top of page
Search

Roads Out Ahead

  • Doug Wakefield
  • 5 days ago
  • 6 min read

While the top story of world markets continues to be centered around the Strait of Hormuz and US and Iranian negotiations and actions, I want to examine 3 other roads that all investors should watch as they develop.



Private Credit Road

 


What were the holdings in the two hedge funds by Bearn Sterns that closed in 2007?




Did Collateral Debt Obligations in 2007 use leverage?




What are the assets in private credit funds?




Do private credit funds use leverage?




Public articles in the first part of 2026 have also shown serious cracks have already happened in the private credit sector this year. Remember, the crack that occurred in the summer of 2007 with the 2 Bear Sterns hedge funds, morphed into what is now known as The Great Recession.


 

“… First Brands Group, a maker of auto parts, filed for bankruptcy in September 2025 with approximately $10 billion in debt. In the same month, Tricolor Holdings, a subprime lender, also filed for bankruptcy, intending to dissolve the company….”


“… Then this year, BlackRock’s TCP Capital Corp. wrote down the value of a private loan to Infinite Commerce Holdings, an aggregator of online Amazon sellers, to zero from full value. There is also a fear that advances in artificial intelligence (AI) will impair lending to software companies and lead to more defaults.”


 

More investors flee Blue Owl as private credit fears deepen, CNN,            April 2, 2026

 

“Blue Owl has shed 40% of its market value this year, and its stock (OWL) sank again on Thursday after it revealed a massive surge in requests from investors wanting to yank their money, forcing the firm to cap withdrawals. Blue Owl said in a letter that it received requests to pay out 41% of its $6 billion tech-focused fund (up from 15.4% the previous quarter) and 22% of its $36 billion flagship fund (up from just 5%). The lender is honoring just a fraction of those requests, paying out 5% from each fund.”


In markets that turn over money in short periods of weeks or even milliseconds, this is not information for trading, but it is information that impacts the entire integrity of global financial markets. While the two Bear Sterns funds went under fairly soon after they closed the door on redemptions "temporarily" in the summer of 2007, it took until the following spring before JP Morgan Chase could buy out Bear Sterns for $2 a share.



Treasury Buyers’ Road


Over years and in fact decades, Americans, and I would say most of the world, have seen US government debt as something that would just continue indefinitely. While I certainly do not see it ending, trends have shown that things are certainly changing.


Central Banks Now Hold Gold Than US Treasuries, Visual Capitalists, October 8, 2025


 

This month, we have had the IMF and the former Treasury Secretary and CEO of Goldman Sachs, Henry Paulson, addressing the global markets for US Treasuries.   



“ ‘The increase in the US Treasury security supply is compressing the safety premium that US Treasuries have traditionally commanded – an erosion that pushes up

borrowing costs globally,’ the Washington-based IMF said in its latest Fiscal Monitor report.”


“As Bloomberg reports, the IMF pointed to a narrowing gap between the yields of AAA rated corporate bonds and Treasuries as a sign of reduced appeal for US government securities.” [Bold by ZH]



Paulson said officials need an emergency plan "on the shelf, so it's ready to go when we hit the wall," during an interview on Bloomberg Television's Wall Street Week with David Westin.


The former Treasury chief said a breakdown in the $31 trillion market for US government debt would differ from the financial crisis he managed two decades ago. During that crisis, the government had fiscal resources to address the credit meltdown, he said. However, in a US public debt crisis, “when you hit the wall and you’re trying to issue Treasuries and the Fed is the only buyer and the prices of the Treasuries are going down and interest rates are going up, that’s a dangerous thing.”


“People say, when are you going to hit the wall? I obviously don’t know, it’s impossible to know,” Paulson said. “When we hit it, it will be vicious, so we have to prepare for that eventuality.”    

 

Since Paulson worked at the pinnacle of American finance and certainly understood that the 2008 crisis was meet with massive bailouts for the banks followed by the QE “experiment”, he certainly understood that flooding the financial system with massive debt would eventually lead us to a “hit the wall” moment!! It is basic common sense, like a person continuing to max out more credit cards.


Where are we going next? Not to a place where more “global planning and rescues” will improve this mess, that is certain. More on this later.     



Oil and Gas Supply Road


A month ago, the world watched as massive changes took place in the war surrounding Iran. Clearly, these are supply issues that continue to impact the entire world, especially Asia and Europe. Even when this war ends, it will take months or even years for parts of the supply chain to be rebuilt or fixed.



The war is causing “the largest supply disruption in the history of the global oil market,” according to the International Energy Agency. The Strait of Hormuz is a chokepoint for the bulk of oil exports from states around the Persian Gulf. Almost 90% of the crude and condensate transported through the waterway last year went to Asia.


…. The Middle East is a significant supplier of LNG thanks to Qatar, which was the second-largest producer last year after the US. Qatar Energy halted activity at the world’s biggest LNG export facility after it was targeted in an Iranian drone attack. The Ras Laffan plant accounts for around a fifth of global supply….


However, it is incredible to see how fast things have changed regarding access to the energy markets.



In a striking display of America’s emergence as the world’s premier energy supplier, at least 121 empty oil tankers are currently steaming toward U.S. waters — with 68 of them Very Large Crude Carriers (VLCCs), each capable of hauling up to 2 million barrels of oil.

This surge, captured in real-time Marine Traffic data and highlighted on Fox News, comes as global buyers scramble for reliable supplies amid ongoing disruptions in the Strait of Hormuz….


…Overall, the Gulf Coast offers approximately 7.1 million barrels per day (Mbpd) of crude oil export capacity across these and supporting terminals. Utilization has historically run well below full capacity, leaving ample room for the current tanker influx.





Saudi Arabia returned its East-West pipeline to full operating capacity of about 7 million barrels a day, reestablishing a critical route for crude shipments to the Red Sea.


A very interesting commentary on a podcast by Victor Davis Hanson called “This Regime Won’t Be Able To Stall Much Longer..” on Israeli Pesach Wolicki’s You Tube Channel provides more information about moving oil out away from the Strait of Hormus [Minutes 6 – 8].


To close out this post, I would encourage you to check out this post by Dr Daniel LaCalle on his website. He is an economist and fund manager in Madrid.



This comment in the article really stood out to me after watching and reading information constantly about oil and the war since the end of February.


In the past 30 days, 80% of the essential volumes that moved through the Strait have been rerouted or offset by other oil producers, including US record exports.



Closing Short Term Road




The speed of the current stock market rally has been extremely fast, much of which was shorting covering at the end of March, taking the CNN Fear and Greed Index from an “Extreme Fear” level of 8 to an “Greed” level of 72 in 14 trading days (April 20).


While a continued stock market bull would not be a surprise if a peace agreement is presented to the world, the recent explosive bull would be starting at “Extreme Greed” levels, and all this in less than a month.


Nothing goes up like a rocket without slowing or falling.





 

Disclaimer: Best Minds Inc was closed in 2018. I am retired. Nothing I am writing should be taken as advice to buy or sell any form of security or asset. Everyone must study and consider their own situation before putting money anywhere, as well as understand that they are living in a time where major changes at the highest levels of money are taking place. These writings are free.



 






 
 
 

Comments

© 2016 by Best Minds Inc. 

bottom of page