What I Learned This Week

We are repeatedly asked, what is the weak link that will bring the U.S. economy down? Although there are many possibilities, our vote right now is corporate debt.

Stats tell the story of deterioration: The third quarter of this year saw the most credit rating downgrades for U.S. companies relative to upgrades since 2015, according to Bloomberg. Over the past 12 months, non-financial S&P 500 cash balances have declined by $185 billion, or 11%, the largest percentage decline since at least 1980, according to a Goldman Sachs analysis. Excluding financial companies, leverage—how much debt a company owes relative to earnings—hit an all-time high in 2Q19 based on investment-grade bond data going back to 2004, according to JPMorgan Chase. Leveraged loans totalling more than $40 billion and tied to more than 50 companies are in the midst of a “meltd…

Want to read more?

Subscribe Today

Already a subscriber? Login here.