Covenants

Most people don't know what this word means.
Anyone who has ever done any business with Wall Street knows this is the key to the door for your ability to raise money. Particularly Bond investors who literally write the terms and conditions to protect their investors so they can get their money back upon repayment or in the event that there is stress in the company as their investment is protected. Today with the current velocity of money...this very critical aspect of protection to the economy, investors and the markets are getting over looked. "Bad investors drive out Good investors." In today's world the young bankers and hedge fund managers are so transaction oriented that they are saying, "why sweat the details."

"STZ" got hit hard today. They are a company that was 100% dependant on cheap debt, a strong stock market and a growing economy to support their business plan which was simply to acquire companies for debt. Now with contracting revenues, the debt exceeds its market cap and interest coverage is at bare minimums....buyer beware....this is the tip of the ice berg.

A whole lot of red flags are going up:

1) Iraq 2) China's markets 3) Peak oil 4) Housing 5) Banking sub prime 6) A gapping down stock market 7) Everyone is bullish saying everything is fine. 8) Climate change 9) La Nina now forecast 10) A backlash growing on private equity in Europe. 11) India stopped certain trading in key food commodities. 12) The dramatic drought in China and Australia 13) Secretary Paulson's ignoring of the hedge funds 14) A possible peak earnings and slowing of the USA economy. 15) Natural Gas shortage possible in the next couple of years. 16) American entitlements 17) An increase in taxes to the American public 18) Inflation rising

Danny Boy seen here with snow everywhere..wonders when the Minnesota spring will arrive.