Bed Bath & Beyond Won’t Be the Last

Andy Snyder|April 25, 2023

What a world…

Bed Bath & Beyond and its BuyBuy Baby brand have added “bankruptcy” to their alliterative business. Meanwhile, the fellas making bombs, bullets and bayonets are in the midst of an all-out bonanza.

It’s a storyline we’ve punched our way through many times over the last few months.

In January, we told our beloved Manward Letter subscribers to brace for bankruptcies. We said at least three major companies would go quietly rapping on the court’s door on a Sunday afternoon.

We’re hardly a quarter of the way through the year, and we’ve already got what we promised.

Bed Bath & Beyond exemplifies why we made the prediction. We need bankruptcies like this if our economy is to get back to anything resembling health.

The numbers speak for themselves…

The company has $4.4 billion in assets and $5.2 billion in debt. Assuming all the lawyers will work for free and the assets aren’t artificially inflated, a liquidation means somebody is about to lose at least $800 million.

Chances are it will be a lot more than that.

We hope so.

Why are we so negative? Why do we hope the number swells?

It all harkens back to that $5 trillion the government joyfully printed in 2020. It was created out of thin air in hopes that it would be enough to plug the holes created by shutting down the economy for several weeks.

But it was too much money… way too much. The history books will show it was one of the most disastrous monetary blunders in history (right up there with ditching the gold standard).

Now that money has to get soaked up… before the next major downturn.

There are two ways for it to happen – natural growth (which tends to lead to inflation) and bankruptcy.

The latter is the fastest and most efficient route. Money disappears quite quickly when the folks who are owed millions get pennies on the dollar.

For the folks involved in the bankruptcy… it’s painful. For the folks who saw it coming… well, it’s probably a good time to renew your subscription.

But let’s not forget about the other side of things – the other story we mentioned at the top.

Global military spending reached $2.2 trillion last year… a fresh record.

Last week, we spoke to a friend who runs a large tank-building factory. Times are good.

“Normally, the headlines don’t affect our business,” he told us. “Tanks are on a regular maintenance cycle, so things are steady. But this is different. Things are crazy. We gave away all of our old stuff, so now the Pentagon is buying new.”

It’s a theme that’s playing out all over the globe.

It puts a bayonet into the heart of central bank tightening plans, but it’s quite good news for defense sector investors.

The maker of fluffy sheets and baby seats is filing for bankruptcy. More companies will certainly follow.

The warmongers will have a banner year… or three.

Invest accordingly.

What a world…