Slate Money Credit Cockroaches
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Oct 18, 2025 The hosts delve into the fallout from First Brands and Tricolor's bankruptcies, questioning banks and private credit firms' accountability. They explore the rising prices and sales in the auto industry, highlighting how EV incentives have shifted market dynamics. Discussion tightens around the peculiar marketing strategies of the QQQ ETF, revealing its unusual structure and low profits for Invesco. Plus, a curious look into the complexity of matcha prices adds a flavorful twist to the conversation!
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Private Credit Is Frothy, Not Necessarily Doomed
- The credit market is historically frothy with very tight spreads and lots of lending capital chasing deals.
- Fraudulent borrowers like First Brands and Tricolor reveal weaknesses but are unlikely to trigger a systemic collapse.
Origination Incentives Create Blind Spots
- Bank-originated loans and private credit both face due-diligence blind spots that the Tricolor and First Brands cases exposed.
- Opacity in private credit and origination incentives at banks create different but real vulnerabilities.
Fraud Collapses Bonds, Not Yield Mispricing
- Fraud in credit markets is binary: fraudulent issuers' bonds can crash to near zero no matter the yield.
- Discovering frauds is the moment prices collapse, not the prior mispricing of spreads.