The Debt Bubble is about to EXPLODE | PREPARE

is it possible there is a big debt

bubble yes it is in fact there is a debt

bubble especially at a lot of smaller

companies but also at some larger

companies I'll show you a couple larger

companies in this video and I'll show

you where to look for which companies

might be at a massive interest rate

shock potential we'll look at exactly

all of that in just a moment after we

look at this Wall Street Journal piece

brought To Us by a course member Max of

course is obviously linked down below

what do we got here markets ignore the

looming debt peril

basically some companies just have too

much debt but so far investors aren't

actually pricing that in in fact you

could look at some companies like

carvana which has just exploded

even as people are ignoring the levels

of death that carvana has which

basically brought it to near bankruptcy

last year which is why it sold down as

much as it did and so the article in the

Wall Street Journal here makes the

argument that there are three types of

companies and business models that are

really going to hit the hardest and this

author basically says the market is

Dashing towards trash right now being

blind about the potential for these weak

borrowers to just get whacked number one

would be as they call your most obvious

disaster super speculative companies

that have financed them their final

stages of production uh and mostly ended

up being spax using debt financing to

become these zombies that are probably

trending towards bankruptcy some of

these companies in my opinion are

probably going to be although you do

have the Saudis backing them you're

Lucid you're a rival your canoe those

are some of the the EV highly indebted

companies that are getting whacked

rivian has somewhat separated itself

from this uh and it's it's certainly

doing better than those that I just

mentioned but not doing great either

with the level of a terrible massive and

terribly and massive negative growth

margins you have not to include net

margins is even worse it's terrible I

mean you're spending somewhere around

two hundred dollars for every hundred

dollars of Revenue you get it's it's bad

uh but anyway what do we have over here

decent businesses so this is your second

type of company decent businesses with

solid cash flow but a huge amount of

debt these companies potentially face a

reckoning as well I'll give some

examples of these in just a moment and

show you in investor relations docs how

to look for this

then of course you have offices and

hotels those are likely to get whacked

and the third type of company is one

that might not get hit from a debt point

of view but they're going to end up

getting hit for more of an EPS point of

view so you've got these three big risks

companies that get hit from higher

interest rate risks companies that have

a lot of debt but have cash flows but

they'll see those cash flows evaporate

and then basically the only thing

keeping some speculative companies to

life which is that so what I like to do

is I like to take inspiration from

articles like this

uh and uh you know where they basically

talk about uh wild pets in the stock

market being quite risky and these are

some of the red flags you should pay

attention to and I like to go to actual

earnings reports so what I've done is

I've pulled up some earnings reports

this is the Walt Disney uh quarterly

report and one of the things that I

noticed with Disney is that even though

you have a net income here of 1.5

billion dollars

you have nearly uh words just a little

bit above one-fifth of their net income

here getting spent on interest

322 million dollars in one quarter going

to debt that's over uh 1.3 ish billion

dollars of debt a year that Disney is

spending so in other words an entire

almost quarter of uh Disney's net income

is going to debt in a year

it's pretty wild it's a lot of money

going to debt and a lot of folks

reporting that out over at Disney and

saying well maybe that's why Disney is

performing more weak or weekly lately in

the stock market of course you could

look at a balance sheet as well

jump over the balance sheet you can see

you've got long-term liabilities here of

13 billion dollars deferred taxes of

eight putting you at about 21 combined

uh on top of that 21 you've got uh here

short-term bills payable of around

20 uh 122-ish billion dollars right here

not considering the deferred revenue so

in other words we got somewhere around

40 billion dollars of debt at Disney

with cash sitting around

10 billion dollars now you do have

receivables of another 12 but still

that's an extra 18 billion dollars of

debt what's another one how about

Carnival cruise lines look at carnival

Carnival Cruise Lines reporting and

they've done very well here since their

last earnings over the last week week

and a half year but I think this is

what's inspiring this Wall Street

Journal article saying hey you know

people are turning a blind eye to how

much debt some of these companies have

and it's a mistake but look for example

at Carnival Cruise Lines

you've got interest income of 69. uh

what do we got 69 million dollars but

interest expenses of

542 million dollars

you have losses at carnival of 407

million dollars in other words

their interest expense alone

is driving them into net income if they

had no debt they'd be barely break

barely break even

but look at the actual number of

borrowings they have they got about 4.4

billion cash you've got short-term

borrowings here uh or or short-term

bills to pay of what is that 2.7 plus

another two call it 4.7 about 4.7

billion dollars in bills but

unfortunately you've got

32 billion dollars in long-term debts

yikes 32 billies no wonder their

interest rate is so high or their

interest expense rather is so high now

one of the things that you can do as

well if you go a little bit deeper into

these companies so you can actually

start looking when these notes are all

due and payable which is kind of an

interesting strategy for trying to

evaluate when these companies might have

to raise money in the stock market or

issue new bonds for example you could

jump over here this is just a few pages

down from where we just were in uh the

Carnival Cruise Lines set here and you

can see here's about 2.4 Billy at

Carnival Cruise Lines due in 2028 at

four percent but then you've got about a

billy here at 10 interest look at this

some more notes Here a billy at 10.5 two

bill at six percent 1.1 at 5.8 and you

can see the due dates here with less due

here in 2023 or you're starting to get

some of these due in 2024 that's where

you're really going to start getting a

little bit more of your our maturities

coming through although Carnival has

really been able to Kick the Can down

the road to mostly what looks like 2026

and 2027 where you're really going to

get somewhere around 10 billion dollars

coming due by 2027. so while you might

have a nice run for the next year or two

at some point the Market's going to

start pricing and some of the pain

coming from debt and this is a warning

and a red flag to start paying attention

to so if you're investing in companies

you really ought to look at companies

that potentially have really low debt

now I'm not saying go for like super

high growth names or SAS companies but

if you want to see a company that has

like a phenomenal balance sheet like you

want to see what a phenomenal balance

sheet looks like do the following we'll

do it together go to sec.gov

and let's go to filings let's search for

a company what ticker are we going to

put in palantir pltr you ready for this

okay hold on palantir give me my

palantir filings here I need palantir

filings yep there we go better okay

quarterly report let's get the last May

9th quarterly report on palantir

let's go to HTML here there we go let's

look at the balance sheet for palantir

so

what do we have here well these numbers

are in thousands so from March 31st you

have 1.2 billion dollars in cash another

1.6 in marketable Securities that puts

you in somewhere around

2.8 billies in cash call it 2.9 in cash

you have bills sitting on the table of

about

178 uh million dollars so in other words

let's let's make this clear we'll write

it down you know what we'll put a little

notepad over here and we'll go 2.9 Billy

in cash and then you have bills

uh of what we'll call it 180 mil in

bills well if you want to put this in a

billion just put a period in front of it

and then going back to the balance sheet

customer deposits deferred revenue I

generally don't look at his debts

because you're likely to fulfill unless

your business goes BK you've got some

lease liabilities here of another 200

million dollars but no long-term debt

literally no long-term debt so that's it

other than your bills which is coming

from your operating cash flows anyway

you have a company with 2.9 billion

dollars of cash and 180 million dollars

of bills in other words fantastic

balance sheet so that's just a quick

lesson for you that it's really easy it

doesn't take a long time to do a quick

fundamental analysis like I teach in the

courses on building a growth link down

below it doesn't take a lot of time to

do a quick you know Financial Health

checkup on the companies you're

investing in and go am I investing in a

debt time bomb and these are important

things to consider for your investments

in my opinion and of course reiterating

what the Wall Street Journal has just

explored here now I want you to know

this when it comes to AI

time is what's going to make you money

and if you can prove that value to an

employer you'll always be able to be

employed so this is another way of

making sure that you don't get replaced

but

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