The success with which they adjust to global structural changes is also influenced by current economic conditions. For example, the challenges faced by producers competing against foreign lowcost producers, or multinationals with global supply chains, increase when our exchange rate overshoots.
Corporate balance sheets are strong and flush with cash, and broad stock price indexes are up more than 10 percent so far this year. At the same time, yield spreads on corporate bonds across the ratings spectrum have been low, supported by the strong balance sheets and robust profit growth.