Marathon’s Richards Says High Yield Is Fully Priced in This Market

The video discusses the current state of the high yield bond market, highlighting the tight spreads and low yields. It predicts challenges for the market in 2020, with limited potential for spread tightening and a fully priced market. The speaker suggests reallocating investments from high yield bonds to structured credit, benefiting from strong housing and consumer markets. The video also addresses credit rationing, particularly affecting lower-rated companies, and anticipates an earnings recession rather than an economic recession in 2020, with global growth supported by resolved trade tensions.

What is the historical significance of the current yield of double B high yield bonds?

• They have remained stable over the years.

• They have fluctuated without a clear trend.

• They are at their highest yield ever.

• They are at their lowest yield ever.

What is one of the main reasons high yield bonds are expected to struggle in 2020?

• Increased coupon rates

• Spread tightening

• Fully priced market

• Decreased investor interest

What is the primary focus of asset reallocation in the capital markets according to the transcript?

• From structured credit to high yield

• From high yield to structured credit

• From high yield to equities

• From equities to high yield

What is the current spread difference between Triple C and double B companies?

• 1100 basis points

• 500 basis points

• 200 basis points

• 900 basis points

What is a significant concern regarding Triple C companies in the current market?

• They are receiving too much credit.

• They are outperforming double B companies.

• They are trading at a narrow spread.

• They are facing credit rationing.

What is the expected economic trend for the US in 2020 according to the transcript?

• An earnings recession

• A growth recession

• A financial crisis

• An economic recession

What recent developments are considered beneficial to global growth?

• Rising inflation rates

• Trade settlements and Brexit clarification

• Increased interest rates

• Decreased consumer spending