Oatkree’s Marks Says Distress Is Coming as Fed Withdraws Support

The transcript discusses the concept of 'fallen angels'—investment-grade bonds downgraded to junk status—and the Federal Reserve's potential actions in buying such bonds. It explores the Fed's unlimited buying power and its impact on the market, highlighting the artificial nature of such a market. Oak Tree's strategy in response to these market changes is examined, noting their reduced buying activity due to increased prices. The discussion also covers future investment opportunities, potential defaults, and the impact of the ongoing crisis, suggesting that Oak Tree may become more aggressive in buying as market dislocations present bargains.

What is the term used for investment-grade bonds that have been downgraded to junk status?

• Defaulted bonds

• Rising stars

• Fallen angels

• High yield bonds

What was Oak Tree's response to the Fed's announcement in March?

• They reduced their buying activity.

• They stopped buying completely.

• They increased their buying aggressively.

• They shifted focus to equities.

What percentage of high yield bonds are expected to default according to rating agencies?

• 25-35%

• 10-15%

• 15-25%

• 5-10%

What is a significant factor that leads to defaults and bankruptcies?

• Lack of cash

• High market demand

• Increased stock prices

• Government intervention

How does Oak Tree view market dislocations?

• As a sign to exit the market

• As a reason to diversify

• As an opportunity for bargains

• As a risk to avoid