Daily Commentary

MarketMinder’s View: Several Wall Street firms think the risk of recession is high today amid the Middle East conflict, citing the potential headwinds of higher inflation tied to rising energy prices and an elongated or expanded conflict affecting a bigger slice of global GDP. Now, we acknowledge a US recession is always possible, but the article’s assertion that economists’ raising their recession probabilities somehow signifies “elevated risk” is off base. First and foremost, these outlooks are opinions—forecasts extrapolating today’s conditions forward and, in some cases, presuming things will get worse. Maaaaybe, but what about other possible outcomes—like, what if the conflict concludes quickly and economic activity largely returns to its pre-conflict status? That wouldn’t be unprecedented as resolutions can arise swiftly and unexpectedly, rendering these predictions moot. Secondly, the article’s evidence of the titular “cracks beneath the surface” has some holes. While recent jobs data have been rocky, they are inherently backward looking, reflecting employers’ decisions from months ago. They say nothing about future economic activity. Worries that deteriorating consumer sentiment will hurt spending, which comprises the majority of GDP? Another false fear considering feelings don’t predict future economic activity. To us, rising recession odds are a sign sentiment toward America’s economy has taken a hit recently.

MarketMinder’s View: The UK consumer price index (CPI) stood pat at 3.0% y/y in February, matching analysts’ predictions for an unchanged rate. A closer look at the report reveals a second consecutive month of falling oil and gas prices—just before the Middle East conflict began on February 28—offset rising prices for clothing, jewelry and tobacco products. Stripping away volatile prices for energy, food, alcohol and tobacco, CPI sped from January’s 3.1% y/y to 3.2% in February. Still, this article predictably spends most of its pixels stressing about how war-related energy price spikes risk sending UK CPI skyward. Perhaps, but note two scale-related things here: One, energy prices comprise only around 6% of UK CPI (per FactSet). Two, while it is true higher global energy prices may lead to higher costs for UK households—especially since natural gas is critical in electricity generation—don’t presume this equates to hotter broad inflation to come. Higher prices in a handful of high-profile categories isn’t the same as an economywide rise in prices—the latter requires too much money chasing too few goods and services. That isn’t the case today. Oh, and ditch the monetary policy speculation in here, too. One month’s inflation reading (and predictions for future readings) won’t reveal how the nine voting members of the Bank of England’s Monetary Policy Committee will act at April’s end. There are too many other factors at play.

MarketMinder’s View: We found this discussion of the private credit market mixed overall. On the positive side, it gives a decent primer about recent happenings in the space, noting private credit firms “essentially act as act as banks, but without all the regulations that force actual banks to mitigate risk and make their balance sheets public.” (Also, MarketMinder doesn’t make individual security recommendations and firms referenced here are coincident to the broader theme we wish to discuss.) It also, perhaps inadvertently, illustrates just how opaque the private credit space is—as one columnist cited in the conclusion notes, there isn’t a consensus definition of private credit, let alone any reliable reporting. Where we think this piece misses is the assertion that recent private credit weakness could bring a redux of 2007 – 2009’s global financial crisis. “If private credit sours, big banks that lent to the industry would lose money. In turn, those banks could be forced to tighten lending across the board, including to everyday consumers and small businesses. And that’s where the 2008 Part Two fears kick into high gear.” With private credit’s opaque valuations and illiquidity, the article suggests broader weakness could go unnoticed until it is too late, hitting exposed banks and other financial institutions. Perhaps. But the 2007 – 2009 comparison overlooks several key factors. For one, as the article notes, big banks have around $300 billion in loans to private credit providers (per ratings agency Moody’s, as of October 2025). That number sounds big on paper—and a sudden private credit collapse would cause pain—but those loans represent a fraction of the multi-trillions of dollars in assets on big banks’ balance sheets. Secondly, 2008’s cause wasn’t tied to “toxic assets” but instead more about mark-to-market accounting rule FAS 157 forcing banks to mark their assets to the latest price for comparable securities, spurring a disastrous spiral when some hedge funds offloaded securities at rock-bottom prices to meet margin calls. There is no such analogue to today, and private credit’s troubles are getting far more attention than the mark-to-market accounting rule’s application to illiquid, hard-to-value assets in 2007 did. For more, see our recent commentary, “Putting the Latest Private Credit Implosion in Perspective.”