses dipped recently. The National Federation
of Independent Businesses Small Business Optimism Index decreased 0.6
points in August to 91.3, remaining lower than the 49-year average of 98.
We have a crisis emerging, he said, referring to the 11 interest rate
hikes the Federal Reserve has imposed since March 2022. These rapid rate
hikes that have occurred and the unprecedented speed of these hikes has
put my small businesses [in a difficult position] The cost of capital
has gone through the roof.
OLeary believes smaller companies are particularly vulnerable.
If youre in the S&P 500, you have no trouble financing your business,
he said. You cant say that about small businesses anymore.
He goes on to highlight the fact that small businesses with five to 500
employees represent 60% of the U.S. economy, which is why this liquidity
crunch is a concern.
Weve got a real crisis coming here, he said. When the Fed raises rates
another 50 basis points thats going to make it worse.
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real estate without the headache of being a landlord. Here's how
More pain ahead for some sectors
Analysts at Morgan Stanley believe that if interest rates stay higher for
longer, companies with weaker credit ratings could be most impacted. But
businesses of all sizes operating under tight margins share this risk if
theyve borrowed too much money in the past, the rising cost of interest
could push them into losses.
Some over-levered companies have, in recent years, been able to just
barely pay the interest on their debt, thanks to historically low rates,
but their principal has remained. Now these so-called zombie companies
are being pushed over the edge into bankruptcy. Bankruptcy filings surged
15% year over year as of July.
Simply put, all businesses are vulnerable to the rising costs of servicing
debt. But companies that are large enough or publicly traded can raise
capital from the stock market, whereas small and family-owned businesses
may have no choice but to shut down, liquidate or enter bankruptcy.
OLeary says some small businesses should turn to government tax credits
and support programs to survive. His focus is on the Employee Retention
Credit, which could help some businesses meet payroll and avoid layoffs
during the recession and credit crunch.
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120000167.html
Kevin OLeary is worried about a crisis emerging in the United States.
In a recent interview on Fox Business, the entrepreneur and television
personality was asked if the small and mid-sized businesses he works with
are becoming more optimistic about the economy.
Don't miss
Commercial real estate has outperformed the S&P 500 over 25 years. Here's
how to diversify your portfolio without the headache of being a landlord
Rich young Americans have lost confidence in the stock market and are
betting on these 3 assets instead. Get in now for strong long-term
tailwinds
Millions of Americans are in massive debt in the face of rising rates.
Here's how to get your head above water ASAP
No, thats not what I hear, and I live in the real world, he said.
OLeary expressed his concern with rising interest rates, and with further
rate hikes still on the table, he worries it could push some businesses
into deep distress.
Small business outlook
Optimism among small businesses dipped recently. The National Federation
of Independent Businesses Small Business Optimism Index decreased 0.6
points in August to 91.3, remaining lower than the 49-year average of 98.
We have a crisis emerging, he said, referring to the 11 interest rate
hikes the Federal Reserve has imposed since March 2022. These rapid rate
hikes that have occurred and the unprecedented speed of these hikes has
put my small businesses [in a difficult position] The cost of capital
has gone through the roof.
OLeary believes smaller companies are particularly vulnerable.
If youre in the S&P 500, you have no trouble financing your business,
he said. You cant say that about small businesses anymore.
He goes on to highlight the fact that small businesses with five to 500
employees represent 60% of the U.S. economy, which is why this liquidity
crunch is a concern.
Weve got a real crisis coming here, he said. When the Fed raises rates
another 50 basis points thats going to make it worse.
Read more: Thanks to Jeff Bezos, you can now use $100 to cash in on prime
real estate without the headache of being a landlord. Here's how
More pain ahead for some sectors
Analysts at Morgan Stanley believe that if interest rates stay higher for
longer, companies with weaker credit ratings could be most impacted. But
businesses of all sizes operating under tight margins share this risk if
theyve borrowed too much money in the past, the rising cost of interest
could push them into losses.
Some over-levered companies have, in recent years, been able to just
barely pay the interest on their debt, thanks to historically low rates,
but their principal has remained. Now these so-called zombie companies
are being pushed over the edge into bankruptcy. Bankruptcy filings surged
15% year over year as of July.
Simply put, all businesses are vulnerable to the rising costs of servicing
debt. But companies that are large enough or publicly traded can raise
capital from the stock market, whereas small and family-owned businesses
may have no choice but to shut down, liquidate or enter bankruptcy.
OLeary says some small businesses should turn to government tax credits
and support programs to survive. His focus is on the Employee Retention
Credit, which could help some businesses meet payroll and avoid layoffs
during the recession and credit crunch.
What to read next
Big box stores are getting away with overcharging their customers use
this app to instantly get the best deals when you're shopping online
How can I stop the pain and make money in this nightmarish market? Here's
1 simple way you can protect your nest egg
Jeff Bezos and Oprah Winfrey invest in this asset to keep their wealth
safe you may want to do the same in 2023
This article provides information only and should not be construed as
advice. It is provided without warranty of any kind.
--
We live in a time where intelligent people are being silenced so that
stupid people won't be offended.
Durham Report: The FBI has an integrity problem. It has none.
No collusion - Special Counsel Robert Swan Mueller III, March 2019.
Officially made Nancy Pelosi a two-time impeachment loser.
Thank you for cleaning up the disaster of the 2008-2017 Obama / Biden
fiasco, President Trump.
Under Barack Obama's leadership, the United States of America became the
The World According To Garp. Obama sold out heterosexuals for Hollywood
queer liberal democrat donors.
President Trump boosted the economy, reduced illegal invasions, appointed
dozens of judges and three SCOTUS justices.