The Eye Of The (Stock Market Sh*t) Storm

The author identifies subprime auto loans, commercial real estate, private credit, and crypto as potential triggers for a stock market downturn. These areas have hidden leverage, opaque valuations, and exposures that aren't fully scrutinized. The subprime auto market mirrors the early stages of the 2008 crisis with rising repossessions and delinquencies. Commercial real estate faces challenges due to declining occupancy and refinancing difficulties, impacting non-bank investors and REITs. Regional banks are particularly vulnerable as they hold significant exposure to these stressed sectors. Looming loan maturities and declining property values could lead to bank failures and mergers. While individually smaller than the pre-2008 housing crisis, these combined stresses, along with crypto and private credit fragilities, pose a threat. Valuations are near all-time highs, masking the underlying risks and creating a calm before a potential storm. The author draws parallels to the 2008 crisis, where losses were visible but not reflected in market pricing. Measures to delay markdowns and reliance on hope are reminiscent of past strategies. The current situation feels like a suspenseful calm before inevitable market recognition of building stresses.