“The financial condition of balance sheets in the consumer discretionary sector has severely deteriorated over the past few years It’s one thing to accumulate debt in a easy money environment, but quite another to operate a highly leveraged business in a rising cost of capital setting. Keep in mind that some of these companies will soon be on the hook for having to refinance their debt at significantly higher interest rates.”
Balance sheets of consumer discretionary stocks have clearly deteriorated. In general, non-financial corporates have accumulated a ton of debt since the GFC, doubling from $6.5 trillion in Q2 '09 to $13 trillion in Q2 '23 — with rates now rising fast. https://t.co/Py1f8NKPls
— David Sommers (@dgsommersmkts) September 27, 2023