Yeah, Something’s Off…
Last week in the markets was pretty ugly… And there’s clearly something building.
The MAG 7 carried the S&P 500 up… but the bottom 493 stocks on the index were effectively flat. Regional banks, private equity, and private credit were weak.
And on Wednesday, we had the worst breadth for the S&P 500 since 1990…
S&P 500 was up 0.23%… while the net advance/decline of the index was a staggering MINUS 294.
What’s the adage? Why was the market down today? More sellers than buyers?
Well… that feels a little backward for this environment…
The Fed is going to end QT in December, but won’t commit to more cuts…
Fine… But there’s something off in the plumbing.
The SOFR rate has been trickling higher than the Fed Funds Rate a few times recently (secured lending rates moving higher than unsecured lending… which is bizarre… and a reminder of the 2019 spasm that led the Fed to pump capital into the system - while claiming it totally wasn’t a form of easing - even though it was a form of system support)…
The issue is what happens if SOFR spikes and leverage starts to unwind?
There are clear concerns about the “cockroaches” that Jamie Dimon discussed recently in the private credit markets. The latest cockroach to arrive as
But we’ll see where the entire nest is when we see the tide really pull back - similar to what we saw in 2022 with FTX and Luna… and some of the other fun schemes uncovered when the water recedes and we see who isn’t wearing shorts…
Stay positive,
Me and the Money Printer
Posted Nov 3, 2025, 9:05 PM UTC