Wall Street is unabashedly loony at the moment. Stocks remind me of Clark Griswold’s famous line in National Lampoon’s Vacation, “This is crazy, this is crazy, this is crazy.”
In every previous recession, corporations reduced their leverage to shore up their balance sheets. Not this time.
US corporate debt is heading for 50% of GDP. That is not just a new record… it’s other-worldly.
In 2000 as well as 2008, bubbly asset price excesses reversed course around the time that corporate debt-to-GDP reached 45%. In Q2 of 2020, as the economy contracts further and