How do you folks think that this current expansionary cycle will end?
My amateur guess is:
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Rising interest rates through 2019/2020.
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Reduced corporate earning because of China trade war
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Both the above put the squeeze on debt-laden companies to pay back bonds
- See Tesla for example
- Companies have loaded up on debt to execute share buy-backs that increases share price — but reduced earnings will decrease share price!
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PE companies, which hold lots of corp debt, get hurt
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Insurance companies, which hold corp debt, get hurt
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How does this affect municipal pension obligations? Do municipalities have to declare bankruptcy a la Orange County in the 90s?
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How does this affect zombie tech companies (i.e. Uber/Lyft) who are running on “unlimited” cash from VCs? And PE Companies?
http://knowledge.wharton.upenn.edu/article/corporate-debt-bubble/