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Corporate Debt Bubble

1,047 Views | 4 Replies | Last: 5 yr ago by oldarmy1
Ag92NGranbury
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AG
Danger, Will Robinson!

https://www.nytimes.com/2018/08/09/opinion/corporate-debt-bubble-next-recession.html
FTAco07
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AG
Noted bear Dave Rosenberg has been preaching that gospel for a while now. I can't link the chart because it's behind a paywall, but nearly half of all investment grade corporate debt is rated BBB! Half of the investment grade universe is one notch above junk! That number was only 32% in 2009.
AgBank
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AG
High yield spreads over treasury are unappealing these days. I find myself in more short term treasuries than ever.

Cyp0111
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We are at quite the mismatch in pricing on high yields vs risk...but that is always the case before the avalanche. The desire for yield has pushed leverage levels and credit too far past levels that are sustainable and we are starting to see big issues.

Corporate debt is one thing. It's more or less corporate finance 101 and incurring debt at cheap levels to buy back shares etc. all. That will come to a stop, at the detriment to the stock markets.

The bigger issue is the chase for yield in emerging markets and lack of currency hedge (it's not that much better than last two EM crisis levels). I think people are underplaying Turkey and other areas where inflationary troubles coupled with loans going bad should really start to impact global markets.

The unwind and credit crisis is starting to step up, timing is the only question imo.
oldarmy1
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AG
Pressed right up to gap fill and rejected. Missed filling it by less than 2 points. Psychology says it will get filled. Lile a hang nail to market makers.
oldarmy1
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AG
Wrong thread.

So whats all the QA money sheltered do to this write up?
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