Gundlach Reduces Recession Odds, Warns of BBB Credit Risk

The video discusses the reduced likelihood of a recession in 2020, with consumer confidence and positive economic indicators playing a role. It highlights the risks associated with Triple B rated bonds, which may be downgraded to junk status due to high leverage ratios. The narrowing spread between Triple B and junk bonds is a concern, and investors are advised to act promptly to mitigate risks in their portfolios.

What is the revised probability of a recession in 2020 according to the transcript?

• 25%

• 33%

• 50%

• 75%

What is the main reason for the reduced recession probability?

• Decreased government spending

• Consumer confidence and positive economic indicators

• Rising inflation

• Increased unemployment

What is the 'fallen Angel risk' associated with Triple B rated bonds?

• The risk of bonds being upgraded to higher ratings

• The risk of bonds being downgraded to junk status

• The risk of bonds losing all value

• The risk of bonds being called early

Why might Triple B rated bonds be downgraded to junk status?

• Because of low interest rates

• Due to high leverage ratios

• Owing to government regulations

• Because of high demand

What action is recommended for holders of Triple B rated bonds?

• Wait for interest rates to rise

• Invest more in them

• Sell them immediately

• Hold onto them for long-term gains