The next credit crisis is... here...

Back in December, our colleague and Stansberry's Credit Opportunities editor Mike DiBiase warned in the Stansberry Digest that this crash was inevitable...

"The next credit crisis is right around the corner," Mike said. And he explained why the Federal Reserve's fingerprints were all over this "house of cards"... how one thing – fear – could cause the whole fragile credit market to collapse entirely... and that whenever that happens, a bear market follows.

Mike's analysis could not have been more spot-on, everything down to when he used the word "contagious" while making his case. Here's just part of what Mike wrote in that December 2 Digest...

If you want to know where the stock market is headed, it's wise to pay attention to the credit markets...

Problems often appear in the credit markets before the stock market. And as likes to say, problems in the credit markets are contagious. Their problems spread to all parts of the economy.

In this case, Mike explained that he was talking about the corporate-bond market... where the debt of corporate America is traded. He pointed out that the $10 trillion in debt on corporate America's books was an all-time high...

It's a high both nominally and as a percentage of gross domestic product ("GDP"). In a Digest earlier this year, I warned that the next bear market will be triggered when the corporate credit bubble pops.

It's a matter of when, not if...

If Mike could show you only one chart to sum everything up, he said it'd be this one, which showed "the inevitability of the corporate-credit bubble popping"...

The chart shows how many U.S. companies can't pay their debt (the high-yield default rate) versus total corporate debt. Total debt is measured against U.S. GDP. The shaded areas show bear markets...

"The credit bubble's biggest enemy is fear," Mike said...

And not only that...

It's important to understand that fear can take hold of the markets incredibly fast.

Fear causes investors to sell without asking questions.

Fear causes banks to tighten credit – a process that I'll get into below – and it causes the credit market to dry up.

We all know what happened next...

In March, as COVID-19 fears reached the U.S., the credit bubble popped, and the next bear market was triggered...

Stocks, bonds, and almost everything else – even bitcoin and gold – sold off at the same time. Several times, the panic triggered the "circuit breakers" on the New York Stock Exchange...

And the markets and corporate America experienced a debt-fueled blow that played out exactly as Mike predicted. Credit markets were seizing up like it was 2008 all over again.

Money was lost... then, money was created...

The Fed stepped in – as it did more than a decade ago during the 2008 financial crisis – with more "unprecedented" measures to make sure the entire economy didn't crash.

Unlimited quantitative easing ("QE")... $2 trillion-plus and counting... and eventually, the Fed said it would buy up to 20% stakes in exchange-traded funds ("ETFs"). This is reminiscent of Japan-style QE, which worked out terribly over the country's "Lost 20 Years" in the 1990s and 2000s.

The Fed has also disclosed that it hired BlackRock (BLK), the world's largest asset manager, to handle what is essentially a new central bank bond-buying business.

And, working in tandem with the U.S. Treasury Department, the Fed now has the ability to fund stakes in companies like the major U.S. airlines, which have been literally and economically grounded because of the COVID-19 outbreak.

How many kitchen sinks does the Fed have left?

This is the question Mike and his Stansberry's Credit Opportunities co-editor Bill McGilton recently posed to their subscribers...

Almost all of the Fed's stimulus efforts over the past six weeks have been to keep the ever-fragile credit markets afloat. Multiple Fed governors have said as much in various forums.

But according to Mike and Bill, this still hasn't changed their expectations – or the expectations of many others, like credit-market soothsayer Edward Altman. Corporate defaults are coming... And so are credit-rating downgrades from "AAA" (safest) to "BBB" or lower.

As Mike and Bill wrote to DailyWealth readers on Monday...

At the start of 2020, credit-ratings agency Standard & Poor's ("S&P") forecast a 3.3% high-yield default rate – the percentage of companies with "junk" credit expected to default within 12 months. Less than four months later, it's now forecasting a 10% default rate.

S&P has never increased its forecast so drastically. And its current "pessimistic" forecast projects the default rate to reach about 13% by the end of the year. That would be a new 40-year high.

S&P clearly doesn't believe the Fed's actions will stop the bleeding.

The Fed started buying junk bonds in March... And then last week, the central bank said it would be buying corporate bonds that have recently been downgraded, via – go figure – BlackRock's high-yield ETF, the iShares iBoxx High Yield Corporate Bond Fund (HYG).

You really can't make this stuff up.

But all this has led to a surprising opportunity in "crisis bonds" today...

This is a critical point for individual investors interested in growing and preserving their wealth. If you know where to look, you can find tremendous opportunities to buy "distressed bonds" trading at discounted prices.

As Mike explains, these are different from the bonds in your 401(k). And they have nothing to do with "bond" mutual funds... U.S. Treasury bonds... or bonds issued by blue-chip companies like Apple (AAPL).

These are sophisticated debt investments in a little-known area of the market. And it's a strategy that some of the world's greatest investors – like Warren Buffett, Paul Singer, and Wilbur Ross – use when they're looking to deploy cash during crises like today.

The biggest point is, not every company with a bond that sold off will default...

Be it because of Fed intervention or otherwise, Buffett or anyone else can buy these "safe" bonds at big discounts. As Mike and Bill wrote to their subscribers in the March 27 update...

This is the type of environment we've waited for since we launched this publication back in November 2015. We're seeing many attractive distressed-debt opportunities today...

We still believe it's imperative to be cautious. There are still many "unknowns" as the coronavirus continues to play out. But we don't want to sit on our hands any longer.  

Over the past week, we've studied dozens of bonds that have sold off. And now, it's time to take advantage...

In a special report for new subscribers published last week, Mike and Bill identified three of these opportunities... for "the beginning of the crisis."

They described these opportunities as "crisis bonds"... explained exactly how the public can buy them... and shared why investors can make more money than they ever thought possible – with less risk than stocks.

We're talking about years and years of return on your capital. And it's possible from a part of the market that many investors don't even know about or understand... but one that can be tremendously lucrative.

Click here right now to learn more about how to access these incredible opportunities today.

Now more than ever, it's important to have a safe, reliable way to continue building your wealth. Our economy's volatility could last weeks... months... or more. So while you continue to hunker down at home, consider earning outsized potential gains in the process.

All the best,

Corey McLaughlin

Editor's note: After the 2009 financial crisis, you could've made 772% in less than five years... thanks to our Stansberry's Credit Opportunities strategy. And we're getting another chance at similar moneymaking opportunities today. We're passing the mic to one of our longtime subscribers to explain why... You can get the full details – and take advantage of our all-time low price for Mike's research, before it's gone – right here.