Global economy needs central banks in order to stand on its own feet

The FTSE All-Share index is off some 18% from its high in April 2015 at the time of writing, yet having called the top of the market successfully the key question to answer is when do we want to start to invest our high levels of cash?

The answer to this is not yet. Corporate access to debt is becoming more expensive. US banks' are tightening lending standards to medium- and large-sized industrial companies and traded corporate debt costs have risen markedly for many companies. One of US Steel's bonds which will need to be refinanced shortly is a case in point. Having traded at a 2.5%pa 15 months ago, the price has sold off to such an extent that the debt is currently yielding 27%pa. Clearly US Steel cannot refinance at these levels of interest and it is probable that existing equity investors will be severely dilut...