Oaktree’s Howard Marks on Fed Support, Credit Market Distress, Virus Impact

May.18 -- Howard Marks, co-founder and co-chairman at Oaktree Capital, the largest investor in distressed securities worldwide, discuses Federal Reserve intervention in response to the coronavirus pandemic, and warns that distress will sweep through credit markets when the Fed’s support inevitably recedes. He spoke exclusively with Bloomberg's Erik Schatzker from Los Angeles on “Bloomberg Front Row.”

[@nickynick1014]

The interviewer has gotten noticeable better at listening, without interrupting . TY

[@rho008]

It makes a really big difference when someone knows exactly what they are saying.

[@kevinford6420]

Thank God for that!!!

[@energyexecs]

...Bloomberg's Erick Schatzker is getting even better at interviewing various market "leaders". Sam Zell and now Howard Marks I agree with the question posed by Mr. Marks - Can the Fed keep it up forever? Thank you to Erick Schatzker.

[@mongevoador]

Erik is calmer and quieter during this interview. I guess he is learning. Or Bloomberg is learning. Great minds should not be rushed, interrupted or cut out. They should be listened to, from start to finish of every point. Follow up questions are ok, remarks and deeper dives are ok. I am thankful for this improvement. Great interview.

[@blessedspear2642]

Well TV interviews need to keep the pace, so he has to interrupt

[@MAchannel2024]

Well stated. I noticed the same

[@Sojourner88]

@@blessedspear2642 No. I tune in to hear the guests. Why have a guest if the interviewer just wants to hear the sound of his own voice? When they're trying to 'keep the pace', looking for a stupid headline, all you get is noise like a bunch of squawking seagulls at the fish market.

[@citycams-fc]

Yes it is so annoying when the host cut these guys like Carl Icahn and etc. ..

[@bidorcheng]

Eric asked all the right questions. Thank you. Lucky we have alternative to CNBC's clowns

[@bearzaklumpt9654]

Are you kidding me? Jim Cramer is like Colbert Report of finance.

[@JoseGonzalez-ob8ku]

@@bearzaklumpt9654 qq

[@richardnwaigwe8678]

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[@vangelism7591]

At last an intelligent interviewer. When Howard Marks talks we should listen carefully.

[@InvestorCenter]

Howard Marks is a great investment mind. Listen and learn.

[@energyexecs]

Agreed. ..At minute 14:00 of this fascinating interview the well known Howard Marks author-investor talks about regular cycles but how COVID is an episodic exogenous impact - an external factor not subject to cyclical analysis. He also poses an important question - Can the Federal Reserve keep it up forever? Are we forestalling a further cleansing of highly leveraged entities and further "moral hazard"? There is "artificiality" in the Fed's support of the "highly leveraged markets" and the fear of losing money may have disappeared. This creates a "risk prone" business society which is not good. However, Howard Marks agrees the Federal Reserve had no choice but to inject money support. Learned a lot.

[@coreyham3753]

@@energyexecs Very good interview and information. Also good comment with observations. However the FED has been massively intervening in the economy for over a decade now. The FED has grossly distorted virtually every aspect of real capitalism, real free markets, real price discovery, and many other basic elements of markets. The FED is not the friend of average american citizens, rather they have fostered and enabled crony capitalism and corporate socialism to a extreme degree. They have been key players in growing wealth inequality for decades and the virtual destruction of the saver class. They have enabled massive debt growth and severe misallocation of resources and have backstopped extreme speculation. The average bull market over history has lasted something like 4-6 years, yet the massive interventions by the FED and other central banks around the world have prevented normal economic times to happen. The FED and other central banks have essentially appointed themselves as masters of the economic universe with the right to pick winners and losers in economic game of life. And it is pretty obvious whom they picked as winners.

[@grass.dihenia2590]

Corey Ham great insightful comment. Remember when the Fed was declared independent of the government? Technically, the fed is a privatized institution that's distorting capitalism by letting over leveraged companies survive. Bailouts are not part of capitalism. I understand why average Americans are upset by this. They think socialism will help them. Socialism adds to the problem. We need less government, not more. True capitalism creates wealth, not increasing the money supply (inflation of assets).

[@rayterrell6442]

A great interview. Howard Marks is a brilliant man who shared some high level thoughts. He was criticized for being too conservative and saying the market was overpriced and ahead of itself for years, which he humbly acknowledged. I think he is a voice worth giving a listening ear to.

[@i486DX66]

One of the best Bloomberg interviews

[@AS-iu3pl]

Hi Erik. Great interview; Howard provides great insight into current times, and raises great points for future discussions. Keep up the good work.

[@techbizcanada7594]

Great interview. More of Erik, and more of Howard.

[@kenngo9127]

Thank you Erik for asking all the excellent questions. I always enjoy to listen to Howard's wisdom and his viewpoints.

[@InturnetHaetMachine]

If you really listen, you can tell he's worried. Not about the markets, returns junk bonds. But the future of this country.

[@philipvjones397]

People everywhere should be worried. Central banks buying every asset under the sun is not sustainable.

[@gnel8021]

He's saying IT'S ILLEGAL for the Fed to buy bonds of ZOMBIE COMPANIES! (lower credit risk, like CCC) The Fed needs to be CHARGED WITH FINANCIAL TERRORISM, AND CRIMES AGAINST (SAVERS) HUMANITY!

[@felixfrost1564]

It’s sustainable so long there is trust in the usd? Until there isn’t

[@gorthorki]

*flees to Israel with billions of freshly printed Fed money* Nothing personal, kid.

[@marekkolenda3220]

Powell and Fed's ends road is Greece model or Japan from 1980s.

[@robg8743]

You can always count on Howard to offer a wise, measured level headed view on the economy and financial matters.

[@rocking1313]

You conducted the interview excellently Erick! No mean feat with a storied investor like Howard Marks - 10/10 to you!!!

[@dragounian5567]

Schatzker is getting much better at these long-form interviews. Thoughtful follow-up questions and no interruptions.

[@vivekdabholkar5965]

You are a very wise man. I need to watch more of you!

[@chessdad182]

Kids like candy. The stock market in a nutshell. This was an enjoyable interview.

[@wangchunjih]

Much improved interview. Allowing the guest to talk. Bravo for reading the feedbacks 👍

[@SKWDMDYT]

Erik Schatzker......best interviewer in business! Fantastic interview!

[@nickb8002]

Eric did a great job. Asked some good questions. He left a few hard ones off the table but job well done.

[@sureshraghava2607]

Very good questions from Eric and excellent answers from Howard. Very useful in getting a perspective of the markets and the economy. Thanks a lot !!

[@LoanwordEggcorn]

Thanks for a good interview. Good thoughts from both Marks and the interviewer.

[@jackwachtel-scott8000]

I would be most interested to learn exactly what assets Royal Caribbean put up as security for an $11 billion loan. Please don't tell me their fleet of cruise ships because unless they are sailing around with a shit load of passengers the ships are worth what a scrap recycling yard will pay for them.

[@rocking1313]

Some fund manager understood that and went for the 4% yield pick-up..maybe a Fed put comes to the rescue and the can was successfully kicked down the road...if not, better than getting fired today, no? High yield is a zombie mkt, all bets are off!

[@kevinford6420]

Perhaps the ships can be used for homeless shelter rather than scrap them!!

[@GoJets64]

The record cruise bookings are likely do to the fact that cruise lines offered credit for cancelled bookings towards future bookings (possibly even limited to a year from cancellation) similar to the airlines or resorts around the world. Essentially, cruise lines are padding their 2021 stats using this compensation strategy.

[@LoanwordEggcorn]

Essentially they sold a bond to their customers, or said another way, their customers gave a loan to the companies. That's ok. BTW, the reservations are cancellable. Very much like a bond buyer selling it back.

[@marksoberay2318]

Howard Marks is so frank I chuckle at everything he says, the guy is brilliant

[@vvolfflovv]

I always feel more intelligent after listening to Howard.

[@thelaw3536]

I lovvvved this interview and how measured the guest was!

[@frankblangeard8865]

Marks says 'we all have the same information about the present' 0:23. Do you or I really have the same information about the present as Mr. Marks does?

[@cliftt]

Good interview, Erik. Less is more.

[@mynameisdj1]

0:12 Implication of pandemic for the economy and companies - The same info about the present and the same ignorant about the future 0:53 How do you put capital at risk with any degree of confidence? - Great dilemma. Investing is only about positioning your capital to profit from future developments. 3:27 Optimistic vs Pessimistic - I don't see V-shape economy. We'll have good news mixed with bad news. 21:09 Capitalism without bankruptcy is like Catholicism without hell. 22:13 We are living through the worst economy that almost anybody alive has ever seen. 26:53 What does it mean if there is no punishment for recklessness ( airline buybacks ) 27:41 Three stages of bull market 28:47 View of the market in recent years - High uncertainty, High asset prices, Low prospective returns, Risky behaviors 30:33 Do you worry that it has set the stage for more recklessness? 32:06 What happens if fed buys junk bonds? 34:29 Negative ramifications 35:28 Do this considerations affect what/when Oaktree is buying? 38:46 Cost of pandemic bailout ( social gap)

[@monsteroh]

this comment should be pinned

[@ralfholzbach6560]

Great interview! Thank you!

[@zekoomrkva]

Most valuable assessment of the situation to date. Those senators should have watched this before speaking to J Powell

[@paulobaronceli]

Great interview. It's months old but definitely still relevant. Thanks for the video.

[@SantoshNaidu009]

Excellent interview, enjoyed it!!

[@BobBob-vt9ix]

Seriously Mr. Marks provided great information. One of the best interviews. Thank you

[@kazukinakamura1110]

Good interview thank you.

[@barrybearman3511]

Very well done interview. Thank you.

[@BobBob-vt9ix]

I wanted to take a nap so I watched this and sure enough in few minutes I fell asleep. Thank you. Keep up the good work.

[@diseasefire]

Howard is a genius and Eric did an amazing job

[@kingkang6877]

Love Howard but even 2x playback speed is still way too slow

[@ioannislazaridis4887]

At 33.00'' Howard Marks explodes : Look Eric.... The best part of this interview. Howard bursts and says passionately what the majority of the people think.

[@trevorowens4262]

Great conversation - I like the format

[@TheJuniorApollo]

Amazing Interview!

[@jsauerfinancial8257]

Great content by Bloomberg

[@skifast1356]

Unusual for Americans,they actually listen and think before they speak

[@playlistjohnnybitter]

The best indicator is taking public companies private how many privete companies are worth 15 times earning much less 30 over a five year period

[@rho008]

I listened to everything he said. This guy is insightful, no bias, and very knowledge. And he actually admits it right away if he doesn't know something. CNBC analysts are just doom and gloom or immediate recovery. They just talk, but shows little to no support to their argument.

[@hubaermi]

Insightful! Thank you.

[@emiliod90]

Great interview and insight

[@abraintrust]

It is simply not true that we "all have the same information". Lots of people have info about what is going on, they are just not sharing it with the rest of us. I know people would be scared or overreact or whatever, but we simply do not 'all have the same information.'

[@varunjain5789]

Extremely insightful !

[@piratexlife]

I'm a Hurricane Katrina Survivor... There are parishes that surround New Orleans that was Totally Devastated... Property values fell to pennies on the dollar... These places Today are All worth a Fortune Now... This Fluster Cluck Shall Pass...

[@nickl5658]

Eventually. But it maybe a long time. For China it was nearly 200 years. For Great Britain... 80 years have passed and still waiting.

[@nvrselout3678]

31:00 no one is talking global depression? What do you call 30% unemployment?

[@haroldharold3975]

Enhanced social isolation. :D

[@mullerstephan]

only the US has that much unemployment... so no, not global

[@LoanwordEggcorn]

@@mullerstephan It depends how quickly and to what extent they are re-hired. In principle if 100% were rehired within the second quarter, there would be no depression. In practice, that probably can't happen.

[@georgemaximus694]

“There is no punishment for bad behaviors” This has brought great prosperity in the stock markets for the past decades and seems to continue to go on. This is not just in Wall Street investors, lots of people got into debt, in trouble now without a rainy day fund and will be bailed out. The bad behaviors will continue to be unpunished therefore fuels more bad behaviors. So bad behaviors will be the acceptable normal and will continue to be bailed out. Getting hurt due to bad behaviors will not be permitted by our current standards.

[@veeraiahpalanivel1273]

I agree the fact that we have entered into a painful economic cycle.. But the co-ordination of several central banks to alleviate the economic distress will have a measurable impact...

[@darkheart1721]

30:10 Great quote!

[@happynews6219]

Howard marks definitely is a very bright man. if anyone disagrees with me please reply to my comment I would want to have a debate.

[@Madisonrvr]

Solid takes by Marks. If you want another no-BS outlook on things, check out one of Mark Yusko's Corona Crash Crisis weekly vids.

[@violator2695]

Thanks for the recommendation. Will check it out.

[@chavashoshana1765]

The fed has artificially made the market temporary ok. It will run out of ammunition.

[@apt62]

unlimited ammunition are just a few clicks away.

[@techbizcanada7594]

Market participants will run out of confidence way before the FED runs out of ammunition. There is no limit on how much monopoly money the FED can print. The limit comes from how much the people are willing to bend over.

[@LoanwordEggcorn]

@@techbizcanada7594 The natural limit to overprinting is (excess) inflation. You can only devalue the currency so much. P.S. Buy Gold and Gold miners. It's real money.

[@divyjain123456]

Howard having seizures while saying the fed's balance sheet has expanded to $10T lol

[@marcz6653]

Zimbabwe money 😂😂

[@AlifAhsanul]

good interviewer

[@cokechang]

The only question is when does inflation comes to play?

[@madchadt]

******* "I personally believe that there is too much concern with the downside of withdrawing the support (of the FED) and not enough concern with the downside of (the FED) never withdrawing support" ****** THIS!

[@densmith6727]

The reliance on metals that are current carrier's well be doubled if not more than that soon in the future. Survelance issues will become a major problem.Chemical warfare well become a major issue. Facsism well be a major threat world wide.Free market capitalism well take a backseat in all markets.Free trade well not be allowed in many countries.Security issues well be mostly controlled by government.

[@christoffergrinsted]

He's brilliant

[@Smarv11]

Everyone is returning to work more and more each day and people are out spending. The ones employed want to support businesses by spending more money, that is what I am seeing. I feel the market is high because it is optimistic about this.

[@nvrselout3678]

Everyone is returning to work? Are you insane?

[@suziepaloozie]

Slugworth is just trying to get that damn recipe, forget the markets...

[@densmith6727]

the reliance on fuel for transportation well be less in the future, Hopefully a lot less.

[@thomaspeebles4356]

Jerome Powell belongs in prison. His actions will have negative ramifications for decades.

[@JamesJones-wy7mg]

Get his book if y’all really in the market. Only people in the market can understand his parlance

[@hgm8337]

omg, it's like trying to get blood out of a stone trying to get him to adopt a position.

[@pdubb801]

This guy just talks in circles all the time

[@ccc3]

As a personality trait, openness shows the strongest positive relationship with intelligence. A preference for variety and admitting that a range of scenarios may be correct could be a sign of someone smarter that the average.

[@MartinJG100]

Once upon time there was a strange concept called fair value based on fundamental principles and common sense and it worked well. Now we have something else .... :)

[@lindenzhang8212]

Fed can buy, but Fed cannot buy without negative externalities, and one day those externalities will make Fed cannot buy anymore.

[@PrathameshMone]

Guru speaks....!!!

[@gnel8021]

A recent study says 2/3 of S&P companies ARE SPENDING ******* ZERO******* ON R&D ! Your phuckers need to verify!

[@jc.1191]

The risk hasn't changed since before covid. There's always risk.

[@sevencostanza3931]

When Howard said "Give every America million dollars, what would happen" HAHA we know what would happen, millions will not want to work.

[@fenrisler]

No, a cup of coffee would jump to $500,000

[@jonnes__4657]

🐲 Now the world is selling their USD bonds! ... zero interest rates. The USD is doomed... .

[@bernardting3361]

Excellent

[@siddhant_mutha]

Shrewdest market investor of all time inarguably .

[@rosannelin4714]

OK but can we have a frozen cycle? Because this is our first pandemic in modern times but there will be more and worse. I don't know.

[@unbrnwsh]

Stock market has already taken the V shape recovery already but the economy will never recover. For that matter the economy never recovered for a large segment of society that live from pay-ck & often with unlivable wages, with no healthcare, benefits and with no safety net as it exist in other civilized nations. This is how the voters in this nation want their democracy to be and they get what they wish

[@redharp4749]

Wow thanks for the 20 seconds at the end going deep into the absurdity this art thou holiest of markets. boomer beatdown goes on

[@praveenchawla6999]

Great interview - Catholicism without hell would be a great religion. I will probably convert..

[@geroldatlarge1841]

I generally like Marks. But basically he bought distressed bonds in mid March and got bailed out by government actions. Good timing. In addition, he described populism as class resentment. Not really a dictionary definition but an opinion worth thinking about.

[@ruim8590]

lost me at the "this is not cyclical"

[@jorgejimenez1364]

"The cyclical nature of our economies", nobody wants to face the possibility of a systemic change. the ones that have everything don't want it. the rest fear it or can't even believe is possible. yet, whether now or later, it' the future.

[@williamevansstevens]

He means in the way of debt cycles

[@marcz6653]

I think he was being sarcastic and went on to explain

[@Verysimpleinvesting]

Mr Marks is my hero. Around year ago I got his book: “The most important thing”. Great book basically tell you buy unwanted companies so I bought Barick Gold for $50k. Now I have $100k 😊. And I’ll hold it longer.

[@Essays4College]

The Nike swoosh recovery? Oh my!

[@Alaric2030]

Looks like Joe Rogan changed Bloomberg. Good on ya for letting the expert speak, not just mining him for sensational talking points. Seeing more and more long form journalism is a good thing.

[@wilsonarmstrong5000]

This guy told people 2 months ago to buy

[@MOME914]

He knows the cruise industry enough to say it will rebound but he doesn’t know it enough to say if it could sell its debt without fed stimulus....eyebrow raise

[@danbarrett6387]

Howard..they did bail out the fat cats....AGAIN...and YES more resentment.

[@goodmanvolley]

There are no capital markets today. Period. End of story.

[@bebetowilliams5712]

Im coming up there love will be the motto

[@jimmyhvy2277]

What a Bloody Mess !

[@robertwhite1810]

Absolutely no guarantee of a vaccine.

[@HornOkay]

Anyone watching this after V shaped recovery? 😂

[@siddhant_mutha]

Watching again. Haha

[@aroundandround]

He looks horrified because he suddenly remembered that he forgot to flush after taking a massive dump just before the interview.

[@jeffreygoss8109]

aroundandround haha! He might be a billionaire, but is still terrified of his wife

[@kenny2110]

Secured Debt with a yield of 11% ....