You Need to Prepare for the Coming Credit Collapse

Editor's note: Longtime Empire Financial Daily readers are familiar with our friend and colleague Mike DiBiase... At our corporate affiliate Stansberry Research, Mike is the editor of the Stansberry's Credit Opportunities corporate bond newsletter. Before joining Stansberry, he had nearly two decades of experience in the world of finance and accounting, most recently serving as […] Not rendering correctly? View this e-mail as a web page [here](. [Empire Financial Daily] Editor's note: Longtime Empire Financial Daily readers are familiar with our friend and colleague Mike DiBiase... At our corporate affiliate Stansberry Research, Mike is the editor of the Stansberry's Credit Opportunities corporate bond newsletter. Before joining Stansberry, he had nearly two decades of experience in the world of finance and accounting, most recently serving as VP of Finance and Planning for a large, publicly traded software company. Mike is a former CPA and Big Four auditor, and he holds bachelor's and master's degrees in Accounting. In short, Mike is an expert at analyzing vast amounts of data, and he understands complex accounting issues and how to read and interpret SEC documents. That's why – as he explains in today's essay – he's concerned about a crisis he views as inevitable... --------------------------------------------------------------- You Need to Prepare for the Coming Credit Collapse By Mike DiBiase --------------------------------------------------------------- [Revealed: Apple's future iPhone design]( You're looking at the details of a patent application that Apple quietly filed in 2021 for a flexible iPhone. The unique screen in the design blueprint could be the result of a new technology that is going to change our lives. Forbes calls it "the next Industrial Revolution." It will help make everything cheaper, faster, better, and safer... from smartphone screens to computer chips, to vaccines, to construction materials, and more. And one little-known company is leading this revolution. Getting in early could lead to huge profits. But you'll have to do it before the news of this company reaches the masses. [Click here before it's too late](. --------------------------------------------------------------- ► It started out like a normal video interview... Adam Aron – the CEO of troubled movie-theater chain AMC Entertainment (AMC) – appeared on camera from his home in a shirt and tie to answer questions from popular investment YouTuber Trey Collins. It was all very professional. That is, until Aron's camera accidentally fell off his computer while he was talking... showing everyone watching that he wasn't wearing any pants. Aron quickly grabbed the camera and put it back into place. He kept going as if nothing had happened, hoping that no one noticed the brief but shocking view of his bare thighs. Of course, people did notice... The video instantly became an Internet meme. But instead of being ridiculed, Aron became even more loved by his legion of followers – investors who call themselves "Apes." The hashtag "ApesDontWearPants" went viral. ► This ridiculous moment perfectly captured the state of the markets last year... Aron wasn't pandering to Wall Street in the interview. He was talking to retail investors who had driven up share prices of several previously left-for-dead stocks to all-time highs. They did this through the "WallStreetBets" community on social media website Reddit. These investors were at the forefront of the "meme stock" craze. They joined together to buy heavily shorted stocks, aiming to drive up the share prices by causing a "short squeeze" – forcing short-sellers to buy shares to cover their positions at much higher prices. At the start of 2021, AMC was just weeks away from filing for bankruptcy... when the "Ape Army" – armed with stimulus checks and unemployment cash burning holes in their pockets – came to its rescue. The COVID-19 pandemic crushed AMC's business. Attendance was down 91%, and the company was burning through $125 million in cash per month. At the end of November, it was down to only $320 million in cash. The company's stock traded for less than $2 at the beginning of last year, when the Apes began targeting it. They pushed up the stock price 10-fold to $20 per share on January 27, 2021... valuing the company at $8 billion. It was AMC's highest ever valuation at the time. The Apes continued to pile into the stock and smashed that record. The day before Aron sat down pants-less for his YouTube interview, AMC's stock traded as high as $72 per share, valuing the company at $36 billion. Take a look... Thanks to the Apes, AMC is no longer in danger of bankruptcy. Aron used the lunacy of clueless retail investors to line his company's coffers with cash by selling new shares of stock. --------------------------------------------------------------- Recommended Link: [Berna Barshay: 'My No. 1 stock to own over the next three years']( Over the next five years, billions of dollars are heading into one specific corner of the market, regardless of what's happening in the markets, what the Fed's doing, or whether war is still breaking out. And Berna has found the one company to disrupt this $300 billion industry – [making it her No. 1 stock to own over the next three years](. --------------------------------------------------------------- ► This is the kind of excess you see when money is too easy... Following the pandemic, the Federal Reserve purchased trillions of dollars' worth of U.S. Treasurys with money it created out of thin air (or a few computer keystrokes). And it lowered interest rates to next to nothing. The stock market soared. Novice investors believed that stocks could "only go up." And it wasn't just meme stocks. We saw a liquidity-driven speculative frenzy in almost everything – from a cryptocurrency that started as a joke (Dogecoin) to video clips of flying babies and digital cats (non-fungible tokens) selling for millions of dollars. Of course, these kinds of wild market excesses never last. Government intervention always has always unintended consequences. The Fed's massive liquidity injection put out the economic "fire" and pulled us out of a post-pandemic recession. But the central bank left the fire hose on for far too long... and flooded the house. By not removing its support quickly enough, the Fed has made things far worse than they otherwise would have been in the first place. As a result, our economy is now knee-deep in inflation. Prices are rising faster than at any time since the early 1980s. That's why we believe we're now on the cusp of another unavoidable recession. And we believe it will come sooner than most people expect... A recession is simply two consecutive quarters of declining gross domestic product ("GDP"). U.S. GDP shrank 1.4% in the first quarter of 2022. We're already halfway there. ► Investors are finally starting to wake up... Stocks are on the cusp of an official bear market – defined as a 20% fall from a recent high. The S&P 500 Index is down 15% this year. The tech-heavy Nasdaq Composite Index is already in a bear market... down 27% since its high last November. Most of the Apes have fared much worse than the average investor. They paid extravagant prices for shares of AMC as it surged to record highs. No doubt, their foray into the movie theater business ended poorly. As one Ape recently lamented on a group call... To you new Apes... I know you all are red... I get it. I didn't sell at $77... I'm not selling now. I've lost enough to buy a house with cash. And the worst isn't over. There are still massive dangers lurking in the market... But while everything else is falling, corporate debt has only ballooned. Throughout the COVID-19-induced economic downturn, corporate debt piles have grown dangerously larger... up 8% since the beginning of 2020. Corporate debt now tops $11.6 trillion, an all-time record. Excessive debt balances can only keep rising for so long. Eventually – and in most cases, suddenly – companies will collapse. Unsuspecting investors will be wiped out. ► Fortunately, you don't have to be one of the victims... If you're prepared, you could make a killing. You see, the coming wave of bankruptcies opens the door for tremendous profit-making potential, if you know what you're doing... This is the situation we're looking to capitalize on. Some of the world's greatest investors wait for moments like this... We're talking about billionaires like Warren Buffett... John Paulson... Paul Singer... Andy Beal... Sam Zell... and Wilbur Ross. These guys do the exact opposite of most investors. While everyone else is chasing prices higher in the late-stage bull market euphoria, these billionaires are busy raising cash. Then, when the crisis unfolds, they pounce. They use a little-known type of investment to make more money than the majority of people ever thought possible. It's sophisticated – and most folks know nothing about it... But the world's best and richest investors have been using this type of investment to grow their wealth for decades. It's a way to boost your profits completely outside of the stock market... with the potential for equity-like capital gains... and with far, far less risk than individual stocks. [Get the details here](. Regards, Mike DiBiase May 27, 2022 --------------------------------------------------------------- Editor's note: The Empire Financial Research offices are closed on Monday in observance of Memorial Day. 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