Capital Markets: Observations & Insights

V

Confidence Game Economic Outlook

• Economic and policy uncertainty may have peaked given recent events

I

• This is reflected in declining credit spreads and expectations for credit, which indicate business spending should accelerate

II

Credit Outlook Has Improved…

…Which May Boost Capital Expenditures

0

1%

10%

III

-1

8%

-2

Corporate Capex

2%

6%

-3

-4

IV

4%

-5

3%

2%

Credit Spreads

-6

?

0%

-7

V

4%

-2%

-8

Expected Credit Conditions

2013

2014

2015

2016

2017

2018

2019

2020

2017

2018

2019

2020

VI

Source: National Federation of Independent Business, Bureau of Economic Analysis, and FactSet. Expected Credit Conditions is based on a survey of small and independent business owners and reflects financing availability. Capex growth is U.S. real nonresidential gross private domestic investment.

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