The Junk Bond Market is About to Implode

Many investors are on the lookout to find where the next black swan might come from that could take down the markets.

And it looks like it might be hiding in plain sight in the junk bond market. Basically, you have companies that have, number one, a high amount of debt. Number two, they have debt at very high interest rates. And number three, they have overstated their future earnings to the point where they may not be able to repay their debt.

Timecodes
0:00 Video Introduction
1:01 Many Companies Fail to Meet EBITDA Marks
3:04 Federal Reserve Using Special Vehicles
5:21 Banks Trying to Exit Junk Bonds

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#JunkBonds #BanksExit

[ajkristy]

EBITDA stands for Earning Before Interest Taxes DEPRECIATION, and Amortization.

[dm-fwqu]

All in all, one of the most informative videos you have done in the past six months. Good job, Joe. And btw thank you. Very helpful.

[trekkiee]

Having worked for a medium sized business owned by private equity, all I heard about our performance was EBITA. One thing is going down are the PE firms that own companies on leveraged buyouts. A family friend is tied in with a PE firm, they buy small medical device companies and put him in as CEO, they just exited a company AT A LOSS. Which is insane. He just retired relatively young because he sees that the leveraged PE model is doomed. Literally walked away from potential millions.

[JinKee]

Can we talk about the insane "No Landing Scenario" in the mainstream media where inflation keeps markets high forever? It sounds suspiciously like the "Permanently High Plateau of Prosperity" we heard about back in 1929.

[DaveVandeWalle]

Great stuff, Joe. But I was always told the "D" is for "depreciation."

Anyway, junk bonds bad, world gone mad...
But that IPA was the best I ever had.

[thomascharlton]

Looks like someone already caught the Depreciation thingy. Hey you make enough videos and you will make minor mistakes. Great video dude!!

[jeffcauhape]

And when this happens, the talking heads on the news will say, "Nobody saw this coming!!!". Yeah, right.

[momentumcharting]

Junk market is going through a bottoming process, which should complete in the next few months. It’s not going to “implode”.

[buggsmcgee]

Joe i believe YOU are the most intelligent and understanding of the current situation

[MFGEEDORAH]

Are we going to go into a depression in the 30s? No roaring 20s just straight to the depression.

[robertvorce]

Depreciation not Deduction in EBITDA calc

[tacocruiser]

Deflationary death spiral sounds rather appealing after experiencing the recent inflationary surge.

[dadthemanthemyththelegend]

Accounting seems to be a fluid language.

[depreciatingasset]

Well, if it's the 1st expected to implode and the highest risk, it's not a black swan. But I get your point.

Maybe the next black swan is what's considered a zero-risk investment ie US treasuries. If those fail, that would be a black swan.

[dm-fwqu]

I'll always tell you exactly how I honestly feel...good, bad, or indifferent😉

[marksgoogle]

we already had ten black swans and the economy is in the dumpster but stock market will not be impacted

[stevenemig]

Aniother good insight. Keep them coming. Any thoughts on where the $1.3 trillion of SLABS (Student LoanAsset Backed Securities) went? They seem to have disappeared in the last 3 years. Somebody's holding it, and there's a LOT of those loans not getting paid right now.

[kadirergull]

I have invested on presale, we will see I am also very confident this will be easiest 100x.

[martinzelaya]

Why would the Feds take the risk of buying below investment grade bonds? Did they misread the economy?

[rolandbraun]

Top notch as always with clarity of thought and analysis dominating your podcasts.!!
Does anyone have an estimate for the total market capitalisation of the Junk bond market as at 2022?