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Home / Business / A $ 3 trillion tsunami is about to wash over the stock market, warns fund manager

A $ 3 trillion tsunami is about to wash over the stock market, warns fund manager



Nasgovitz, who monitors $ 1.3 billion in assets as CEO of Heartland Advisors, will not call a "full blown financial crisis", but with trillions in corporate debt coming in the coming years, not exactly predicting steady sailing in the stock market, either .

"With low interest rates, the economy strong and relatively simple lending standards, it was thought that repurchase share loans or finance acquisitions were a low-risk strategy" Nasgovitz explained in a recent post. " Read: Bernie Sanders shoots at the former Goldman Sachs boss Lloyd Blankfein over" makes them very rich even richer "

Nasgovitz used this chart to illustrate his attitude:


As you can see, about 3.3 trillion – or 48% of all current outstanding business debt – comes to an end by 2023. The time may be problematic.

"The large volume would be challenging for the market to digest in the best of scenarios, say it late in an economic expansion, "Nasgovitz wrote." Adding to our caution is early signs that lending standards have begun to tighten for commercial and industrial borrowers. "

He says that as banks become stricter, Borrowers end up paying higher prices just to secure funds for pension outstanding liabilities.

"While we currently do not see signs of a full-blown financial crisis on the horizon," He said, "We believe that excessive debt poses unnecessary challenges for the companies in general and is likely to be a wind blow for heavy borrowers in the meantime. "

Read: Why investors shouldn't worry about the bank's tightening credit

Not much fear in the market on Wednesday, with Dow

DJIA, + 0.25%

and S & P 500

SPX, + 0.19%

both move slightly higher.


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