bill dudley carl icahn credit Macro Tourist Markets

Macro Tourist, Bill Dudley Think Carl Icahn May (Eventually) Be Right On Corporate Debt ‘Time Bomb’

"Although I have no idea of the timing, as this cycle continues, I am getting more sympathetic to the idea credit is a time bomb."

Read more from The Macro Tourist I rarely follow former FOMC Board Members as too often their "private-sector-personas" are way tougher than their "sitting-on-the-board-guises".  However, this week's Bill Dudley's Bloomberg Opinion piece caught my attention - "Two Risks to Stability Build Amid Short-Term Calm". Sure, his economic orthodoxy shines through with his "chronic budget deficits require large increases in the supply of Treasury debt" rhetoric.  I have little interest in discussing the first risk Bill highlights in his article.  Most readers know I am a huge fixed-income grizzly, not because we will have trouble selling debt, rather due to what I believe will be an increase in inflation in the coming years.  However, you don't need another bearish bond diatribe from me. But the other risk Dudley singles out is interesting.  From the article: The second long-term risk is the buildup of corporate debt — especially in the BBB rated and high-yield areas. In recent years, U.S. corporations have taken advantage of low interest rates and narrow corporate credit spreads to increase their leverage and move down the credit-quality curve. For many chief executive offic
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3 comments on “Macro Tourist, Bill Dudley Think Carl Icahn May (Eventually) Be Right On Corporate Debt ‘Time Bomb’

  1. Anonymous says:

    Very helpful information and insight here, Kevin. Thank you. For those of us who are limited to Bloomberg and (much worse) CNBC for perspective, your writings (and Walt’s writings) are extremely useful. My regards.

  2. OTR says:

    So one moral of the story is stretch out your maturities while you still can.

    (BTW, AAA issuers are practically an extinct species.)

  3. Seifert says:

    Yeah, this is for sure a (too?) scary scenario, but in a rigged financial world, I would not be surprised if we have some serious market interferrence, what will stop the FED to target junk bonds financing to protect the jobs of the american people ?

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