Are markets misreading news about Iran?…Households that can’t stomach $100 oil…Private credit pressures extend beyond software…and what to do now
As I write on Tuesday, markets are rising on war news – but the logic behind this rally is worth a closer look…
this morning, Wall Street Journal President Trump has reportedly told aides that he is prepared to end the US military campaign against Iran even if the Strait of Hormuz remains largely closed.
Stocks jumped on the headlines, as I read “War’s End” and bought first, then asked questions later. But this gathering ignores important details…
Nearly 20% of the world’s seaborne oil passes through the strait every day. So, if Iran remains in control of this strait when the weapons subside, has our energy problem really been solved?
While Wall Street seems to be ignoring the issue, the oil patch is not – and the difference between the oil benchmarks, WTIC in the US and Brent in Europe, tells the real story. As I write this article, WTIC is down slightly on the day while Brent is up 5%.
The gap between them is about $15 per barrel, which is close to an 11-year high. This difference reflects the extent to which European supplies are more exposed to the closed strait than American crude oil.
Oil industry executives and analysts warn that the Strait of Hormuz must reopen by mid-April or the supply disruption will worsen dramatically — and even then, enough damage may have been done to leave energy prices high for much longer.
Now, as we go to press, Axios is reporting that China and Pakistan have presented a new plan to end the war that includes an immediate ceasefire and reopening the strait. We will continue to track this as new details emerge, but it is encouraging – and the markets are applauding it.
So, what does this mean for investors?
Wall Street is trying to price the end of active hostilities. This may happen – and if it does, higher relief is justified. But the deeper energy problem will not be solved on ceasefire day, especially if Iran remains in control of the strait.
So, while Wall Street seems to be asking, “Which stocks should I buy?” We’re thinking of a different question…
If Trump ends hostilities with the strait closed, where will oil prices settle as we enter the summer driving season? What does this mean for inflation, Main Street’s balance sheets, and the Fed?
We will continue to track this.
The energy shock we are witnessing today does not affect households that are financially well off
Here’s the uncomfortable context surrounding the recent rise in oil prices…
The pain at the pump doesn’t hit households with low cash reserves and debt. It’s hitting families already stretched to their limits — and the data clearly tells that story.
New numbers from JD Power and Edmunds put some startling numbers on the table.
An estimated 30.5% of trade-in car buyers now owe more on their current car than it’s worth – known as being “underwater.”
The average amount owed on these underwater trades reached $7,214 in Q4 2025, an all-time high. 27% of these trades carried more than $10,000 in negative equity – also a record high.
here Edmunds Consumer Insights Analyst Joseph Yuen:
While these levels of negative equity are nothing new, the amount underwater is the real and troubling story.
When you trade in a car with negative equity, that remaining balance doesn’t go away. It is rolled into your new loan. The average monthly payment for buyers who did just that reached $916 in the fourth quarter of 2025, which is $144 more than the average new-car payment for buyers without negative equity.
40.7% of these passive equity trades are now funded with 84-month loans. That’s seven years to pay off a car that’s likely to be worth a fraction of its purchase price long before the loan is paid off.
Now throw in the possibility we’ve covered yesterday digest The next step for the Fed is interest rates to liftnot cut – and the picture gets darker. Borrowers who are already carrying heavy auto debt aren’t getting a lifeline in that environment…and that pressure has to come down somewhere – which puts lenders in check.
The nation’s largest independent auto lender, Ally Finance (ally)sits right in the middle of all of this, with more than 70% of its $83.9 billion loan book in consumer vehicles.
To be fair, ALLY has tightened its underwriting standards. But its first-quarter 2026 earnings on April 17 will be the first real window into how consumer pressures are impacting its numbers. If delinquency trends deteriorate further, that would be a meaningful signal — not just for ALLY, but for the broader consumer credit picture.
Bottom line: Auto loan data is not today’s crisis – it is a measure of stress. But right now, the pressure is rising.
The same pressure is showing up in a corner of the market that most investors don’t watch
We’ve had several recently Summaries Tracking building pressures within private credit, covers the AI software angle. But recent data from Fitch Ratings suggests this isn’t just a software issue…
The problem is spreading.
According to Fitch, the total private credit default rate rose to 5.8% over the next 12 months through January 2026 — the highest rate since the agency began tracking it. But the industry leading in defaults is not software…
It’s health care.
Health care providers had the highest number of unique private credit defaulters during that period.
The rules of the game that got them here are familiar…
Over the past decade, private equity firms have loaded up dental chains, veterinary clinics and behavioral health networks with debt using the same leveraged buyout strategy they applied to software companies. The idea was identical: fixed recurring revenue and a fragmented market that was ripe for consolidation.
But the cash flows are not holding up. Cuts in Medicaid reimbursement, swelling staffing costs, and the operational complexity of assembling thousands of small practices crushed the margins that were supposed to service all that debt.
Many of these companies have already seen their interest coverage ratios drop below 1.0x – that is, they are no longer generating enough money to cover even the interest on their loans.
Here William Barrett, Managing Partner at Reach Capital, speaks CNBC:
“Funds concentrated in volatile sectors or holding diluted loans with weaker protection are also at risk, as are highly leveraged healthcare groups… Some smaller issuers have recently recorded a default rate of 10.9%, due to a lack of resources to absorb shocks.”
Morgan Stanley’s 2026 private credit outlook independently reflects this concern — and the company notes that it maintains a significant underweight to health care, which has led all sectors in loans made on non-accrual status over the past year.
By the way, healthcare isn’t the only sector flashing red. According to the same Fitch data, consumer products had the second highest default rate, more than doubling over the past year from 6.1% to 12.8%. This is the institutional echo of the kitchen table pressures we described in our story of trading operations gone underwater.
Bottom line: Stress in the private credit market isn’t limited to just one corner. Software is a big problem, but healthcare and consumer products are amplifying this problem.
We tracked it alongside legendary investor Louis Navellier, a magazine editor Stock breakout
Lewis has been warning of private credit pressures since mid-2024, and his concerns have increased dramatically as default data piles up.
It’s a topic he knows inside out — early in his career, he worked as a banking analyst during the savings and loan crisis of the 1980s, and saw firsthand how financial problems pile up long before they became headline news.
This experience shapes how he reads what is happening today:
Financial crises don’t start when they hit the headlines. They start months in advance. Sometimes years.
The first cracks appear quietly. Loans stop performing the way they should. Cash flows weaken. Institutions begin to adjust their exposure.
Most investors don’t notice this until the story gets much bigger.
He’s been watching those early cracks forming in private credit for more than a year. Now he points to a specific date that most investors haven’t caught on yet: June 30, 2026.
As I detailed yesterday, this is the deadline by which business development companies and private credit funds must report their half-yearly results – and, for the first time this cycle, put honest marks on their loan portfolios. The actual value of these assets will become public record.
If the tension building beneath the surface is as significant as the early data suggests – and the Fitch numbers above suggest it is – then June 30 could be the moment when the hidden losses become visible, with real consequences for markets.
Lewis isn’t just warning investors. He’s also outlined specific steps to protect your wallet and profit potential as this story develops.
It’s been compiled Complete presentation He explains what he sees – and where he thinks the opportunities lie on the other side of it. Click here to watch Lewis’ presentation before this story gets bigger.
Coming full circle, today digest It tells one story from three angles
We have an oil market that’s peacefully pricing in while we ignore who still controls the strait… households offering record negative equity into seven-year car loans… and a $3 trillion private credit market where defaults are spreading far beyond where they started.
These are not separate stories. They are different readings of the same stress scale — a financial system built on low interest rates, cheap credit, and steady growth that is now being stress-tested on multiple fronts at once.
One of these stories is already flashing red. The other two are still quietly building in the background – and that’s exactly what’s happening Lewis will tell you that the dangerous always start. Cracks appear small and contained…until they don’t show.
We will continue to track all of this with you here at digest.
I wish you a good evening,
Jeff Remsburg
