Corporations expected to take on record debt in 2026

Overview

This episode explores the economic dynamics of corporate debt as companies prepare for record refinancing, AI investments, and mergers in 2026. It also highlights the struggles of small businesses rebuilding after disasters, the impact of rising brisket prices on Texas barbecue culture, and Costco's surprising influence on the wine market.

Notable Quotes

- Big tech companies are going to be having massive capital expenditure needs this year, and one thing that they're going to use to fund that is debt issuance. - Guy Labas, on AI-driven corporate borrowing.

- Brisket back in the day was a scrap cut of meat. Nowadays, it's a commodity that's way overrated and overpriced. - Randy Harley, on the rising cost of brisket.

- For some people, the famous rotisserie chicken is the draw. For me, it’s the wine section. - Georgia Wells, on Costco's appeal to wine enthusiasts.

📉 Corporate Debt Trends in 2026

- Companies are expected to issue record levels of corporate debt this year, driven by:

- Refinancing expiring low-interest debt from 2020-2021 (Maureen O'Connor, Wells Fargo).

- Funding mergers and acquisitions, with debt-financed M&A volumes projected to rise by 25%.

- Massive capital expenditures in AI infrastructure, particularly for data centers (Guy Labas, Janney Montgomery Scott).

- Investor confidence in corporate bonds remains high due to strong balance sheets and anticipated Federal Reserve rate cuts. However, inflation or slower economic growth could disrupt this trend (Randy Vogel, Wilmington Trust).

🔥 Rebuilding Small Businesses After Fires

- Jimmy Orlandini, owner of Altadena Hardware, shares the challenges of rebuilding after the Eaton fire:

- Limited commercial spaces and high costs in Altadena hinder relocation efforts.

- Insurance covered payroll for a year, but 15 employees lost their jobs as temporary solutions fell through.

- Orlandini remains committed to reopening in Altadena, even considering temporary structures to maintain community ties.

- The slow pace of residential rebuilding further impacts local businesses, reducing customer bases and foot traffic.

🍖 Brisket Inflation and Texas Barbecue

- Brisket prices have soared, with pitmasters paying over $100 per brisket compared to $30 just a few years ago (Rusty Rohan, Charlie Rose Barbecue).

- Rising costs are attributed to smaller cattle herds and increased demand for brisket as a premium barbecue staple.

- Pitmasters face tough decisions:

- Balancing supply and demand to avoid waste or lost sales.

- Encouraging customers to try more affordable options like chicken (Wayne Miller, Louis Miller BBQ).

- Customers lament the shift of brisket from a humble cut to a luxury item, straining budgets in rural areas.

🍷 Costco’s Surprising Wine Market Influence

- Costco has become a favorite for wine enthusiasts, even in Napa Valley, due to its ability to offer high-quality wines at discounted prices.

- Economic pressures, including declining wine consumption among baby boomers and oversupply, have led winemakers to embrace Costco as a sales channel (Georgia Wells, Wall Street Journal).

- Costco employs a treasure hunt strategy, rotating stock to encourage repeat visits and maintain exclusivity.

- While some wines are relabeled under Costco’s Kirkland Signature brand, others, like Chateau Margaux, are sold at significant discounts, appealing to both casual and serious wine buyers.

🗓️ Reflections on January 6th and Economic Stability

- Host Kai Ryssdal reflects on the connection between political stability and economic health, emphasizing how democratic institutions underpin predictable regulation and equitable processes critical for economic growth.