Dr. Edward I. Altman, Max L. Heine Professor of Finance, Emeritus at the Stern School of Business, New York University, joins Julia La Roche on episode 88 for an in-depth discussion on where we are in the credit cycle and the global phenomenon of zombie companies.
Dr. Altman is a renowned professor and researcher for his bankruptcy prediction and credit risk analysis work.
Dr. Altman earned his MBA and Ph.D. in Finance from the University of California, Los Angeles. He has been with NYU Stern School of Business since 1967.
He is most famous for developing the Z-Score formula in the late 1960s. The Z-Score is a financial model that uses historical data to predict a company's likelihood of bankruptcy. This formula is widely used by investors, financial analysts, and auditors as a tool for predicting corporate defaults and an aid in credit risk management.
Dr. Altman has published numerous books and articles on the topics of bankruptcy, corporate distress analysis, corporate financial restructuring, and credit risk. His work has had a significant impact on both academic finance and practical investment analysis.
Links:
Where We Are In The Credit Cycle: https://creditorcoalition.org/special-feature-professor-ed-altman-on-where-we-are-in-the-credit-cycle/
Wiser Funding: https://www.wiserfunding.com/
Corporate Financial Distress, Restructuring and Bankruptcy Book: https://www.amazon.com/Corporate-Financial-Distress-Restructuring-Bankruptcy/dp/1119481805/
NYU Stern: https://www.stern.nyu.edu/faculty/bio/edward-altman
0:00 Intro
0:49 Where are we in the credit cycle?
2:43 5 indicators (Default Rates; Recovery Rates, Required Rates of Return; Distressed Ratio; and Liquidity)
10:00 Is the market underestimating the near-term risk of defaults?
15:50 We’ve reached an inflection point
18:00 Historical default rates, benign credit cycles, and recession periods in the US
22:00 Warning of a great credit bubble in 2007
25:15 Why have defaults been so low?
28:20 Scenario of 10% default rates in credit markets?
33:30 Zombies and the Z-Score
39:40 Zombieism globally has increased from 1.5% to about 7%
44:00 Implications of keeping zombie companies alive
48:30 Why does the US have so many zombie companies?
50:00 Triple Cs risk of default
53:48 Bankruptcy v. Bailout
1:01:00 Bankruptcy reforms and impact on zombies
1:04:25 Zombies only increased slightly during Covid
1:06:30 What are people asking Dr. Altman on his lecture tour?
1:08:36 Starting a fintech called Wiser Funding
1:12:08 Parting thoughts
#177 Mike Green: Passive Investing Has Turned The Market On Autopilot
#176 Economist Jonathan Treussard On The Extraordinarily Confusing Macro Data, Markets With A Memory Of A Goldfish, And If We're In Bubble Territory
#175 Chris Whalen: 'We're Hiding A Lot' — Why Commercial Could Be The Next Source Of The Financial Crisis In This Country
#174 James Lavish On The Debt Spiral: They’re Going To Print So Much Money It’s Going To Shock You
#173 Dave Collum On Why We’re Headed For A 40-Year Bear Market
#172 John Cochrane On The Fiscal Theory Of The Price Level, Causes Of Inflation, And The Need To Stop Throwing Money Down Trillion-dollar Rat Holes
#171 Dave Friedberg, CEO Of Ohala And Co-Host of The All-In Podcast, On The New Breakthrough Can Boost Crop Yields By 50-100% And Could Change Farming Forever
#170 Bob Elliott: The Biggest Risk For Equity Investors Is The Economy Remains Too Strong
#169 Carol Roth: The Stagflationary Economy Is Making A Resurgence
#168 The ‘Acid Capitalist’ Hugh Hendry On The Fed’s No-Win Situation, The Fragility Of Valuations, Gold As ‘The Alchemy Of Chaos,’ Buying Bitcoin, And The Dangerous Sign The Japanese Yen Is Sending
#167 Michael Pento: If Rates Don't Come Down Across The Yield Curve Relatively Quickly, The Economy's In For Big Trouble
#166 Nancy Davis: 'Whatever They Say, The Opposite Happens' — Fed Meeting Reaction, Why Inflation Is Here To Stay, And The Opportunity For Investors
#165 Jim Bianco On Stickier Inflation, A 10-20% Chance Of A Rate Hike, And Why The 10-Year Treasury Yield Could Surge To 5-5.5%
#164 Chris Whalen On Higher Interest Rates, Illiquidity, And The Death Of Leverage
#163 Professor Scott Galloway: We're Turning Into Something That's Not Very American
#162 Keith Fitz-Gerald, Investor Who Nailed 2023 Market Rally, Says The Fed Doesn’t Matter — Investing In Optimism Does
#161 Michael Howell On Global Liquidity, A Re-entry Point For Risk Assets, Monetary Inflation, Gold, The US Dollar
#160 Bill Fleckenstein: The Fed Is Trapped And Unable To Fight Inflation
#159 Lyn Alden On Fiscal Dominance Macro Backdrop, Why The Rise In Gold Is Indicative Of Fiscal Problems, And Why Bitcoin Could Hit Six-Figures In This Cycle
#158 Larry McDonald: We’re Entering A Sustained Inflation Regime, Why Trillions Of Dollars Are Currently Misallocated, And The Opportunity Right Now In Hard Assets
Create your
podcast in
minutes
It is Free
U.S Property Podcast
Aligned Money Show
Dubai Property Podcast
The Ramsey Show
The Clark Howard Podcast