The Wrap: Inflation Sinks GOP, Citi & BLK Double Down on Private Credit
Citigroup teamed with BlackRock’s private‑credit arm HPS to originate up to €15 billion (about $16.3 billion) of loans for European companies and leveraged‑buyout funds, a move analysts label a regulatory‑capital arbitrage. At the same time, heightened geopolitical tension in the Strait of Hormuz is pushing oil and industrial‑chemical prices higher, prompting Federal Reserve officials to signal another interest‑rate hike as 10‑year Treasury yields climb above 4.6%. Michael Saylor announced MicroStrategy will likely sell a portion of its Bitcoin holdings to fund dividends, marking a sharp reversal from his earlier bullish stance. The combined pressures are weighing on bank balance sheets and inflating market volatility ahead of the U.S. midterm elections.
What Does a Smaller Fed Balance Sheet Mean for Inflation & Interest Rates?
The Federal Reserve is considering a $2‑3 trillion reduction in its balance sheet, primarily by off‑loading the $2 trillion of mortgage‑backed securities (MBS) held in the SOMA. Treasury could respond by issuing longer‑duration debt, which would let the Fed keep short‑term rates...
Who Is the Next Countrywide Financial? PennyMac, Rocket & UWMC
United Wholesale Mortgage (UWMC) is using aggressive loss‑leader pricing and inflated mortgage‑servicing‑right (MSR) valuations to protect its >40% wholesale market share, echoing Countrywide’s pre‑crisis tactics. The firm’s cash‑light balance sheet—$450 million liquidity versus billions in debt—raises concerns after its stock‑based bid...
The Wrap: AI and Metals Surge, Dollar Gyrates and Private Credit Sinks
Gold prices jumped nearly 3% in five days while silver outperformed, driven by supply bottlenecks in India and broader Asian markets. The Federal Reserve’s balance sheet rebounded to roughly $6.65 trillion, adding $42 billion of Treasury bills in February, signaling renewed reserve...
The Wrap: FOMC Rejects Rate Cut; Mag7+ Dominates Equity Markets
The Federal Open Market Committee voted 8‑4 to keep rates steady, marking the strongest dissent since 1992, while Senate leaders moved forward with Kevin Warsh’s nomination to replace Jerome Powell as Fed chair. Powell will remain on the Board of...
The Wrap: Energy Prices Surge, Stocks Ooze Up, Gold Edges Sideways
Energy prices have surged as the Israel‑U.S. conflict with Iran persists, prompting airlines to slash flights and driving a $500 million Treasury bailout for Spirit Airlines. The FHA, Fannie Mae and Freddie Mac announced a pilot to accept VantageScore 4.0 and FICO 10T...
D. Ricardo on Private Credit & the Real Risk to Financial Markets
The Financial Accounting Standards Board’s working group voted to add loan recapture to mortgage‑servicing‑right (MSR) valuations, a move that could anchor current MSR pricing rather than lift fair values. Over the past three decades, MSRs have averaged roughly 1.5% of...
The Wrap: Public Markets Rally; Private Credit Will Become Equity
Goldman Sachs lifted its Q1 2026 credit‑loss provision to $315 million, a near‑10% year‑over‑year rise and the highest level since 2020, driven by impairments in wholesale and corporate loans. The bank’s gross loan yield of roughly 10% outpaces peers like JPMorgan...
Private Credit and Large Banks
Banks entered Q1 2026 under heightened scrutiny over private‑credit disclosures, as investors—both institutional and retail—face losses from illiquid, mis‑sold vehicles. Goldman Sachs president John Waldron warned that private‑credit products lack clear liquidity labeling, prompting regulators to demand more transparency. While banks...
The Wrap: Hormuz Still Closed, Home Prices Stagnant to Down
The Strait of Hormuz remains closed despite a two‑week U.S.‑Iran cease‑fire, keeping global oil flows constrained and energy prices elevated. Gold futures have rebounded, the S&P 500 is trading sideways, and Bitcoin stays down year‑to‑date. In the housing sector, mortgage rates...
Goldman Sachs, Morgan Stanley & the Asset Gatherers
The Institutional Risk Analyst published a brief note asking whether major Wall Street banks such as Goldman Sachs and Morgan Stanley represent good value at current levels. The piece reveals the author’s modest position in Flagstar Bank, purchased well below...
The Wrap: Trump, Inflation and the Term Structure of Interest Rates
The Iran war with the United States and Israel has triggered a sharp risk‑off shift, prompting private‑credit managers such as Ares and Apollo to cap redemptions as investor cash‑out requests surge. Direct‑lending defaults are projected to climb from 5.6% to...
Risk Concealed: Private Credit, PIK and the Banks
Banks are increasingly financing private‑credit managers through non‑recourse loans structured via special purpose entities, expanding the sector to over $2 trillion in assets. Since 2022, accrued but uncollected interest on these loans has surged past $100 billion, while roughly 9% of private‑investment...
Countrywide II: UWMC + TWO = ? Loan Depot Flops, Again
United Wholesale Mortgage (UWMC) announced a stock‑only acquisition of Two Harbors, sending UWMC shares below $10 and sparking a shareholder vote amid a steep discount to Two Harbors' book value. The deal highlights UWMC’s reliance on mortgage‑servicing rights (MSRs), which...
Are the Money Center Banks a Buy?
Bank equities fell in January after Q4 2025 earnings, despite solid results, as investors booked profits from a rally that began in October. Citigroup emerged as the top performer among the five major depositories, but the broader money‑center segment faces heightened...