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The bond market is in a difficult place. With rampant inflation and interest rates on the rise, you will likely start seeing a lot of headlines on how monetary policy will affect bond prices.
Why is this relevant now?
Many companies with poor creditworthiness have been able to take advantage of the low-interest rate environment to finance their operations without having to make heavy interest payments.
Roughly 20% of companies in the US are “zombie” firms, meaning that they pay more in debt servicing costs than they make in profits.
Inflation and low interest rates are also keys to this conversation.
Let’s dive in.
This thread was provided by vishalinvests on Twitter: https://twitter.com/vishalinvests/status/1504172581745741824
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⏰ Timestamps ⏰:
0:00 – Intro
1:31 – The Big Picture (Inflation, Interest Rates)
3:04 – What Are Bonds?
5:21 – Bonds vs Stocks
8:01 – Historically Low Interest Rates
9:08 – Corporate Credit Ratings
11:16 – Why Is This Relevant Now?
11:37 – ZOMBIE COMPANIES
11:40 – FTX SPOT
13:17 – ZOMBIE COMPANIES (CON’T)
15:05 – BONDS ARE BREAKING!
18:30 – My Thoughts
21:08 – LOL!
Instrumental Produced By “iAmHaywood” on IG
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