Leveraged Loans May Face Hard Landing, Amoroso Warns

The video discusses the potential for a soft landing in the economy, which may involve a mild recession. It contrasts this with a hard landing, often associated with financial crises and excessive leverage. The current economic situation shows resilience, with strong household and corporate balance sheets and well-capitalized banks. However, there are concerns about the leveraged loan market, which has grown significantly and may face challenges due to rising interest rates. The video emphasizes the need to monitor these pockets of leverage to avoid a hard landing.

What is a key difference between a soft landing and a hard landing in economic terms?

• A soft landing may involve a mild recession without severe disruptions.

• A hard landing is characterized by stable economic conditions.

• A soft landing involves a financial crisis.

• A hard landing corrects economic excesses smoothly.

How does the current US consumer debt service compare to the period of the Global Financial Crisis?

• It is half of what it was during the GFC.

• It is the same as during the GFC.

• It is three times higher than during the GFC.

• It is twice as high as during the GFC.

What is one reason the speaker believes the economy is resilient?

• Well-capitalized banks.

• Weak corporate balance sheets.

• Low cash balances.

• High levels of consumer debt.

What has happened to the size of the leveraged loan market since the financial crisis?

• It has decreased significantly.

• It has remained the same.

• It has tripled in size.

• It has doubled in size.

What is a concern regarding the leveraged loan market?

• Stable interest rates.

• Deteriorated credit quality.

• Improved credit quality.

• Decreased market size.