Eurodollar University

US consumers are dramatically pulling back on credit card usage, signaling a shift in financial behavior. Recent data shows a decline in revolving credit for the third time in seven months. Meanwhile, job-finding expectations are plummeting, highlighting a growing fear of payment difficulties. Payroll reports suggest that employment figures may be overstated, indicating deeper job losses. The intertwining issues of declining credit, consumer sentiment, and employment paint a concerning picture of the economic landscape.

A deep dive into the turmoil facing Blue Owl reveals unsettling trends in private credit. Withdrawals surge, marking a shift in investor behavior and signaling potential credit cycle troubles. With banks supplying emergency liquidity, the decline may be stalled, but risks loom. The podcast explores how bad loans and lax oversight expose a bubble, while concerns grow about the broader implications for the credit market. As dealers hoard Treasuries, a defensive stance underscores the uncertainty ahead.

New car sales for households earning $75k or less have plummeted by 30% since 2019. Incomes haven't kept pace with soaring prices, pointing to a deeper affordability crisis. Even those earning between $75k and $150k are purchasing 7% fewer cars. The podcast explores how higher car prices disguise a shrinking auto industry and highlights significant job losses, contributing to a net negative turnover in hiring. Policymakers are urged to cut interest rates, as a persistently shrunken economy drives these challenges.

The podcast delves into a synchronized loss of economic momentum across the globe. It highlights troubling trends in manufacturing, with countries like Germany and Mexico facing significant downturns. Jeff discusses how weak demand signals are evident in TIPS and treasury markets, reflecting subdued inflation expectations. Also covered are the impacts of eurodollar tightening and foreign reserve sales, indicating broader funding stress. Collectively, these insights paint a concerning picture of the global economy.

Commodity prices are experiencing wild fluctuations, with silver soaring due to a speculative squeeze and shifting supply dynamics. Copper is facing multiple supply shocks, further driving its parabolic price rise. However, the copper-to-gold ratio indicates deflationary trends ahead. Meanwhile, oil markets reveal a concerning inventory glut, with key spreads flipping to contango, highlighting weakening demand. The interplay between these commodities suggests deeper economic implications that are worth watching closely.

Steve Van Metre, an investor and market expert on credit and corporate finance, dives into the intricacies of the AI debt bubble. He highlights how tech giants are heavily borrowing for AI projects, creating a dual risk for the economy. The conversation spans key insights from Howard Marks on bubble psychology, the increasing debt loads of major firms like Microsoft and Meta, and the potential fallout for smaller businesses tied to AI spending. Van Metre warns that rising credit issues could threaten equity markets and halt innovation.

The discussion dives deep into troubling signs for the economy, highlighting a notable bull steepening on the Treasury curve and falling gasoline prices. Concerns grow as economists warn we're on the brink of recession due to negative payrolls and weak consumer demand. There's analysis on the oil futures market, revealing contango implications and risks of a global downturn. Additionally, rising inventories and falling orders point to a significant production slowdown, indicating the economy's momentum is fading despite positive GDP headlines.

European banks are experiencing a shocking surge in lending to shadow banks, driven by urgent need rather than adventurous risk-taking. This emergency backstop aims to prevent fire sales in troubled financial markets. The trend mirrors past U.S. dollar repo tightness, indicating a broader global funding squeeze. Notably, banks are seeking safety in government bonds while grappling with significant exposure to non-bank financial institutions. The IMF raises alarms over systemic risks, highlighting the interconnected nature of today's financial stresses.

The Fed faces a year-end surge in repo borrowing, raising eyebrows about collateral flow issues. Repo fails are spiking, signaling tightness rather than a full-blown crisis. Meanwhile, Treasury bill yields are tumbling, hinting at collateral scarcity. Jeff also explores how the Fed's not-QE practices could worsen this situation. Discussions on FOMC minutes reveal a tilt toward rate cuts, while a stabilizing yield curve suggests underlying consumer vulnerabilities heading into 2026.

Massive protests in Iran highlight a global wave of unrest fueled by economic collapse. Younger generations are at the forefront, angered by their bleak financial futures. Economic hardship is overshadowing cultural issues, leading to political upheaval. Historical examples reveal that weak recoveries often result in voter backlash. As Gen Z protests rise worldwide, the discussion pivots to whether these youth movements will foster reform or push extreme ideologies. The podcast warns that political instability poses the greatest systemic risk.