The Insight by Oaktree Capital On the Lookout
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Aug 21, 2025 In this discussion, Armen Panossian, Co-CEO and Head of Performing Credit at Oaktree Capital, and David Rosenberg, Co-Head of Liquid Performing Credit, delve into the current state of credit markets. They reveal surprising resilience in the U.S. economy despite recession fears, and explore rising car repossessions signaling stress among lower-income consumers. The duo highlights the convergence between public and private credit markets while discussing strategies for investing in low spread environments and the importance of creditor dynamics in financial negotiations.
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Market-Economy Disconnect
- The US economy shows resilience but clear pockets of weakness, especially among low- to middle-income consumers.
- Markets appear disconnected from these fundamental risks, creating potential future surprises.
Equity Valuations Demand Growth
- Equities are richly valued and require strong future growth to justify current multiples.
- Historical data suggests high PE levels often precede muted long-term returns.
How The Magnificent Seven Outperform
- The Magnificent Seven convert profits to cash exceptionally well due to being asset-light and scalable.
- Traditional, capital-intensive industries face tougher growth and cash conversion challenges.