Debt Crushing US Businesses, Bankruptcies Soar
$DIA, $SPY, $QQQ, $VXX
Bankruptcy filings by US businesses soared 38% in September from a year earlier in an ominous sign of a weakening economy.
Last month’s bankruptcies reached 3,072 to bring the YTD total to 28,789 and marked the 11th month running of increases from Y 2015, according to data from the American Bankruptcy Institute (ABI).
“Rising bankruptcies are an indicator that the ‘credit cycle’ has ended,” Richter says in a commentary about the limits of the Federal Reserve’s ability to help an economic recovery. “The Fed’s policy of easy credit has encouraged businesses to borrow – those that could. But by now, this six-year debt binge has created an ominous debt overhang that is suffocating these businesses as they find themselves, against all promises, mired in an economy that’s nothing like the escape-velocity hype that had emanated from Wall Street, the Fed and the government.”
The financial crisis of Y 2008, when Lehman Brothers Holdings Inc. filed for the biggest bankruptcy of all time, triggered the worst recession in 80 years and a major jump in bankruptcy filings. Bankruptcies peaked at 9,004 in March 2010 and proceeded to fall until November 2015.
The restaurant industry has been hit particularly hard with bankruptcies.
“Nine restaurant companies representing 14 chains have filed for bankruptcy since December: Garden Fresh Restaurant, Restaurants Acquisitions, Cosi, Logan’s Roadhouse, Fox & Hound, Champps, Bailey’s, Old Country Buffet, HomeTown Buffet, Ryan’s, Johnny Carino’s, Quaker Steak & Lube, and Zio’s Italian Kitchen,” according to the data.
Tuesday, the US major stock market indexes finished at: DJIA -200.38 at 18128.66, NAS Comp -81.89 at 5246.78, S&P 500 -26.93 at 2136.73
Volume: Trade on the NYSE came in at 834-M/shares, moderate but below the recent average.
- Russell 2000 +8.1% YTD
- NAS Comp +4.8% YTD
- S&P 500 +4.5% YTD
- DJIA +4.0% YTD
|HeffX-LTN Analysis for DIA:||Overall||Short||Intermediate||Long|
|Bearish (-0.37)||Bearish (-0.43)||Very Bearish (-0.54)||Neutral (-0.14)|
|HeffX-LTN Analysis for SPY:||Overall||Short||Intermediate||Long|
|Bearish (-0.30)||Bearish (-0.41)||Very Bearish (-0.50)||Neutral (0.03)|
|HeffX-LTN Analysis for QQQ:||Overall||Short||Intermediate||Long|
|Neutral (0.07)||Neutral (-0.09)||Neutral (-0.00)||Bullish (0.29)|
|HeffX-LTN Analysis for VXX:||Overall||Short||Intermediate||Long|
|Neutral (-0.18)||Neutral (-0.07)||Neutral (-0.19)||Bearish (-0.29)|