Troy Gayeski on Search for Yield and Brexit Strategy

The video discusses the dynamics of credit markets, focusing on investment grade credit, structured products, and the impact of economic factors like Brexit and China's economy. It explores the potential for recession, the role of collateralized loan obligations, and strategies for managing market volatility and distortions. The discussion highlights the importance of understanding technical and fundamental factors in investment decisions.

What factors have contributed to the technical dislocation in the credit market?

• Wall Street dealer firms exiting businesses

• Increased investment in US assets

• Strong economic growth in China

• High consumer spending in the US

What is the expected economic growth rate for the US in the next year?

• 1.5% to 2%

• 0.5% to 1%

• 3.5% to 4%

• 2.5% to 3%

What has been the primary reason for the slow issuance of CLOs?

• Rising interest rates

• Lack of balance sheet capacity by dealers

• Increased government regulations

• High demand for lower tranches

How do risk retention rules affect CLO managers?

• They increase the profitability of CLOs

• They require managers to hold more risk on their balance sheets

• They allow managers to issue more CLOs

• They reduce the need for regulatory compliance

What is the expected behavior of the market if Brexit results in an 'out' vote?

• Increased stability and reduced volatility

• Short-term surge in implied volatility

• Immediate economic recovery

• Decrease in cash flow generation

What is the main distinction between technical and fundamental market factors?

• Technical factors are based on economic fundamentals

• Fundamental factors are driven by market regulations

• Technical factors are related to market movements and regulations

• Fundamental factors are influenced by short-term market trends

What is the impact of regulatory reforms on market makers?

• They stabilize market prices

• They create long-term opportunities for investors

• They reduce the need for market makers

• They increase market liquidity