Gundlach: Debt-Financed Buybacks Have Made Stock Market Like a High-Risk CDO

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via mishtalk:

Jeffrey Gundlach, CEO of DoubleLine Capital LP, has some interesting thoughts on debt, stock buybacks, and leverage.

Please consider Gundlach’s Slideshow on Debt Financed Buybacks.

Corporate Credit as Percentage of GDP

Investment Grade Has Shorter Maturity Than High Yield

US Corporate BBB Debt

BBB debt is one step above junk.

Rise of the Zombie

Zombie firms are those that are unable to cover debt servicing costs from current profits over an extended period.

If they cannot refinance, they go under.

Junk Rated Bonds

Never before have there been so many bonds this close to junk.

Bond Market Breakdown (August 2018)

  1. AAA $0.11 Trillion
  2. AA $0.59 Trillion
  3. A $2.60 Trillion
  4. BBB $3.15 Trillion
  5. BB $0.57 Trillion
  6. B $0.52 Trillion
  7. C $0.16 Trillion

Fed on Hold

The Powell Fed is now on hold. It cannot possibly matter one bit. It’s simply Too Late to Matter.



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