April/May 2019 - Bubbles and bottoms for companies -

Corporate debt. It is the type of debt that has gone up the most over the past decade, compared to household, government and financial sector debt. As i`ve said before, the next financial crisis won`t be starting at banks. Banks have been bullied by every single government since the great financial crisis, and this is practically the only industry that has managed to deleverage over the past years. If one wants to find the catalyst of the next great crisis, look no further than private and listed companies all over the world.

Zooming in on this picture, one can see that Chinese nonfinancial corporate debt has been the biggest cause of the worldwide corporate debt growth. It has gone from roughly 3 Trillion in 2007, to more than 20 Trillion in late 2018!

In the U.S. it`s not much different though, with Russell 2000 companies increasing their debt fivefold in a decade.

When it comes to companies who are about to be listed on the stock market, the story might even be worse, as the majority of them are not even profitable yet. The Lyft IPO that went terribly wrong last month, was infamous for having the largest annual loss before going public. Ever.

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