Markets News 

‘A recession will come’: Experts across Wall Street are warning of hiccups in a market that ‘sounds a lot like subprime in 2006’

“Right now, there are leverage ratios in the investment-grade corporate bond market that suggest that nearly a third of the investment corporate bond market probably should be rated junk.”” writes Christopher Competiello for businessinsider.com. “We have zombie companies that are allowed to keep going because of these artificially low interest rates — and the corporate bond market is probably significantly over-rated, which sounds a lot like subprime in 2006.”. He lamented what he called the “riskiest corporate market we’ve ever had.”. “You’re going to see en masse downgradings of the…

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Are Employment Numbers Solid or a Debt Fueled Jobs Bubble?

“If it is a jobs bubble, it can only last until the underlying credit bubble bursts” writes W E for ccn.com. The growth in jobs this year looks like a jobs bubble.Soaring payrolls figures are only good news if these jobs numbers hold.If they crash, then this is a jobs bubble.The November U.S. jobs report sent the Dow surging Friday. Source: ccn.com

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I didn’t hear the term ‘debt-to-income’ ratio until I was 26, but if I’d known it earlier I would have made some very different decisions

“If I had known about it sooner, I likely would have made different financial decisions, especially around my student loans” writes Kelly Burch for businessinsider.com. However, I’m interested in buying an investment property next year, which means I want my debt-to-income ratio in tip-top shape.If you make $5,000 a month (more than the American average), your debt-to-income ratio is 50% ($2,500/$5,000).However, I didn’t realize how those payments would be affecting my debt-to-income ratio more than a decade later.It wasn’t until I was applying for a mortgage at 26 that I…

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Markets News 

Consumer Credit Bubble Could Drag Economy into Recession

“This has created another bubble in equities along with consumer credit, as the flood of easy money chases quick profits” writes W E for ccn.com. Consumer credit card delinquency and charge-offs rocketed to seven year highs in the third quarter.It’s not only the consumer credit card market showing cracks.At the end of September 2019, consumer credit backed securities totaled $4.1 billion. The consumer credit market is one to watch. Source: ccn.com

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The $800 billion shadow-lending industry is staffing up with recession pros who can sort out messy credit meltdowns

“But an unexpected economic shock or recession would be “exacerbated by the build-up of non-financial corporate debt over the past decade.”” writes Alex Morrell for businessinsider.com. Having professionals that can navigate the potential carnage when debt-saddled firms hit a rough patch is key, according to Mahoney.Wall Street doesn’t expect the corporate debt hoard to provoke a crisis, at least not in the near term, according to a report from Wells Fargo’s chief economist.”Senior restructuring professionals with the ‘scars’ earned from working through prior credit cycles are both scarce and coveted,”…

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Rand Paul to offer bill allowing families to use 401, IRA savings on student loans

“Rand Paul wants to combat the rising debt load engulfing college students by allowing families to use their retirement savings to pay off their loans” writes Associated Press for marketwatch.com. The Kentucky Republican introduced federal legislation late Monday that would allow students to dip into retirement accounts to help pay for college or make monthly debt payments. Source: marketwatch.com

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Sen. Paul offering bill to combat student loan debt

“Rand Paul wants to combat the rising debt load engulfing college students by allowing families to use their retirement savings to pay off their loans” reports thebusinessjournal.com. The Kentucky Republican introduced federal legislation late Monday that would allow students to dip into retirement accounts to help pay for college or make monthly debt payments. Source: thebusinessjournal.com

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Goldman’s credit-investing chief explains how he’s profited from widespread recession fears — and breaks down the next big opportunities he’s exploiting

“Another corner of the credit market he finds attractive is mortgages, thanks to the Fed’s balance sheet reduction” writes Akin Oyedele for businessinsider.com. “Investors — especially going into year-end — have been overly conservative and have kind of bet only on the highest-quality credit,” Shah said.Investors were naturally concerned that companies with the weakest credit ratings and largest piles of debt would run into the most trouble.Another reason for the outperformance of these so-called investment grade bonds was that many companies with cash seized upon widespread recession fever to pay…

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