Chris Whalen: This Could Be One of the Biggest Busts in U.S. Financial History
Summary
Private Credit Unwind: A slow, opaque unwind in private credit and private equity is expected, with banks pulling back commitments and potential losses spreading through CLO structures and off-balance-sheet entities.
Banks & Financials: JPMorgan (JPM) is setting the tone by marking down private loans; overall the sector faces pressure but the guest sees no immediate systemic crisis, just prolonged pain and litigation.
Mortgage REITs: Annaly Capital (NLY) is highlighted for income within a barbell strategy; agency MREITs benefit from a steeper curve, hedge aggressively, and fund via repo while delivering high dividends.
BDC Risks: Business Development Companies allegedly window-dress leverage, creating systemic accounting risks that regulators are overlooking, implying future enforcement and investor losses.
Housing Outlook: Expect rising visible delinquencies (FHA/VA) after policy rollbacks and a likely housing price correction by 2028, with limited DC focus to address affordability.
Energy & Oil: Oil could hover near $100 due to Middle East conflict; technology and efficiency trends temper long-term demand, and the guest recently took profits on prior energy positions.
Rates & Macro: Despite oil-driven inflation bumps, slowing jobs data points to one or two Fed rate cuts this year; markets remain invested with passive flows supporting valuations.
Precious Metals: Gold and silver are likely to move sideways to modestly higher; silver’s pricing increasingly reflects Asian market dynamics and tight deliverable supply.
Transcript
And you're also going to see the industry pull back some of those unused commitments and that's going to put pressure on private equity and private credit funds and that's going to be quite a mess. So, but they were all so convinced that this was a superior trade and that they were going to make more money that they ignored some of these warning signs. Hey everyone, welcome back to this week's episode of the rap with Chris Whan where we break down what's happening on Wall Street, DC, and everywhere in between. What's happening in markets and the economy. Chris, great to see you as always. >> Good morning, Julia. Happy Friday. >> Happy Friday, and good morning to you. All right, Chris, since you have been the guy who has been on top of all things private credit and that that seems to be like the topic these days, I open up X every single day and there's just a new batch of headlines in the space and this week we had JP Morgan actively marking down private loans and pulling back credit to private credit clients. So, is this the moment then where we go from that slow unwind to an actual crisis? Is JP Morgan the canary in the coal mine? >> No, but JP Morgan is the biggest secured lender in the country. So, they tend to set the pace for the rest of the banking industry. Uh when they don't like an exposure, everyone has to pay attention to that. Private credit's going to unwind very slowly because it's private. You can't see what's going on. And this is an episodic tale of greed and stupidity on the part of Wall Street that I think could be one of the biggest busts in in US financial history. The reason is is that what happened was originally people used to invest in hedge funds. Then they kind of decided that private was better because hedge funds have to mark their assets to market every day. And they loaded in the private. At first it worked. You know, the Harvards and the rest of them had it all to themselves. But the street kept putting more capacity into this trade and they wanted more fees. Of course, they wanted more fees, right? That's how bankers think. So over time, this whole thing went from just private equity to private credit and it went from institutional investors only to qualified investors and eventually retail. So it's going to take a long time for this to unwind. The banks have a protected position in many of these transactions because they tended to take the best uh credit if you will and everybody else is subordinated to the banks. They use collateralized loan obligations to slice and dice the exposures. So the banks are sitting there saying, "Well, I have a AAA asset. I don't have any risk." But that's not true. They could even end up losing money even though they have a AAA CLLO sitting in their portfolio. So, this is going to take time to unwind. It's not this month's crisis. Definitely not. But I am going to do a piece next week for the blog that talks about some of these details because it's really, you know, too much to try and go through it on the on the broadcast. >> You did have another piece that came out in the Daily Reckoning that was syndicated in Zero Hedge um that the banks have 1.4 4 trillion in outstanding loans to non-depository financial institutions which I know they're a player in the space but then they have another 2.8 trillion in undrawn commitment sitting on top of that. So the potential exposure is 4.2 trillion. So for every dollar lent >> two more dollars are waiting to be drawn. So do that's okay that's really interesting. Do you think like the I take it the average investor does not understand this. >> No they don't. And and what's going to happen is banks will take losses on this stuff. They will do so grudgingly over time. And you're also going to see the industry pull back some of those unused commitments. And that's going to put pressure on private equity and private credit funds. They're going to really uh I think eventually just going to have to try and sell stuff that they cannot sell. And that's going to be quite a mess. So, see what what's interesting is that the whole notion of private should raise big red flags for most investors. But they were all so convinced that this was a superior trade and that they were going to make more money that they ignored some of these warning signs. They ignored the fact that you were contractually unable to sue the sponsor. They ignored the non-disclosure agreements. So many investors are sitting here today and they have no rights. They're subordinated to the banks that lent money to these things and they literally have no legal rights, Julia, which I think is very unfortunate. >> How do you think that ultimately plays out? Are we going to see a lot of litigation? >> Well, the politics of this are going to be interesting. There's a fascinating litigation going on between Jeff, which was a big lender to uh First Brands, the auto parts maker that had a lot of fraud involved. It collapsed in the bankruptcy. and uh Western Alliance was one of the lender banks. So Jeff put the collateral on one of these loans into a special purpose entity and now they're saying, "Well, it's not ours. You got to go sue the SPE to get your money back." And Western Alliance is saying no. You may recall in 2008 a bank called City Corp or City Group uh had the same situation. The bond holders showed up and said, "Give us our money back." So I think these offbalance sheet entities once again are really at the center of this mess and you're going to see litigation. You're going to see losses and it's going to take years to unwind this. >> You know, as someone who follows the banking sector closely, I believe like last time you said you you really don't have the long exposure to financials. Is that correct? >> No, not right now. The only common I own is Flagstar because I bought it very very deep discount. They're clo, you know, slowly clawing their way out of New York multif family real estate. I know the team. I know the CFO very well, Lee Smith. And I think he's going to turn the bank around. But it's a risky position. I admit I got out of all of the rest of my common back in the fall after we ran all summer. Remember, we had Independence Day, the financials sold off, and then I told everybody who reads the blog, I said, "Guys, load up." So, I bought some Schwab. I bought some American Express, rode those up for a, you know, nice 30 plus% gain and then got out because these, you know, they were expensive. >> You don't you I believe you don't think this is going to be systemic, the private credit issue. >> No, I think it's just going to be painful for a lot of investors, large and small. Banks will take losses, but you know, we know about it. Systemic events occur when people are surprised. That was Jerry Corgan's take on it years ago and I think that's still right. When people are surprised by something that causes markets to move um Independence Day, you know, the whole tariff thing got people sideways and the markets sold off dramatically. That was an opportunity and I think we'll see more of that this year. This year is going to be very interesting. >> Is there any like language that you've been looking for? um you know it seems like every week someone kind of comes out and says oh you know the risk is contained that sort of thing does that >> risk is never contained >> right or does that kind of like make like alarm bells go off when you hear that >> look humans are greedy by nature it's it's part of our need to eat uh we always chase the shiny object and in this case you know you had a lot of bankers who decided that they were entitled to make that 20% uh fee every here and so they loaded a lot of investors into these things that were really not suitable uh to use the term from uh the securities industry. Suitability is a very important thing because it makes you look at time horizons, risk, other criteria that lets you know whether a certain investment is good or bad for an investor. And that didn't happen here. Why? Because it's private. By having these vehicles be in the private market instead of a public market, uh the sponsors were able to commit bad acts and I hope they do get punished for it. Largely the punishment will come via lawyers, you know, death by lawyer. So, um I think the litigation and you know, reputational damage is going to be the primary way that these people get punished. >> This episode is brought to you by Goldco. Have you seen these prices? Of course, I'm talking about the precious metals. Gold and silver have been on an absolute tear, breaking record after record. How far will they go? Well, no one knows for sure. And yes, there will be some pullbacks along the way. But if you want to understand why gold and silver have exploded higher in price and why they could possibly explode even higher in 2026, then I've got the perfect guide for you. It's from my new partners over at Gold Co. They are an amazing company. Head over to goldco.com/therap to get your free 2026 gold and silver kit. And some big news for this audience. Goldco is offering our viewers a limited time bonus offer. You can get up to 10% free gold or silver plus free storage and a free home safe with a minimum cash purchase. There isn't a better deal out there. So go to goldco.com/thereap for more details or click the link below. And I think even in your institutional risk analyst bank book, you've talked about a bunch of these banks have quietly loaded up on private credit risk in a way that investors still don't understand. >> So is there a number that shock people? >> No, but here's what they've done. They've taken a a a senior position in many of these credits and they sold the subordinated tranches to other investors, credit shops, etc. So, the bankers think they're safe. But the joke, of course, is is that when the other tranches in the in the CLO get wiped out, the banks will take losses, too. You also see this with business development companies, Julia. There's a lot of BDC's, both public and private, that have been playing fast and loose with the rules about leverage and the load up on leverage during the quarter, and when they get to the end of the quarter, they push the leverage off using a derivative. And this is fraud. I mean, they're they're actually committing open fraud. But nobody at the SEC is paying attention because, you know, chairman Paul Atkins, who's a friend, is uh spending all of this time on stable coins and crypto. Uh there's a lot of stuff going on in the markets that the SEC and the other regulators ought to be paying attention to. >> Wow. Do you think that fraud is systemic then? >> I think the accounting fraud is systemic when I'm a BDC and I'm limited to two times leverage and in fact I have five or six but then I window dress my financials at the end of the quarter so that my investors don't see it. That's fraud. Very definitely. >> All right. All right. Well, that is a space we'll definitely continue to watch. Um >> Oh, yeah. >> Yeah. Chris, toward the end of last week's episode of the rap, you said something that kind of became the buzzy headline of the episode that you thought the Trump administration would end in a financial crisis. Could you elaborate on that a bit more? And are we already seeing like early warning signs? Yeah, I I think the accumulation of things like what we've been talking about in private credit, real estate, which is still very interesting on the commercial side, and residential housing. uh when the Trump administration rolled back all of the COVID era uh era progressive rules for foreclosure and delinquency, they caused an enormous increase in the visible amount of delinquency in residential mortgages, especially in the FHA and VA. So, I think you're going to be reading about that this year in a big way. It's a cost for lenders because they have to buy those loans back at PAR. And this goes both for agency loans and also private loans. So when that loan goes sideways and the the customer can't pay, the issuer has to buy it back. This is, you know, every few years we have to kind of reckon all of the all of the fun and games that have been going on for the past decade. And that's kind of where we are. We're we're at this point where there's so many things that need to be squared in terms of bringing uh people back down to reality that even if the Fed were to start cutting interest rates very aggressively, you know, next week, uh I still don't think it would help cushion the blow that we are going to feel in a lot of different areas of credit. So that's why I I think, you know, I said that it's very likely that when the Trump administration ends, we're going to be in the middle of a housing price correction, even though obviously it's really hard to find homes right now. Uh but I I do think we are going to see a pretty significant correction by 2028. >> And that would be the misery on the eights that you've been talking about. >> Misery. That's right. >> 2028 because that would be the last year of the presidency for Trump. Okay. Um, okay. Question then. You mentioned like rate cuts. We've talked about rate cuts. I think even last time we might see one this month, but do you think so? Especially with what we've seen with the oil prices. >> A lot of economists are saying that the central banks around the world are going to have to wait because of oil price hikes. My sense is, you know, oil prices is a result of war. It's not a monetary event. It's it's more a case where you you know you have to deal with this externality until it goes away. On the other hand, the economy is clearly slowing. If you look at the jobs numbers, Julia, they got revised downward. >> And I think that the Fed is going to be under a lot of pressure to cut. when uh Kevin Walsh gets confirmed as chair, you're going to see him very definitely pushing for cuts because if you look at the charts, where we are today in terms of interest rates is still quite elevated compared to where we were for the past 12 years. And I think on that basis alone, the slowing jobs market, you're probably going to see at least one, if not two cuts by the Fed this year in short-term rates >> because like a hike would probably be a mistake because if I recall, like before the financial crisis, there was an oil price shock then. Maybe I think prices were higher than today and some central banks raised rates. Is that correct? >> Well, that's right. Some some feel that that is an appropriate policy response, but there's nothing a central bank can do about a war in the Middle East. >> The two are totally disconnected. So, I think the central bankers should stick to their models. Look at what's happening in the jobs market and the economy overall. And clearly, we're going to have an inflationary bump because gasoline prices, other prices for energy are going to move higher. There's no question about it. So the question to my mind is how long does this go on? How long is the straight of Hormuz closed? How how long is that flow of not just oil but chemicals and other products going to be constrained coming out of the Middle East? Uh and I'm not sure there's anything a central bank can do about that, Julia. >> Yeah. Yeah, it's a it is a good point, Chris. Okay, so base case still one to two cuts likely. >> Yeah, I think so. and higher oil prices. We could see oil at $100 a barrel for most of this year, if not the whole year. >> Any concerns around oil being at that level? >> No, I thought it was too low to be honest with you. Um, but that's just a function of the fact that consumption is changing in the United States, new vehicles, new methodologies for technology are causing consumption of energy to fall. And that's a good thing. You're seeing this all over the world. The adoption of of different types of uh technology and vehicles, for example, is slowing the rate of increase in energy consumption. So, you know, if we solved the problem tomorrow with between Iran and the United States, I think oil prices would fall back down to lower than they were before the war started. >> Interesting. Um, and you like energy stocks, if I recall. >> Uh, I have. One of my best trades was En uh Chevron. >> Chevron. >> Yeah. Although al although uh you know I just took some profits there. I had also done very well with Williams the pipeline uh company. >> So you know people need energy. We're not going to stop that tomorrow. But I do think that technology is a very important component in the analysis. You've got to be aware of how different types of efficiency are being introduced into the system that makes it possible to consume less energy. >> Okay. So, I want to go back to housing for a second. Uh because you also wrote that the Senate passed a housing bill that reads like an Elizabeth Warren agenda. I like that. And you also pointed out that Trump's not really paying attention to housing because because of the focus on foreign policy, what's happening in Iran. So, do you think housing's just off the radar then for DC? >> I think that the Senate certainly wanted to move that legislation. There's a lot of things in it, some good, some bad. I'm not sure the House is going to focus on it. And unless President Trump is pushing for the House to move on legislation, it may end up dying in the House. U you know, it's it's interesting. There are parts of it that the Republicans really like. There are parts of it that the Democrats really like, but unless you have an engaged White House that wants to really focus on this, I just don't know how you get it through and get it signed into law. Um, the Trump administration has shown an indifference to housing. They kind of sort of paid attention to it because affordability is such a big issue with voters now. Uh, but other than that, you know, a couple press releases here and there and Fanny May and Freddy Mack buying back their own debt in the mortgage securities market, there hasn't been a lot of substance coming from the White House in terms of housing. Mhm. Well, you just mentioned like the buzzword of the year and that has been affordability. >> Yes. >> Um, >> where do you think President Trump's going to just put his attention then if that we're we're in a midterm year? Like midterms are coming up. So, >> is he cooked at this point? >> Well, given where gasoline prices are headed as we go into the summer, I think that's going to be a big negative for the Republicans. Uh I don't know what got him to suddenly jump uh into bed with BB be Netanyahu and go to war with Iran at this point. Uh but it certainly has changed the calculus regarding the midterm elections rather dramatically. Um I you know there are a lot of Republicans in Washington who are very unhappy about the war. So, I just don't know how they're going to be able to address things like affordability in a, you know, real way uh between now and November. >> Yeah. Um, that will be an interesting one to watch, Chris. Um, okay. So, base case, you think? Well, >> well, we still have $100 a barrel of oil by election day. How about that? >> There you go, then. Yeah, that would open up a whole other can of worms, too, I imagine, too, if the if the midterms don't go his way. Um, okay. So, let's stay on DC for a sec. >> Um, no one's even talking about the budget deficit, it seems like. Um, >> no one's really talking about the dollar either. So, >> what do you think is like Trump's economic endgame here? Do you think it's just Iran tariffs? Like, what do you think? Okay. Well, you're assuming he has one. Um, you know, different agencies in Washington are doing their own thing. The Fed is pursuing some changes for the banks and the SEC is pursuing their pro- crypto policies, of course, but I don't see a cohesive economic agenda coming out of this White House. Uh, Trump tends to get focused on one thing at a time, and right now it's foreign policy. He kind of likes that because it's relatively easy. U the conversation with domestic policy issues is more difficult and I you know like I say I I don't see a cohesive economic program coming from the Trump White House right now. They certainly haven't been able to articulate it if there is one. >> Um has anything changed for you lately from the investor perspective with more of the focus being on foreign policy right now? Has that changed anything for you in the last couple weeks? >> No, I mean the markets have largely ignored what's going on in the Middle East. You know, we had the u sell off in AI related and software related stocks. Obviously, you have the issues with credit and private equity, but the rest of the broad market has been largely unaffected. Um, you know, it's a confused time. I don't see any clear trend one way or another. Some people are betting on lower interest rates, some people are betting on not. Um, so I think there's a lack of a really clear narrative for the markets to follow right now. And you know, basically we're going sideways. Look at gold and silver. >> They've been basically trending sideways this whole time. And you know, that doesn't surprise me because that was really a trade last year where it was short dollar, long gold and silver. Everybody was kind of buying that one. So today uh I think Wall Street is desperately looking for a new narrative and they haven't found one yet. >> So okay, gold and silver though, do you see an opportunity for a breakout or was that just more last year? >> Well, I think last year as we've talked about was rather extraordinary in many ways. So my guess is they're going to kind of go sideways and then slowly back up, especially gold. Uh silver has had a tremendous run. wouldn't surprise me if it corrects a bit now. >> Yeah, I think you pointed out like the one of the silver ETFs was up huge in January. >> I know. Every month we price that group of stocks that we've been uh assembling for our readers and it's it's striking how silver caught up with gold and then passed it. >> It almost did 2x gold. >> Well, I wonder if it's like having its, you know, more of its mainstream moment then for investors. Yes and no. I I I still think the commercial demand uh factor and the lack of deliverable supply are the big things driving silver. If you look at the action in Asia and some of the commentaries that have been coming out of India also it's pretty clear that the Asian markets are now the price setters for silver. There's no question. >> Okay. for the broader markets. Um, you pointed out that Ed Yardini, he raised his meltdown probability to 35%. But, um, when I'm listening to you, you seem less alarmed. So, where do you disagree with him? >> This market wants to stay invested. Uh, I don't see people in this market running for the doors, going to cash, you know, putting uh physical currency under their mattresses. That's just not the way this is playing out. And you know, I think sometimes analysts are looking for old-fashioned sell-offs, old-fashioned crises, when the reality is is that this is an inflated market and the managers have no incentive or desire to to exit. So that to me is, you know, what's holding this up. The ETFs are passive. They're not going anywhere. >> Uh and then most managers in the large and midcap stocks, are they looking to sell and get out? No. Uh, even the financials, surprisingly, commentary you and I have been making and others have been making about asset quality, banks haven't come down that much. >> JP is still trading over tomb times buck. So, when I look at that, what it tells me is that yeah, people are concerned, but they're not concerned enough to go to cash and really pull this market down. >> At least not not yet. >> H, that's interesting. It's an interesting comment too on the passive bit as well. It's come up on the show quite a bit. >> The market. >> Yeah. Folks like Mike Green have talked about that the passive bid. It's been so critical and um yeah was talking about >> when you have selling those ETFs will pull you down faster. >> Yeah. >> That's the dynamic. >> Mhm. That will be the dynamic to watch. Okay. On the financials um because I know you also have the list that you publish. Um, Goldman's now the number one in your Q1 2026 top 50 for the banks and JP Morgan's fallen to 41. What does that tell us? >> Goldman has since given ground. You know, we did that list in the kind of third week of January and since then all of the large caps have basically fallen back to the middle or the bottom of the group. Now, that doesn't mean they've sold off a lot, but it means that other smaller stocks have performed better. Merchants Bank of Indiana was the top last time I looked at at our group. And that's a small regional bank, specialized wholesale bank, but you know, for its own peculiar reasons, it's performed better than the large caps. City, which was one of the best performers in the group last year, fell back dramatically. And of course, SoFi, which was the best performing US bank in most of 2025, is down at the bottom of the group now. So, what that tells you is that, you know, last year was an extraordinary year. You had a lot of narratives that were pushing certain stocks and those narratives have run out of gas uh and people have taken profits. And I just it's striking to me when you see all of these small and midcap names in our bank group in the top 25. >> Yeah. >> Normally you see at least a couple of the large caps. Goldman has been a great performer, but again they have uh given ground. >> What's what's your highest conviction idea right now? >> My highest conviction idea? >> Yeah. >> I think preserving capital is is really where I'm focused. I I don't have any >> really great ideas unlike last year when we were able to make some some real good money. Uh first with the banks and then July August we did a trade with Fanny and Freddy that was very good almost 40%. So I I I don't see clear indicators like that right now. Julia. >> Hey guys, thank you so much for watching this video. If you can just take a quick moment and hit that subscribe button. We are trying to hit our next goal of 100,000 subscribers. Really appreciate you. And back to the video. All right, Chris, the viewer mail. >> Viewer mail. I know. >> Do >> you want me to go through it or do you want to go through it? How do you >> No, you go ahead. I'll I'll answer you. You read them. >> All right. Here we go. Um, and we appreciate your questions, y'all, every single week. All right. This is This comes from the grateful guy. I would love to hear Chris explain how he reconciles his currency debasement thesis long PM with his long analy position. From my understanding, NLY is a highly levered or leveraged sorry paper company, meaning they borrow short to lend long. What if there is a bare steepener? Can you please ask him to expand on this portion of the thesis? >> No, very good question. Um first off realize that REITs are different. Annally buys mortgage back securities. They also buy mortgage servicing rights. They fund themselves primarily short-term not long-term. So they are using the repo markets to fund their securities. Then they have equity and both common and preferred equity and they have to pay a dividend. Right now Annal's dividends almost 13% on the common. The reason a bare steepener doesn't worry me with an agency read like Annalie is that steep is good. They like steep. It has more spread between short-term and long-term. Now, if I'm a property REIT and I own buildings, I have to issue debt, long-term debt, usually 7 to 10 years to finance those assets. So, a bare steepener is bad if I'm running a REIT that owns office buildings. with a agency read these guys hedge very aggressively. So the whole idea of having a lot more difference between long and short-term rates actually helps them. Now to the point about u allocation I'm all in for you know the whole precious metals trade as you guys know but we do have to function in the fiat world. So when it comes to fiat currency you want to maximize your income. It's very simple. That's why I like stocks like Annalie. They pay me good income. So, you have to have both. It's a barbell strategy. On the one hand, I like precious metals because as a long-term uh they're very uh good for the portfolio, and at the same time, I want income in my portfolio. And you, you know, you have to have your tea bills. The next step is something like Annalie because it has high quality assets and they're also very good at managing those assets. There are a lot of other reads, by the way, we have another question about this, um, that do the same thing. And, you know, I think of them as a surrogate for something like tea bills because they pay me three times the yield, four times the yield, in fact. >> Well, speaking of that other viewer question, uh, this comes from Laido. I think I'm saying your screen name correctly. I I don't know. These are these are YouTube comment questions. All right. One question though about Annalie that you keep on mentioning as a good yielding investment. Low beta. Yahoo lists Analy with a beta of 1.3. So does IBKR which is not low at all. 0.5 would be low, right? So did I miss something or what? >> No, you don't miss something. But think about it. A a stock with a beta of 0.5 is going to be something that doesn't react to the market and it's also going to be something that's not going to pay you very much. The whole point of Analy is that they're paying you a levered return. That's how they get that dividend. They have to lever up their assets and that's why they use repo funding for it and that's how they're able to deliver that. Now, what's a high beta stock? High beta stock is something like uh United Wholesale Mortgage or Robin Hood or any of these others, Tesla. Those are around two or higher. And there are some stocks that are even much higher than two. Nvidia was another one. At one point it had a beta of almost three. So when I say it's low beta, to me it's a relative thing. Now why has something like Analy appreciated this way? Because remember this is a REIT. We buy REITs for income. We don't buy REITs for capital appreciation. But the reality is there are a lot of people who will buy an annaly, you know, looking for stock appreciation. And I think they're missing the point. The whole point of a REIT is that they have to pay out 90% of their income in order to continue to have that special status with the IRS because they don't pay taxes. It's what we call a pass through. So what I would say to you is that in relative terms, it's a low beta stock. It's not below one where I, you know, my basis in Analy is 08. That's where I started accumulating it. So that's why I'm kind of indifferent to the price. But yeah, it's okay. It's it's certainly higher than one, but is it a high beta stock? No. Um I I think you have to differentiate between the two. And you also have to realize Analy is very popular. It's got a good management team. People like the yield. And remember that these guys don't issue long-term debt like a property rate does. They fund themselves off of common equity and then they use the repo market for their leverage. So that's how I think about Annalie. >> All right. Final viewer question. Um, they would like for you to comment on whether the seemingly rocksolid employment picture in healthcare and to a lesser degree the growth in high salary tech jobs minus whatever minor AIish layoffs are happening is propping up the economy to such a degree that it has kept the markets, stock, bonds, real estate from unraveling. Anecdotally, this person says they know many people in health care who, despite some grumbles, don't seem to have a care in the world when it comes to job security or their willingness to spend. >> It depends who you talk to in healthcare. If you talk to doctors, they're not happy because the insurance companies are killing them. Uh a lot of sole practitioners in the medical world are being forced to sell their practices to private equity firms, ironically enough uh simply because they have to become employees of insurance companies. Now here I live in Westchester County at the moment and in New York healthcare is one of the leading industries in the entire state. So yes, there is a lot of employment because you have health care institutions that are providing services to all sorts of people. The elderly uh you know New York City is a very important center for hospitals and and medical care around the country. So yes, it is stable but I would tell you that the onslaught by the insurance industry when it comes to healthcare insurance is slowly changing medical care in this country and not in a good way. I can't tell you how many doctors I know who are literally running their practices at a break even >> just because they don't want to sell out and and they're going to retire, >> move to Florida and that'll be that. But you >> a lot of doctors have retired because of it. >> Yes. Or they sell. My my eye doctor, for example, got bought out by a private equity firm. He's not happy with the way it's run, but it solved his problem of what do I do with my practice when I retire. So, that's what's going on here. >> Yeah. Well, Chris, uh, what are you watching next week? >> Well, what are we watching next week? Probably credit, the Fed. Uh, those >> Oh, yeah. We have the FOMC next week. >> Oh, yeah. Wednesday. Let's go. There you go. >> See what's going on. We still don't know what Jerome Powell's going to do. Is he going to stay on the board? Is he going to retire? So, there's a lot of stuff going on with the Fed. I think they're going to fasttrack Kevin Walsh so he gets confirmed as chairman. And really, you know, we're done with earnings. I'm going to be writing about the large banks next week because the Fed will finally release the uh the uh you know, big data set for the large banks. It takes them 75 days to assemble all of this. I don't know why. Um and that's really it. I I think that, you know, the markets still haven't reacted to the war, but that could be coming. And I do think that banks are going to start to have to provide more disclosure to investors about how much exposure they have to private equity and private credit. >> Chris Whan, chairman of Whan Global Advisors, author of the institutional risk analyst. It has been so fun doing this with you week after week. This audience has been amazing. They absolutely love it. They love hearing from you. I love getting to talk to you and listen and learn. Um, it's been an absolute joy and I'm looking forward to continuing this. And I also want to give a special thank you to our partners over at Goldco. You can head over to goldco.comthereap and get your free 2026 gold and silver kit. Thank you to everyone for supporting the rap and we will see you next week. Thank you, Julia.
Chris Whalen: This Could Be One of the Biggest Busts in U.S. Financial History
Summary
Transcript
And you're also going to see the industry pull back some of those unused commitments and that's going to put pressure on private equity and private credit funds and that's going to be quite a mess. So, but they were all so convinced that this was a superior trade and that they were going to make more money that they ignored some of these warning signs. Hey everyone, welcome back to this week's episode of the rap with Chris Whan where we break down what's happening on Wall Street, DC, and everywhere in between. What's happening in markets and the economy. Chris, great to see you as always. >> Good morning, Julia. Happy Friday. >> Happy Friday, and good morning to you. All right, Chris, since you have been the guy who has been on top of all things private credit and that that seems to be like the topic these days, I open up X every single day and there's just a new batch of headlines in the space and this week we had JP Morgan actively marking down private loans and pulling back credit to private credit clients. So, is this the moment then where we go from that slow unwind to an actual crisis? Is JP Morgan the canary in the coal mine? >> No, but JP Morgan is the biggest secured lender in the country. So, they tend to set the pace for the rest of the banking industry. Uh when they don't like an exposure, everyone has to pay attention to that. Private credit's going to unwind very slowly because it's private. You can't see what's going on. And this is an episodic tale of greed and stupidity on the part of Wall Street that I think could be one of the biggest busts in in US financial history. The reason is is that what happened was originally people used to invest in hedge funds. Then they kind of decided that private was better because hedge funds have to mark their assets to market every day. And they loaded in the private. At first it worked. You know, the Harvards and the rest of them had it all to themselves. But the street kept putting more capacity into this trade and they wanted more fees. Of course, they wanted more fees, right? That's how bankers think. So over time, this whole thing went from just private equity to private credit and it went from institutional investors only to qualified investors and eventually retail. So it's going to take a long time for this to unwind. The banks have a protected position in many of these transactions because they tended to take the best uh credit if you will and everybody else is subordinated to the banks. They use collateralized loan obligations to slice and dice the exposures. So the banks are sitting there saying, "Well, I have a AAA asset. I don't have any risk." But that's not true. They could even end up losing money even though they have a AAA CLLO sitting in their portfolio. So, this is going to take time to unwind. It's not this month's crisis. Definitely not. But I am going to do a piece next week for the blog that talks about some of these details because it's really, you know, too much to try and go through it on the on the broadcast. >> You did have another piece that came out in the Daily Reckoning that was syndicated in Zero Hedge um that the banks have 1.4 4 trillion in outstanding loans to non-depository financial institutions which I know they're a player in the space but then they have another 2.8 trillion in undrawn commitment sitting on top of that. So the potential exposure is 4.2 trillion. So for every dollar lent >> two more dollars are waiting to be drawn. So do that's okay that's really interesting. Do you think like the I take it the average investor does not understand this. >> No they don't. And and what's going to happen is banks will take losses on this stuff. They will do so grudgingly over time. And you're also going to see the industry pull back some of those unused commitments. And that's going to put pressure on private equity and private credit funds. They're going to really uh I think eventually just going to have to try and sell stuff that they cannot sell. And that's going to be quite a mess. So, see what what's interesting is that the whole notion of private should raise big red flags for most investors. But they were all so convinced that this was a superior trade and that they were going to make more money that they ignored some of these warning signs. They ignored the fact that you were contractually unable to sue the sponsor. They ignored the non-disclosure agreements. So many investors are sitting here today and they have no rights. They're subordinated to the banks that lent money to these things and they literally have no legal rights, Julia, which I think is very unfortunate. >> How do you think that ultimately plays out? Are we going to see a lot of litigation? >> Well, the politics of this are going to be interesting. There's a fascinating litigation going on between Jeff, which was a big lender to uh First Brands, the auto parts maker that had a lot of fraud involved. It collapsed in the bankruptcy. and uh Western Alliance was one of the lender banks. So Jeff put the collateral on one of these loans into a special purpose entity and now they're saying, "Well, it's not ours. You got to go sue the SPE to get your money back." And Western Alliance is saying no. You may recall in 2008 a bank called City Corp or City Group uh had the same situation. The bond holders showed up and said, "Give us our money back." So I think these offbalance sheet entities once again are really at the center of this mess and you're going to see litigation. You're going to see losses and it's going to take years to unwind this. >> You know, as someone who follows the banking sector closely, I believe like last time you said you you really don't have the long exposure to financials. Is that correct? >> No, not right now. The only common I own is Flagstar because I bought it very very deep discount. They're clo, you know, slowly clawing their way out of New York multif family real estate. I know the team. I know the CFO very well, Lee Smith. And I think he's going to turn the bank around. But it's a risky position. I admit I got out of all of the rest of my common back in the fall after we ran all summer. Remember, we had Independence Day, the financials sold off, and then I told everybody who reads the blog, I said, "Guys, load up." So, I bought some Schwab. I bought some American Express, rode those up for a, you know, nice 30 plus% gain and then got out because these, you know, they were expensive. >> You don't you I believe you don't think this is going to be systemic, the private credit issue. >> No, I think it's just going to be painful for a lot of investors, large and small. Banks will take losses, but you know, we know about it. Systemic events occur when people are surprised. That was Jerry Corgan's take on it years ago and I think that's still right. When people are surprised by something that causes markets to move um Independence Day, you know, the whole tariff thing got people sideways and the markets sold off dramatically. That was an opportunity and I think we'll see more of that this year. This year is going to be very interesting. >> Is there any like language that you've been looking for? um you know it seems like every week someone kind of comes out and says oh you know the risk is contained that sort of thing does that >> risk is never contained >> right or does that kind of like make like alarm bells go off when you hear that >> look humans are greedy by nature it's it's part of our need to eat uh we always chase the shiny object and in this case you know you had a lot of bankers who decided that they were entitled to make that 20% uh fee every here and so they loaded a lot of investors into these things that were really not suitable uh to use the term from uh the securities industry. Suitability is a very important thing because it makes you look at time horizons, risk, other criteria that lets you know whether a certain investment is good or bad for an investor. And that didn't happen here. Why? Because it's private. By having these vehicles be in the private market instead of a public market, uh the sponsors were able to commit bad acts and I hope they do get punished for it. Largely the punishment will come via lawyers, you know, death by lawyer. So, um I think the litigation and you know, reputational damage is going to be the primary way that these people get punished. >> This episode is brought to you by Goldco. Have you seen these prices? Of course, I'm talking about the precious metals. Gold and silver have been on an absolute tear, breaking record after record. How far will they go? Well, no one knows for sure. And yes, there will be some pullbacks along the way. But if you want to understand why gold and silver have exploded higher in price and why they could possibly explode even higher in 2026, then I've got the perfect guide for you. It's from my new partners over at Gold Co. They are an amazing company. Head over to goldco.com/therap to get your free 2026 gold and silver kit. And some big news for this audience. Goldco is offering our viewers a limited time bonus offer. You can get up to 10% free gold or silver plus free storage and a free home safe with a minimum cash purchase. There isn't a better deal out there. So go to goldco.com/thereap for more details or click the link below. And I think even in your institutional risk analyst bank book, you've talked about a bunch of these banks have quietly loaded up on private credit risk in a way that investors still don't understand. >> So is there a number that shock people? >> No, but here's what they've done. They've taken a a a senior position in many of these credits and they sold the subordinated tranches to other investors, credit shops, etc. So, the bankers think they're safe. But the joke, of course, is is that when the other tranches in the in the CLO get wiped out, the banks will take losses, too. You also see this with business development companies, Julia. There's a lot of BDC's, both public and private, that have been playing fast and loose with the rules about leverage and the load up on leverage during the quarter, and when they get to the end of the quarter, they push the leverage off using a derivative. And this is fraud. I mean, they're they're actually committing open fraud. But nobody at the SEC is paying attention because, you know, chairman Paul Atkins, who's a friend, is uh spending all of this time on stable coins and crypto. Uh there's a lot of stuff going on in the markets that the SEC and the other regulators ought to be paying attention to. >> Wow. Do you think that fraud is systemic then? >> I think the accounting fraud is systemic when I'm a BDC and I'm limited to two times leverage and in fact I have five or six but then I window dress my financials at the end of the quarter so that my investors don't see it. That's fraud. Very definitely. >> All right. All right. Well, that is a space we'll definitely continue to watch. Um >> Oh, yeah. >> Yeah. Chris, toward the end of last week's episode of the rap, you said something that kind of became the buzzy headline of the episode that you thought the Trump administration would end in a financial crisis. Could you elaborate on that a bit more? And are we already seeing like early warning signs? Yeah, I I think the accumulation of things like what we've been talking about in private credit, real estate, which is still very interesting on the commercial side, and residential housing. uh when the Trump administration rolled back all of the COVID era uh era progressive rules for foreclosure and delinquency, they caused an enormous increase in the visible amount of delinquency in residential mortgages, especially in the FHA and VA. So, I think you're going to be reading about that this year in a big way. It's a cost for lenders because they have to buy those loans back at PAR. And this goes both for agency loans and also private loans. So when that loan goes sideways and the the customer can't pay, the issuer has to buy it back. This is, you know, every few years we have to kind of reckon all of the all of the fun and games that have been going on for the past decade. And that's kind of where we are. We're we're at this point where there's so many things that need to be squared in terms of bringing uh people back down to reality that even if the Fed were to start cutting interest rates very aggressively, you know, next week, uh I still don't think it would help cushion the blow that we are going to feel in a lot of different areas of credit. So that's why I I think, you know, I said that it's very likely that when the Trump administration ends, we're going to be in the middle of a housing price correction, even though obviously it's really hard to find homes right now. Uh but I I do think we are going to see a pretty significant correction by 2028. >> And that would be the misery on the eights that you've been talking about. >> Misery. That's right. >> 2028 because that would be the last year of the presidency for Trump. Okay. Um, okay. Question then. You mentioned like rate cuts. We've talked about rate cuts. I think even last time we might see one this month, but do you think so? Especially with what we've seen with the oil prices. >> A lot of economists are saying that the central banks around the world are going to have to wait because of oil price hikes. My sense is, you know, oil prices is a result of war. It's not a monetary event. It's it's more a case where you you know you have to deal with this externality until it goes away. On the other hand, the economy is clearly slowing. If you look at the jobs numbers, Julia, they got revised downward. >> And I think that the Fed is going to be under a lot of pressure to cut. when uh Kevin Walsh gets confirmed as chair, you're going to see him very definitely pushing for cuts because if you look at the charts, where we are today in terms of interest rates is still quite elevated compared to where we were for the past 12 years. And I think on that basis alone, the slowing jobs market, you're probably going to see at least one, if not two cuts by the Fed this year in short-term rates >> because like a hike would probably be a mistake because if I recall, like before the financial crisis, there was an oil price shock then. Maybe I think prices were higher than today and some central banks raised rates. Is that correct? >> Well, that's right. Some some feel that that is an appropriate policy response, but there's nothing a central bank can do about a war in the Middle East. >> The two are totally disconnected. So, I think the central bankers should stick to their models. Look at what's happening in the jobs market and the economy overall. And clearly, we're going to have an inflationary bump because gasoline prices, other prices for energy are going to move higher. There's no question about it. So the question to my mind is how long does this go on? How long is the straight of Hormuz closed? How how long is that flow of not just oil but chemicals and other products going to be constrained coming out of the Middle East? Uh and I'm not sure there's anything a central bank can do about that, Julia. >> Yeah. Yeah, it's a it is a good point, Chris. Okay, so base case still one to two cuts likely. >> Yeah, I think so. and higher oil prices. We could see oil at $100 a barrel for most of this year, if not the whole year. >> Any concerns around oil being at that level? >> No, I thought it was too low to be honest with you. Um, but that's just a function of the fact that consumption is changing in the United States, new vehicles, new methodologies for technology are causing consumption of energy to fall. And that's a good thing. You're seeing this all over the world. The adoption of of different types of uh technology and vehicles, for example, is slowing the rate of increase in energy consumption. So, you know, if we solved the problem tomorrow with between Iran and the United States, I think oil prices would fall back down to lower than they were before the war started. >> Interesting. Um, and you like energy stocks, if I recall. >> Uh, I have. One of my best trades was En uh Chevron. >> Chevron. >> Yeah. Although al although uh you know I just took some profits there. I had also done very well with Williams the pipeline uh company. >> So you know people need energy. We're not going to stop that tomorrow. But I do think that technology is a very important component in the analysis. You've got to be aware of how different types of efficiency are being introduced into the system that makes it possible to consume less energy. >> Okay. So, I want to go back to housing for a second. Uh because you also wrote that the Senate passed a housing bill that reads like an Elizabeth Warren agenda. I like that. And you also pointed out that Trump's not really paying attention to housing because because of the focus on foreign policy, what's happening in Iran. So, do you think housing's just off the radar then for DC? >> I think that the Senate certainly wanted to move that legislation. There's a lot of things in it, some good, some bad. I'm not sure the House is going to focus on it. And unless President Trump is pushing for the House to move on legislation, it may end up dying in the House. U you know, it's it's interesting. There are parts of it that the Republicans really like. There are parts of it that the Democrats really like, but unless you have an engaged White House that wants to really focus on this, I just don't know how you get it through and get it signed into law. Um, the Trump administration has shown an indifference to housing. They kind of sort of paid attention to it because affordability is such a big issue with voters now. Uh, but other than that, you know, a couple press releases here and there and Fanny May and Freddy Mack buying back their own debt in the mortgage securities market, there hasn't been a lot of substance coming from the White House in terms of housing. Mhm. Well, you just mentioned like the buzzword of the year and that has been affordability. >> Yes. >> Um, >> where do you think President Trump's going to just put his attention then if that we're we're in a midterm year? Like midterms are coming up. So, >> is he cooked at this point? >> Well, given where gasoline prices are headed as we go into the summer, I think that's going to be a big negative for the Republicans. Uh I don't know what got him to suddenly jump uh into bed with BB be Netanyahu and go to war with Iran at this point. Uh but it certainly has changed the calculus regarding the midterm elections rather dramatically. Um I you know there are a lot of Republicans in Washington who are very unhappy about the war. So, I just don't know how they're going to be able to address things like affordability in a, you know, real way uh between now and November. >> Yeah. Um, that will be an interesting one to watch, Chris. Um, okay. So, base case, you think? Well, >> well, we still have $100 a barrel of oil by election day. How about that? >> There you go, then. Yeah, that would open up a whole other can of worms, too, I imagine, too, if the if the midterms don't go his way. Um, okay. So, let's stay on DC for a sec. >> Um, no one's even talking about the budget deficit, it seems like. Um, >> no one's really talking about the dollar either. So, >> what do you think is like Trump's economic endgame here? Do you think it's just Iran tariffs? Like, what do you think? Okay. Well, you're assuming he has one. Um, you know, different agencies in Washington are doing their own thing. The Fed is pursuing some changes for the banks and the SEC is pursuing their pro- crypto policies, of course, but I don't see a cohesive economic agenda coming out of this White House. Uh, Trump tends to get focused on one thing at a time, and right now it's foreign policy. He kind of likes that because it's relatively easy. U the conversation with domestic policy issues is more difficult and I you know like I say I I don't see a cohesive economic program coming from the Trump White House right now. They certainly haven't been able to articulate it if there is one. >> Um has anything changed for you lately from the investor perspective with more of the focus being on foreign policy right now? Has that changed anything for you in the last couple weeks? >> No, I mean the markets have largely ignored what's going on in the Middle East. You know, we had the u sell off in AI related and software related stocks. Obviously, you have the issues with credit and private equity, but the rest of the broad market has been largely unaffected. Um, you know, it's a confused time. I don't see any clear trend one way or another. Some people are betting on lower interest rates, some people are betting on not. Um, so I think there's a lack of a really clear narrative for the markets to follow right now. And you know, basically we're going sideways. Look at gold and silver. >> They've been basically trending sideways this whole time. And you know, that doesn't surprise me because that was really a trade last year where it was short dollar, long gold and silver. Everybody was kind of buying that one. So today uh I think Wall Street is desperately looking for a new narrative and they haven't found one yet. >> So okay, gold and silver though, do you see an opportunity for a breakout or was that just more last year? >> Well, I think last year as we've talked about was rather extraordinary in many ways. So my guess is they're going to kind of go sideways and then slowly back up, especially gold. Uh silver has had a tremendous run. wouldn't surprise me if it corrects a bit now. >> Yeah, I think you pointed out like the one of the silver ETFs was up huge in January. >> I know. Every month we price that group of stocks that we've been uh assembling for our readers and it's it's striking how silver caught up with gold and then passed it. >> It almost did 2x gold. >> Well, I wonder if it's like having its, you know, more of its mainstream moment then for investors. Yes and no. I I I still think the commercial demand uh factor and the lack of deliverable supply are the big things driving silver. If you look at the action in Asia and some of the commentaries that have been coming out of India also it's pretty clear that the Asian markets are now the price setters for silver. There's no question. >> Okay. for the broader markets. Um, you pointed out that Ed Yardini, he raised his meltdown probability to 35%. But, um, when I'm listening to you, you seem less alarmed. So, where do you disagree with him? >> This market wants to stay invested. Uh, I don't see people in this market running for the doors, going to cash, you know, putting uh physical currency under their mattresses. That's just not the way this is playing out. And you know, I think sometimes analysts are looking for old-fashioned sell-offs, old-fashioned crises, when the reality is is that this is an inflated market and the managers have no incentive or desire to to exit. So that to me is, you know, what's holding this up. The ETFs are passive. They're not going anywhere. >> Uh and then most managers in the large and midcap stocks, are they looking to sell and get out? No. Uh, even the financials, surprisingly, commentary you and I have been making and others have been making about asset quality, banks haven't come down that much. >> JP is still trading over tomb times buck. So, when I look at that, what it tells me is that yeah, people are concerned, but they're not concerned enough to go to cash and really pull this market down. >> At least not not yet. >> H, that's interesting. It's an interesting comment too on the passive bit as well. It's come up on the show quite a bit. >> The market. >> Yeah. Folks like Mike Green have talked about that the passive bid. It's been so critical and um yeah was talking about >> when you have selling those ETFs will pull you down faster. >> Yeah. >> That's the dynamic. >> Mhm. That will be the dynamic to watch. Okay. On the financials um because I know you also have the list that you publish. Um, Goldman's now the number one in your Q1 2026 top 50 for the banks and JP Morgan's fallen to 41. What does that tell us? >> Goldman has since given ground. You know, we did that list in the kind of third week of January and since then all of the large caps have basically fallen back to the middle or the bottom of the group. Now, that doesn't mean they've sold off a lot, but it means that other smaller stocks have performed better. Merchants Bank of Indiana was the top last time I looked at at our group. And that's a small regional bank, specialized wholesale bank, but you know, for its own peculiar reasons, it's performed better than the large caps. City, which was one of the best performers in the group last year, fell back dramatically. And of course, SoFi, which was the best performing US bank in most of 2025, is down at the bottom of the group now. So, what that tells you is that, you know, last year was an extraordinary year. You had a lot of narratives that were pushing certain stocks and those narratives have run out of gas uh and people have taken profits. And I just it's striking to me when you see all of these small and midcap names in our bank group in the top 25. >> Yeah. >> Normally you see at least a couple of the large caps. Goldman has been a great performer, but again they have uh given ground. >> What's what's your highest conviction idea right now? >> My highest conviction idea? >> Yeah. >> I think preserving capital is is really where I'm focused. I I don't have any >> really great ideas unlike last year when we were able to make some some real good money. Uh first with the banks and then July August we did a trade with Fanny and Freddy that was very good almost 40%. So I I I don't see clear indicators like that right now. Julia. >> Hey guys, thank you so much for watching this video. If you can just take a quick moment and hit that subscribe button. We are trying to hit our next goal of 100,000 subscribers. Really appreciate you. And back to the video. All right, Chris, the viewer mail. >> Viewer mail. I know. >> Do >> you want me to go through it or do you want to go through it? How do you >> No, you go ahead. I'll I'll answer you. You read them. >> All right. Here we go. Um, and we appreciate your questions, y'all, every single week. All right. This is This comes from the grateful guy. I would love to hear Chris explain how he reconciles his currency debasement thesis long PM with his long analy position. From my understanding, NLY is a highly levered or leveraged sorry paper company, meaning they borrow short to lend long. What if there is a bare steepener? Can you please ask him to expand on this portion of the thesis? >> No, very good question. Um first off realize that REITs are different. Annally buys mortgage back securities. They also buy mortgage servicing rights. They fund themselves primarily short-term not long-term. So they are using the repo markets to fund their securities. Then they have equity and both common and preferred equity and they have to pay a dividend. Right now Annal's dividends almost 13% on the common. The reason a bare steepener doesn't worry me with an agency read like Annalie is that steep is good. They like steep. It has more spread between short-term and long-term. Now, if I'm a property REIT and I own buildings, I have to issue debt, long-term debt, usually 7 to 10 years to finance those assets. So, a bare steepener is bad if I'm running a REIT that owns office buildings. with a agency read these guys hedge very aggressively. So the whole idea of having a lot more difference between long and short-term rates actually helps them. Now to the point about u allocation I'm all in for you know the whole precious metals trade as you guys know but we do have to function in the fiat world. So when it comes to fiat currency you want to maximize your income. It's very simple. That's why I like stocks like Annalie. They pay me good income. So, you have to have both. It's a barbell strategy. On the one hand, I like precious metals because as a long-term uh they're very uh good for the portfolio, and at the same time, I want income in my portfolio. And you, you know, you have to have your tea bills. The next step is something like Annalie because it has high quality assets and they're also very good at managing those assets. There are a lot of other reads, by the way, we have another question about this, um, that do the same thing. And, you know, I think of them as a surrogate for something like tea bills because they pay me three times the yield, four times the yield, in fact. >> Well, speaking of that other viewer question, uh, this comes from Laido. I think I'm saying your screen name correctly. I I don't know. These are these are YouTube comment questions. All right. One question though about Annalie that you keep on mentioning as a good yielding investment. Low beta. Yahoo lists Analy with a beta of 1.3. So does IBKR which is not low at all. 0.5 would be low, right? So did I miss something or what? >> No, you don't miss something. But think about it. A a stock with a beta of 0.5 is going to be something that doesn't react to the market and it's also going to be something that's not going to pay you very much. The whole point of Analy is that they're paying you a levered return. That's how they get that dividend. They have to lever up their assets and that's why they use repo funding for it and that's how they're able to deliver that. Now, what's a high beta stock? High beta stock is something like uh United Wholesale Mortgage or Robin Hood or any of these others, Tesla. Those are around two or higher. And there are some stocks that are even much higher than two. Nvidia was another one. At one point it had a beta of almost three. So when I say it's low beta, to me it's a relative thing. Now why has something like Analy appreciated this way? Because remember this is a REIT. We buy REITs for income. We don't buy REITs for capital appreciation. But the reality is there are a lot of people who will buy an annaly, you know, looking for stock appreciation. And I think they're missing the point. The whole point of a REIT is that they have to pay out 90% of their income in order to continue to have that special status with the IRS because they don't pay taxes. It's what we call a pass through. So what I would say to you is that in relative terms, it's a low beta stock. It's not below one where I, you know, my basis in Analy is 08. That's where I started accumulating it. So that's why I'm kind of indifferent to the price. But yeah, it's okay. It's it's certainly higher than one, but is it a high beta stock? No. Um I I think you have to differentiate between the two. And you also have to realize Analy is very popular. It's got a good management team. People like the yield. And remember that these guys don't issue long-term debt like a property rate does. They fund themselves off of common equity and then they use the repo market for their leverage. So that's how I think about Annalie. >> All right. Final viewer question. Um, they would like for you to comment on whether the seemingly rocksolid employment picture in healthcare and to a lesser degree the growth in high salary tech jobs minus whatever minor AIish layoffs are happening is propping up the economy to such a degree that it has kept the markets, stock, bonds, real estate from unraveling. Anecdotally, this person says they know many people in health care who, despite some grumbles, don't seem to have a care in the world when it comes to job security or their willingness to spend. >> It depends who you talk to in healthcare. If you talk to doctors, they're not happy because the insurance companies are killing them. Uh a lot of sole practitioners in the medical world are being forced to sell their practices to private equity firms, ironically enough uh simply because they have to become employees of insurance companies. Now here I live in Westchester County at the moment and in New York healthcare is one of the leading industries in the entire state. So yes, there is a lot of employment because you have health care institutions that are providing services to all sorts of people. The elderly uh you know New York City is a very important center for hospitals and and medical care around the country. So yes, it is stable but I would tell you that the onslaught by the insurance industry when it comes to healthcare insurance is slowly changing medical care in this country and not in a good way. I can't tell you how many doctors I know who are literally running their practices at a break even >> just because they don't want to sell out and and they're going to retire, >> move to Florida and that'll be that. But you >> a lot of doctors have retired because of it. >> Yes. Or they sell. My my eye doctor, for example, got bought out by a private equity firm. He's not happy with the way it's run, but it solved his problem of what do I do with my practice when I retire. So, that's what's going on here. >> Yeah. Well, Chris, uh, what are you watching next week? >> Well, what are we watching next week? Probably credit, the Fed. Uh, those >> Oh, yeah. We have the FOMC next week. >> Oh, yeah. Wednesday. Let's go. There you go. >> See what's going on. We still don't know what Jerome Powell's going to do. Is he going to stay on the board? Is he going to retire? So, there's a lot of stuff going on with the Fed. I think they're going to fasttrack Kevin Walsh so he gets confirmed as chairman. And really, you know, we're done with earnings. I'm going to be writing about the large banks next week because the Fed will finally release the uh the uh you know, big data set for the large banks. It takes them 75 days to assemble all of this. I don't know why. Um and that's really it. I I think that, you know, the markets still haven't reacted to the war, but that could be coming. And I do think that banks are going to start to have to provide more disclosure to investors about how much exposure they have to private equity and private credit. >> Chris Whan, chairman of Whan Global Advisors, author of the institutional risk analyst. It has been so fun doing this with you week after week. This audience has been amazing. They absolutely love it. They love hearing from you. I love getting to talk to you and listen and learn. Um, it's been an absolute joy and I'm looking forward to continuing this. And I also want to give a special thank you to our partners over at Goldco. You can head over to goldco.comthereap and get your free 2026 gold and silver kit. Thank you to everyone for supporting the rap and we will see you next week. Thank you, Julia.