Oil is down below $37 per barrel now, sending oil stocks down the toilet again. CDS for many distressed oil companies, like CHK, are blowing out. Debt to equity levels are getting dangerously high.
This is going to lead to a liquidity event that will cascade into the market and ravage everything in its path.
According to Exodus, there is over $267 billion in debt assigned to companies whose debt to equity levels are over 5x.
Under 5x, there is approximately $1.82 trillion in debt (lolz). Of the $1.82t, there are many billions of dollars in debt becoming distressed. By distressed, I mean companies who will find it increasingly difficult, or impossible, to tap equity markets for capital.
This is how a crisis begins.
SPY futs are off by 16, after fair value considerations.
If you enjoy the content at iBankCoin, please follow us on Twitter
meme use, day made
Wipe that list out
(so long as none of my positions EVER crop up on it. If that were to happen, bailouts would be the only acceptable way forward of course)
I wonder who goes Ellis Wyatt first?
A company may go BK but the oil and gas will always be there. Somebody will benefit from buying cheap in the long haul.