Replies to post #143570 on SPDR S&P 500 (SPY)

[imiloa]

definitely a lot of factors. my series of posts today bullet points a few of them.

re: "growth on borrowed money"

google "carry trade debt"

nutshell:
the current fed interest rate is 0.25%.
compared to:
• 6% before dotcom crash
• 1% after dotcom crash
• 5% after dotcom recovery
http://www.interest.com/content/blogs.dir/2/files/2013/04/federal_funds_rate_2000_2013.jpg

this means money is nearly free to borrow.
so many companies have borrowed large sums to expand growth and even buy back their own shares.

meaning many companies have taken on large cheap debt,
interest payments on which have a small impact on their bottom line earnings.

when the fed raises the interest
the monthly cost of that debt will rise
which will directly impact corp earnings.

therein lies the precarious timebomb.
and, imo, a large part of why the fed has been so dovish about raising the rate.
and why wall street bristles so vehemently at every suggestion of a rate rise.