00:00:00
with all of the tariffs the one thing
00:00:02
that we haven't sufficiently talked
00:00:03
about is there is a tremendous amount of
00:00:05
corporate debt that supports these
00:00:07
businesses today And you would say well
00:00:09
if long-term rates go down there's no
00:00:12
real risk But the tariff picture
00:00:14
actually impacts revenues And the
00:00:17
problem with that is that there's a lot
00:00:18
of companies that have debt covenants
00:00:20
tied to revenue and IBIDA And so this is
00:00:23
what I spoke about at the beginning of
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January which is the one risk that is
00:00:28
uncontrollable is what happens to
00:00:31
corporate debt and could we see a wave
00:00:34
of defaults and a wave of action Best
00:00:36
performing asset Everybody loves this
00:00:38
one What do you got I would be long CDS
00:00:42
I'm buying insurance using credit
00:00:44
default swaps I think that there is a
00:00:47
small chance of some volatility next
00:00:50
year I hope it doesn't happen I hope
00:00:52
that this trade loses money but if it
00:00:54
hits it will be the best performing
00:00:56
asset of 2025 It has hit For every
00:00:59
billion dollars of risk you would have
00:01:00
put on would have cost you about a
00:01:02
million And that million would have made
00:01:04
you about $7 million in about 3 months
00:01:07
Why is this important The CDS actually
00:01:09
represents the structural risk in the
00:01:11
United States corporate economy So when
00:01:13
you see these spreads blowing out this
00:01:15
is actually a very important warning
00:01:17
sign This is what was the canary in the
00:01:20
coal mine for the great financial crisis
00:01:23
The tariff picture and the recession
00:01:25
picture will get played out in this
00:01:26
chart And I think it's something that
00:01:28
folks can and should probably pay
00:01:30
tremendous attention
