Billionaire Marks' Oaktree is stockpiling cachet in case of a correction. What's it warning us about?

Markets are needlessly ignoring a range of fundamental issues that could potentially threaten a correction, Oaktree Capital Management co-CEO Armen Panossian warned investors on Bloomberg TV.

Abundant liquidity after the pandemic, investors' reluctance to go into cachet and strong past corporate results are encouraging market participants to turn a blind eye to economic fundamentals, Panossian noted. This resilience is also supported by the market's widespread belief that US President Donald Trump will not do anything that would cause irreversible damage to the economy, the analyst explained.

"When you add to that a war with Iran, when you add some of the problems in the software sector that we expect to see over the next couple of years, it's a little unclear why markets remain so resilient," Panossian said in an interview with Bloomberg TV.

Because of this, Oaktree is now in the mode of preparing for a correction and is stockpiling cache, Bloomberg writes. Moreover, the company sees no attractive assets, discounted debt or securities worth buying in large volumes, Panossian said.

Panossian also commented on the recent wave of withdrawals from private credit companies amid concerns over the threat of AI to the software developer sector. The Oaktree co-CEO said he was surprised that banks have not "tightened the screws" more on lending to such private credit instruments. "There has been a certain amount of tightening, of course, but not as much as I would have expected," he said.

Oaktree is an investor in distressed debt and credit strategies. The company buys up strong businesses at times when they have liquidity problems.

Oaktree's co-chairman is billionaire Howard Marks. Forbes estimates his fortune at $2.2 billion.

This article was AI-translated and verified by a human editor