A quick note on the Sears bankruptcy

The iconic department store, Sears, has filed for protection under Chapter 11 of the US bankruptcy code. Retail has changed a lot in recent years. And for Sears specifically, this bankruptcy has been coming for a long time. It was signalled last week. So, it's not a surprise to anyone.

The key, however, is that Sears is filing under Chapter 11 to restructure its debt rather than Chapter 7, which means liquidation. That doesn't mean Sears won't get liquidated though. And so, we should watch how this progresses to ascertain what it tells us about where we are in the business cycle.

As I put it in April regarding late-cycle rate hike regimes:
“at some point, there will be a negative impact on credit and that will feed through into the real economy.” The question is when. My assumption ...

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