Over 40% of the top 2000 companies in the US are unprofitable, the most since the pandemic. At the same time, interest expense as a % of total debt of these firms hit 7.1%, the highest since 2003. US company bankruptcies in 2024 surpassed 2020 pandemic levels. Gross leverage—the ratio of debt to assets (and earnings) —of all US publicly traded nonfinancial firms remains high and hedge fund leverage is at or near the highest level in the past decade. So the risk of a financial crash is rising.
As Ruchir Sharma of the Rockefeller Foundation put it: “Awe of “American exceptionalism” in markets has now gone too far….Talk of bubbles in tech or AI, or in investment strategies focused on growth and momentum, obscures the mother of all bubbles in US markets. Thoroughly dominating the mind space of global investors, America is over-owned, overvalued and overhyped to a degree never seen before. As with all bubbles, it is hard to know when this one will deflate, or what will trigger its decline.” And there are signs. The US stock market index, the S&P, 500 fell 1.6% in December, with 6 or more sectors down 5% or worse.
https://thenextrecession.wordpress.com/2024/12/31/forecast-2025-roaring-or-tepid/previous thread
>>1946737This thread officially endorses eggplants over tomatoes.