There are fearful whispers among bankers today: contagion can happen quickly. Is the failure of multinational firm called First Brands the next Bear Stearns? Is the Great Financial Crisis rearing its ugly head, under pressure from tariffs, Trump ineptitude, and smoke and mirrors among private credit markets? There are also whispers about a housing market freezing up….
Here’s some background from this article
The collapse of U.S. auto parts maker First Brands Group is reverberating across the banking sector on both sides of the Atlantic.
The company’s rapid demise – which is now unravelling a maze of complex debt agreements held with a range of lenders and investment funds globally – highlights the risks associated with private credit’s often “aggressive” funding structures.
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While the broader systemic risk from the First Brands’ implosion is considered to be low – mainly due to stricter lending rules put in place post-Global Financial Crisis and improved structural protections in CLOs – the debacle is already drawing comparisons to both the 2008 blow-up and the Greensill Capital collapse in 2021, owing to the presence of complex financial engineering, high-risk borrowing and trade receivables assets.
Swiss litigation and dispute resolution firm Lalive said the First Brands funding model’s mix of private credit and supply chain finance is reminiscent of the Greensill approach.
Meanwhile, Trump is blowing up world markets with his renewed trade war with China. Soon, to save face, Trump will be forced to allow his Supreme Court to rule against him on tariffs, to save America from China’s wrath. Plus the Supreme Court has to decide in that case whether Congress is relevant anymore: that case is make or break for our Republic.
Housing market is already frozen at 4.2% unemployment and as the jobs market continues freezing, so goes the housing market.
As buyers balk at high home prices and mortgage rates that continue to approach 7%, a recent Oxford Economics report predicts more pain ahead. Concerns about the economy and job security mean many would-be new purchasers are opting to make do with modest home improvements instead.
Article title of this one should end with “yet”….
Is the housing market in a recession? Experts say yes but it’s not a crash.
With fewer homeowners listing their properties, inventory remains tight in many regions even as affordability keeps buyers on the sidelines. It’s not just mortgage rates holding people back. Americans remain stuck.
“Job hiring rate is quite low and job changes are often a trigger for a household move, so few people are switching jobs. There’s less incentive to relocate, which reduces buyer and seller activity,” said Kushi.