Corporate Leverage

"Is The Equity Market Irrational Yet?" Citi Answers With The Following Chart

As the cycle matures, pair-wise correlations drop. When the cycle turns and stock markets drop, correlation picks up rapidly as investors “sell what they own”. In 2000/2001 and 2006/2007, this correlation indicator fell to around 20% before markets peaked out. We are currently at 30%.

What Keeps Bank of America Up At Night

"The last two weeks have further underpinned our belief that the market has had misplaced optimism in the new administration's reform agenda, while we find more and more evidence that suggests the macro environment echoes that of 2014 and 2015."

Corporate Debt To EBITDA Hits All Time High

"When using the aggregated data, both gross and net corporate debt/EBITDA are at or near record leverage levels, well above prior cycle peaks." - Morgan Stanley

Accounting Change On Operating Leases To Add $3 Trillion In Debt To Corporate Balance Sheets

From a practical perspective, operating leases are pretty much the same as debt.  They reflect a contractual obligation on the part of one counterparty to make defined stream of cash payments to another over a set period and with an implied interest rate embedded in the payment stream.  That said, accounting rules treat operating leases differently than debt and do not require them to be included as a liability on a company's balance sheet.  That is, until 2019.

Credit Suisse "Climbs The Wall Of Worry", Raises S&P Target To 2,500 From 2,350

"Following the reaching of our mid-year S&P 500 target, we raise both our mid-year and year-end S&P targets to 2,400 and 2,500, respectively (from 2,350 and 2,300). We continue to see a clear-cut risk that we get an overshoot to the upside in equities that then reverses later on; more realistically, this reversal is likely to be a very late-2017 or 2018 event." - Credit Suisse

50% Correction Is Impossible! Really?

"Stock prices have reached what looks like a permanently high plateau. I do not feel there will be soon if ever a 50 or 60 point break from present levels, such as they have predicted. I expect to see the stock market a good deal higher within a few months."

– Dr. Irving Fisher, Economist at Yale University 1929