Richard

Market Risk & Cycles
Fed • Rates • Treasuries • Credit
Portfolio resilience over predictions.
Protect capital first. Compound second.

[Richard @Richardbc2ee]

@CPAPlanner Funny how they froze the IRA limit at $7,500 while forcing anyone over 50 making $155K+ into mandatory Roth catch-ups. That isn't Washington helping you retire, that's Uncle Sam pulling tax revenue forward today because the Treasury can't wait thirty years to collect.

[Richard @Richardbc2ee]

@markcecchini Every November, wealth advisors pitch DAFs like a free lunch, and I always tell clients the same thing: giving up $500K of liquid net worth just to dodge a tax bill is still a 100% haircut. Never let a Schedule A write-off talk you out of keeping your own dry powder.

[Richard @Richardbc2ee]

@DeItaone Classic Washington math: freeze the stamp price so the evening news looks pretty, then quietly hike Ground Advantage 5.9% plus an 11% fuel surcharge. They're not fighting inflation, they're just burying it in the shipping invoice where small businesses eat it first.

[Richard @Richardbc2ee]

Even the jobs print is a trap. 165,000 payrolls and a 1% layoff rate give the Fed cover to keep rates pinned while auto delinquencies hit 5.5%. Hiring freezes before layoffs spike, and by the time payrolls crack, the credit damage is already done.

[Richard @Richardbc2ee]

Wall Street sold retirees "private credit" as safe yield with zero volatility. In Q2, investors asked for $22 billion back and over $14 billion didn't get paid. You don't have a low-volatility asset when the exit door is gated at 5% a quarter. You have a queue.

[Richard @Richardbc2ee]

Meanwhile, 372 large companies filed for bankruptcy in the first half of 2026, the worst pace since 2010, and office CMBS delinquencies hit 12.3%. Equities are pricing a soft landing while credit is already locking the doors. Who gets stuck holding the bag when gates slam?

[Richard @Richardbc2ee]

@IlliquidInsight Exactly, and it does not even need another hike. Those deals were underwritten for lower rates, so rates just staying high is enough to push more loans into PIK. The question is which maturity wall hits first, the PIK loans or the refinancing queue behind them.

[Richard @Richardbc2ee]

@exec_sum That split is the tell. Bankers up 30% get paid on deals closed, private credit pay falls because the fees follow cash, not PIK interest. When the pay falls first, the marks are next, and the bonus in cash is the only part that is real.

[Richard @Richardbc2ee]

@heresyfinancial Cut the card at 10% and the riskiest borrowers lose the card first. They still need the money, so they walk to the payday lender, where no cap will touch the rate. Does that cap protect the borrower, or hand them to the payday lender?

[Richard @Richardbc2ee]

Four years without a default is easy when you get to decide what a default is. PIK the interest, mark it at 96, move it to the affiliated fund, and the original fund exits clean. The people who believed the mark are the ones who lose. Would you call that a default, or a transfer?

[Leyla @LeylaKuni]

"I'm a portfolio manager at a $12 billion private credit fund.

I've been managing institutional capital for four years, and I'm proud to say we've never experienced a single default.

Disciplined underwriting. Rigorous covenant protections. Deep relationships with our private equity sponsors.

Also, we don't classify loans as defaulted if borrowers are still making interest payments.

And we're flexible about what constitutes an interest payment.

Let me give you an example. In 2021, we lent $180 million to a private equity-backed software company. Recurring revenue, mission-critical product. Beautiful business.

The sponsor paid 24 times adjusted EBITDA. We provided debt at eight turns.

Some people thought that was aggressive.

But we'd worked with the sponsor before. Very sophisticated people.

In 2023, EBITDA fell 35%. The company couldn't afford its interest payments anymore.

We agreed to let it pay us in kind.

For those unfamiliar with private credit, PIK means we add unpaid interest to the loan balance.

The company saves cash, and we earn more interest. Everybody wins.

Our loan grew to $197 million.

We marked it at 98 cents on the dollar.

The following year, EBITDA fell another 20%.

We provided a $35 million super-senior loan, extended the maturity by three years, and agreed to capitalize more interest.

The sponsor contributed $5 million in equity.

Strong alignment of interests.

Our discounted cash flow model assumed EBITDA would recover and the company would eventually sell for 18 times EBITDA.

We marked the loan at 96.

Conservative, in my opinion.

Last month, the company missed payroll.

We hired a restructuring adviser. $1,200 an hour. He concluded the company was insolvent.

I disagreed with his methodology.

We're now negotiating a debt-for-equity restructuring and considering transferring the loan to our affiliated opportunistic credit fund.

Our original fund can exit the investment. Our opportunistic fund gets exposure to a promising turnaround.

Everybody wins again.

People from traditional banking backgrounds sometimes struggle with private credit. Me? I love it.

Anyway, our fund just reported another quarter of positive returns.

Four years without a default.

I received my annual bonus last Friday. Cash, obviously.
I'm not an idiot."

[Richard @Richardbc2ee]

This is a checklist, not a prediction. If you only check one gauge, check the queue first, because a queue shows up before a price does. Which one is flashing first for you?

[Richard @Richardbc2ee]

Save this. Most people watch price. I watch liquidity, because liquidity leaves first and price follows. Here are the 5 gauges I check every week, and what each one is telling me right now.

[Richard @Richardbc2ee]

5. Jobs, read backwards. 165,000 jobs in October and a 1% layoff rate look strong, but layoffs are the last thing to rise. Hiring freezes first. Strong jobs keep rates high, they do not cancel the credit break. Which gauge do you check first?

[Richard @Richardbc2ee]

4. Bankruptcies. 372 large companies filed in the first half of 2026, the most since 2010. A single filing is a story. 372 is a cycle.

[Richard @Richardbc2ee]

@zerohedge Losing on both the stock and the hedge is the tell. SoftBank borrowed $7.35 billion on a $2 billion bet, pledged every share, and sold the upside to pay for the floor. I watch the ¥1.1 trillion banks can lend out, because that is how one collar becomes a collateral chain

[Richard @Richardbc2ee]

@DeItaone UBS calling 8,900 after a 20% P/E fall is the part I would not rush to buy. Earnings up 33% does not re-expand a multiple on its own, the rate that prices those earnings has to come down first, and that rate is still high. I would want the credit break first, then the multiple