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Oaktree’s Howard Marks Says Fed Support Isn’t Forever, Distress Coming

  • Co-chairman says bond prices are ‘artificially supported’
  • Despite moral hazard, he says Fed was right to intervene

As successful as the Federal Reserve has been propping up corporate debt prices, the support is only temporary and distress will sweep through the credit markets when the central bank inevitably steps back, Howard Marks said.

“Can the Fed keep it up forever?” Marks, the billionaire co-chairman of Oaktree Capital Group, said in a Bloomberg “Front Row” interview. “Those of us in the markets believe that stocks and bonds are selling at prices they wouldn’t sell at if the Fed were not the dominant force. So if the Fed were to recede, we would all take over as buyers, but I don’t think at these levels.”