In today’s podcast we discuss the rising levels of corporate debt in the form(s) of commercial and industrial loans and debt securities (i.e. corporate bonds). We also highlight some of the key points from the Payment Protection Program (PPP Loans) from the Small Business Administration (SBA). A list of companies can also be found here.
When we analyze the corporate debt landscape, it is immediately evident that there is a deviation from cycle trend. Typically, when the economy is about to enter into or is already in recession, corporate debt levels will plateau and/or be reduced. This is logical behavior as recessions are indicative of slower growth and thus corporations will be looking to shore up their balance sheets and will do so by reducing their debt burdens. Well not this time. In fact, we’re witnessing quite the opposite with sizable increases to corporate debt. Just with commercial and industrial loans, an increase of some $600 billion from February to May of 2020 took place. For a little perspective, commercial and industrial loans did not total $600 billion until the late 1980s! Now, we’re adding that much in a matter of a few months! These actions to continue to kick-the-can down the road will not work and we will all be paying dearly for these actions in one form or another. Stay diversified, stay vigilant, and stay with The Kapital News. #BananaRepublic #Debt #Bailouts #Economy #Depression #Recession #USA #Gold #Liberty #EndTheFed