Submitted by Direwolfblades t3_xx4qlh in wallstreetbets
So yea this isn’t financial advice and the stock market is way more irrational than us cucks are solvent.
With that being said…I work for a large national bank and originate distressed debt credit facilities. I’ve been in banking since the Great Recession and I’ve never seen anything like this. This isn’t a scenario where one asset class (RE) got out of whack and markets dipped 48% while a few Wall Street firms folded and people realized packaging trash with A paper was a bad idea. Deals starting to hit my desk are getting crushed from every direction.
Usually when I see a shitty company I can usually laugh at the management team and point to exactly why their wives are divorcing them. Not anymore boys. I’m seeing demand softness across sectors. This reduced demand is resulting in price reduction (see lumber and steel). Seems good right? Wrong. Companies loaded up on expensive inventory because daddy told them to be worried about the supply chain. So now they are relieving inventory and taking huge GAAP losses. In short I’m seeing companies losing revenue and gross margin across the board.
But wait….there’s more! Interest rates are up. Now people are realizing that I in EBITDA that everyone adds back to cash flow is a cash expense that’s actually paid. Weird right? Oh and Google the word inflation. Every working in America is leaving the grocery store and gas station like they just got kicked in the nuts. So what do they do?? They ask their employer for more money. In short SG&Admin expense is up across sectors.
Long discussion short, put on your pampers so your wife doesn’t have to wash out skid marks when you start yourself. As an economy we’ll be fine, but we are going to see record bankruptcy filings next year (my hunch). There’s no solution for reduced revenue and margin combined with raping climbing SG&Admin unless Uncle Sam gives everyone more tendies. Luckily we can just export our way out of this. JK! Companies who export are especially hosed.
Hope you all have a great day!