The $6 TRILLION Corporate Debt Implosion Begins...
Interest-Rates / Corporate Bonds Jun 01, 2016 - 06:06 PM GMTThe corporate bond market is a $6 trillion time bomb waiting to go off.
It took the US half a century to grow its corporate bond market to $3 trillion.
Thanks to the Fed implementing ZIRP and holding rates there for seven years, we’ve doubled the corporate bond market, adding another $3 trillion in corporate debt… since 2009.
These bonds are junk… literally. The average credit rating is junk. All told, since 2012, 75% of companies accessing the bond market have had a credit rating of single-B.
So… if the corporate bond market is now TWICE as large as it was in 2008. And the quality of the bonds is lower than it was at the PEAK of the previous bubble… what does that tell us about the state of affairs for the markets in 2016?
And look… delinquencies are spiking on corporate loans from commercial banks… indicating that businesses (the same businesses that are issuing record amounts of garbage debt) are not paying banks back for corporate loans.
More and more this environment feels like late 2007/ early 2008: when the economy was in collapse but stocks held up on hopes that the Fed could maintain the bubble.
The time to prepare for this bubble to burst is now. Imagine if you’d prepared for the 2008 Crash back in late 2007? We did, and our clients made triple digit returns when the markets imploded.
We’re currently preparing for a similar situation today.
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Best Regards
Graham Summers
Phoenix Capital Research
http://www.phoenixcapitalmarketing.com
Graham also writes Private Wealth Advisory, a monthly investment advisory focusing on the most lucrative investment opportunities the financial markets have to offer. Graham understands the big picture from both a macro-economic and capital in/outflow perspective. He translates his understanding into finding trends and undervalued investment opportunities months before the markets catch on: the Private Wealth Advisory portfolio has outperformed the S&P 500 three of the last five years, including a 7% return in 2008 vs. a 37% loss for the S&P 500.
Previously, Graham worked as a Senior Financial Analyst covering global markets for several investment firms in the Mid-Atlantic region. He’s lived and performed research in Europe, Asia, the Middle East, and the United States.
© 2016 Copyright Graham Summers - All Rights Reserved Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.
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