저자: EurodollarUniversity진행자 · 외국인
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마이클 버리가 주식시장이 고점에 가까우며 1987년식 급락 위험이 있다고 주장한다는 내용을 전하며, 신용사이클 하강 신호(사모신용 부실, 투자등급 채권의 정크화, 크레딧 스프레드 확대, Tricolor·First Brands·Radiant·MFS 등 사기성 담보 사례)를 근거로 든다. 장단기 금리차 평탄화와 노동시장 약화도 신용사이클 하강과 연결된다고 본다. 다만 고점 시점은 예측할 수 없으며 상승 여력이 남아있을 수 있다고 인정한다.
다듬은 글
So, Michael Bury, known for the movie The Price Is Right, made a statement that the stock market is nearing a peak, and, in fact, according to him , there is a risk of a crash or a 1987-style market correction. I'm currently on the island of Saint Barthélemy at Hugh Hendry's Asset Capital summer camp , which, by the way, has a great atmosphere, and I advise everyone to visit this place if they have the opportunity.
One reason is the opportunity to talk to very successful traders, portfolio managers, and investors about exactly what we will be talking about here. And I have to say that the sentiment here is very similar to what Michael Bury is talking about. Honestly, when I was here last year in August 2025, everyone expressed the same sentiment, but this year there is a significant difference compared to last year.
And another thing that connects our conversations about the stock market and potential recession to 1987 is the credit market. The credit market cycle this year is different from last year, which increases the danger for the stock market. Yes, the credit market and the stock market have certain common features.
They have certain relationships. So let's talk about stock market risks in the context of differences in the credit cycle. And we potentially have another "cockroach" in the credit cycle, a credit cycle downturn, which is starting to appear in a very familiar place. So , Michael Bury says he's going to play against this rally, even as the S&P hits new record highs .
He says we are close to a significant peak and possible 1987-like drop . I, you know, no one can guess the peak, and maybe there's still some potential for growth left. However, as I said, this is a mood we encounter again and again. It's just that no one is ready to bet against it yet. This is where the credit market and the credit cycle become important, primarily in terms of sentiment, because when the credit cycle changes, it means that risk appetite starts to move in a different direction, as do cash flows.
Cash flow is important at some level, but really, when the credit cycle turns, it forces everyone to take a fresh look at risky assets in general. And as I said in yesterday's video and in previous videos not too long ago, private credit is just the beginning, very likely just the beginning. We're likely to see the credit cycle as a whole affect very different parts of the credit markets, not just private credit, not just the cockroaches in private lending, but also, as we'll see here, public credit, credit spreads and junk bonds, as well as investment-grade hyperscalers and AI.
Overall, what I'm saying here, and what I think Michael Berry is saying, which we'll get to now, is that everything is actually interconnected. And when everything is truly interconnected, and the situation starts to change in one part, the chances that it will spill over into all of these risky asset markets increase significantly.
And I think that's Berry's message, and again, I'll echo it here in St. Barts, as Hugh Hendry says, it's a sentiment that's widely shared not just by veteran traders but by really good professionals who know how to invest money. Again, they would never say "I predict a peak," but you see the risks of it increasing because it all looks very familiar.
In many ways, it looks as if it has already been there, or as if it is just starting to appear on the market. So, as Berry says, I continue to believe that we may be close to a major peak, and perhaps a 1987-type dip. But, again, it's a sentiment that's widely shared. This looks like a peak, but setting new highs will attract new money into the market, new investors, so a new high could lead to further growth , and we don't know when it will reverse.
It will turn around, but the question is when . This is truly the mood being expressed. We know it will turn around, we just don't know when it will happen or what the specific reason for it will be. However, the background, again, as I said last year, is the same sentiment, and year after year the stock market continues to rise.
But the difference this year compared to last year, the year before, or the years before is the credit cycle. We are seeing increasing signs that the credit cycle has changed, and as Berry noted in his report, even the demand for AI infrastructure is being fueled by financial mechanisms that may prove unsustainable.
This is not just a reference to private credit, but again to the credit cycle in general. Now, before we get to the " cockroaches" and what's happening with private lending today, let's recap a bit and talk about 1987 . Let's look at the 1987 crash through the lens of the credit cycle. It was a very short credit cycle in many ways, depending on how you date it, but it lasted from about 1981-82, or rather from the bottom in 1982, to 1987, well , '86-87; the credit cycle was intense and relatively short by today's standards.
But it was a four-year intensive cycle during which lending growth was simply stunning. I'm showing you here the domestic banking sector versus the domestic non-banking sector for a reason. The reason I brought in the domestic non-bank sector here —that's pension funds and insurance companies—is because it should sound very familiar to you.
Much of the credit growth, as you can see, reached a level of about 20% in '86 and early '87. Growth rate of 20% from non-banking institutions. Shadow banking, shadow banking is familiar to us from the cycle we are talking about now. Even before we reached 1986 and 1987, bank lending began to slow significantly.
So there were already signs that the credit cycle was at least slowing, and as I will now explain in the context of the growing savings and loan ( S&L) crisis, it wasn't just a slowdown in lending. This was truly the first stage of the downturn in the cycle. So the crash of '87 is reflected here in both graphs, and you see that non-bank lending is slowing down quite dramatically .
Bank lending has already slowed significantly , but the point is that if you look at the period immediately after 1987, 1988-89 and then 1990—this is a real credit cycle downturn driven by the banks and the S&L crisis. So from mid- 1987 to the end of it, concerns about the credit cycle and the state of the banking sector, at least the S&L part, began to become major factors in all risk markets.
And, as I said, the money stopped coming in at the same rate as before. It was still growing tremendously, but second derivatives matter here , and the credit cycle had already begun its first phase of decline. And there were very good reasons why there were such serious concerns about the credit cycle, beyond just the potential losses and lending problems that could arise.
When you look at bank failures. Bank failures by year. The crisis of savings and loan associations. We started seeing an increase in bank failures in the early 1980s, but the real problems started in '85, '86, and of course, '87. In 1987, the number of bank failures was in the hundreds for the third year in a row , which meant that this was not just an ordinary credit cycle.
Many feared that 1987, or the savings and loan crisis of the mid-1980s, along with the 1987 crash, was too reminiscent of the Great Depression. Although this was a false impression of what the Great Depression really was. But, again, the point is that by the time the market peaked in 1987—a local peak or a short-term, medium-term peak in the stock market—there were serious concerns about the state of the banking system and the credit markets.
This is indeed a parallel that we should pay attention to. Not the specifics of the 1987 crash , like computer trading, quants, or anything like that, but the combination of stock markets that more and more people are questioning— both at a fundamental level and about the state of the stock market itself , as well as what's going on behind the scenes.
In fact, this is serious money that is in the credit market in the credit market cycle. There were very serious concerns about the credit cycle, which were building up in the mid-1980s and peaking in the late 80s with the crash of 1987, not coincidentally in the middle of that process, because they were caught in a pretty significant downturn in the credit cycle.
I think that's the main point; I don't want to attribute words to Michael Bury that he did n't say, and I haven't seen the full report, but as soon as I saw that connection, I knew that was exactly what he meant . It is this connection to the credit cycle that is of great importance when we assess the potential for the stock market to peak and then reverse .
So, the parallel here is obvious. By the way, I'll just remind everyone that we have a webinar on August 9th, which is this Sunday, at 5:30 PM Eastern Time. We will talk about using information about Eurodollars. First of all, the webinar we did a few months ago, or was it actually in June? Yes, I think it was a few months ago.
At the end of June, a little less than 2 months ago, 6 weeks ago, we talked about why Euro Dollar University does what it does, what our methodology is, why it's so different from what you hear in the mainstream, how we approach the mainstream from the same " blind spot" that is monetary information , and of course, how to use this information in the context of portfolio management.
In this version of the webinar, we're going to go a little further than we left off last time, talk about how to spot phase shifts, what to do with a phase shift, because it's all about the phase shift, as I talked about in yesterday's video, looking for a regime change, a phase shift or a change of state, whatever you want to call it, in the bond market, because the bond market, of course, is a huge signal for everything we're talking about here, not just in terms of interest rates, bond yields and curves, but also the macroeconomic implications of what bond yields and a change in the bond market would actually mean if that happened.
So, join me on Sunday, August 9, 2026, at 5:30 PM Eastern Time. We will delve into portfolio management using Eurodollar information, and why people don't use other information. Also , it's August 9, 2026. August 9th, which is a sort of "Easter egg" for Eurodollar University fans, if there are any. So, let's go back to the credit cycle.
Latest news, okay . We talked about private credit so much that we were blue in the face. Private credit, yes, there is a certain gap there. We know about asset buybacks. The number of inactive loans is increasing. Fitch says the level of losses is reaching record levels. And now that Fitch says that loss rates are reaching record levels, those losses are largely driven by maturity extensions rather than payments in kind, borrowers who fall behind delay interest payments, while maturity variances and maturity workarounds are where you start missing principal payments.
That was a big problem, but now we're seeing that in the public lending space, in the public markets, we're starting to see investment-grade bonds trading more and more like "junk" bonds. This is Oracle, this is, you know, Stellantis—this is what they were talking about here . But essentially, you see well-known companies that had investment- grade ratings trading as if they were about to lose them, and then the rating agencies will catch up and downgrade those loans, making them what are called " fallen angels." The more "fallen angels" we see, as Mr.
Paul Benson says in the quote , the more it confirms the dynamics of the late credit cycle, which brings us back to the stock market comparisons of the 1980s. Late credit cycle dynamics: The more people become aware of it, the more they become inclined to avoid risk in all these risky markets, including stocks.
And it doesn't help when the stock market has sky-high valuations, where valuation actually matters. They really matter to people who are trying to estimate how expensive a stock is. But essentially, it's not. I mean, we all know that stocks have gone up significantly. We know how expensive they became and how overheated the rally was.
So this is, as Michael Bury says, a very dangerous combination: stocks do one thing and credit markets do another. So, the more people recognize late- credit cycle behavior, the more risks arise for all types of assets, including stocks. So we not only have " fallen angels" -- I talked about this in a recent video -- but also credit spreads in other public markets.
These are spreads on junk bonds, especially triple Cs . You see credit spreads widening. And the last connection here, as I mentioned in that video recently, leads to Tricolor First Brands, our first encounter with " cockroaches." So, the "cockroaches " appear, and suddenly the market asks, "Hey, what's going on here?" He doesn't just ask, "Hey, what's going on here?" This is starting to change the behavior that got us on this trajectory, not just through private loan buyouts and all the metrics we just looked at, but also in the public markets.
Public markets are also becoming more cautious. Now, this is not a panic. This is not a disaster. But, as I've been pointing out since last year when we first started talking about Tricolor First Brands, all of this represents perhaps a slow gradual escalation, but an escalation nonetheless. The credit cycle continues to develop further along the path to a credit cycle downturn.
And the credit cycle downturn is marked not only by these measures , metrics, and examples, as I mentioned, it is also marked by " cockroaches." So, the latest news from Jefferies. Jefferies says , well, we've heard the name Jefferies in the private lending space before. And why this is important and how it affects the credit cycle—that's what we see all the time with these "cockroaches." If you've been watching me since last year, you know exactly what I'm going to say now.
This is the main problem we have not only in private lending but also in the driving force of the credit cycle. This is a constant reminder of how terrible the behavior was during the uptrend phase of the credit cycle. The underwriting standards, we keep hearing, were impeccable, at least according to those within the system who conducted this underwriting.
They say they did a great job and there is nothing to doubt , although time and again we see that it was worth doubting everything. They didn't do proper due diligence. Their underwriting was worthless. And the more evidence we see of this, the more it shows that this wasn't one or two incidents, some isolated problem here or there.
It was truly systemic and even endemic. Which is worse: endemic, then systemic. It becomes endemic and then becomes systemic. But, actually, that's the point. We see that it is now August 2026 , almost exactly a year after Tricolor, and we continue to find new evidence of the same behavior that is fueling what most perceive as a slow decline in the credit cycle.
So, Jeffries is a name that comes up again. And if you remember Point Bonita Capital, it goes back to November of last year, when UBS funds first reported that they were facing liquidations, and one UBS fund was closed due to the impact of First Brands. It wasn't just UBS funds. Jefferies' name came up, as did Point Bonita, for the same reason as that UBS fund: because of First Brands' influence and how they failed to spot what was at the time a blatant fraud.
This was not Jeffries' first experience with a " cockroach." If you remember, earlier this year...but before we get to that, let's talk about the last case. Jefferies now has influence...well, first of all, this fund, Point Bonita, has been in the process of being liquidated ever since the First Brands losses last year.
They were trying to return as much money to investors as possible and, according to a Bloomberg report, were very close to doing so until another one came along called Radiant. If you follow the commodity market, which I highly recommend you do. Actually, I did this in yesterday's detailed analysis for Eurodollar University subscribers, we talked about iron.
Radian is a player in the hardware business. And Radian, as it turns out, at least according to the assumptions and accusations that we are getting now, looks like another " cockroach" crawling out. You have fake invoices that serve as collateral, and which no one has yet exposed as fake. So, here we are a year after Tricolor, especially First Brands , but Tricolor and First Brands with their fake collateral, questionable collateral and committed frauds.
So everyone on Wall Street was on alert. And since then we have only heard promises . We, we'll figure this out. We, we're going to fix the situation. Yes, we need to fix the situation. We are going to correct our behavior. Uh, so all we've heard for the last year is "we won't do that again." It won't happen again, but it keeps happening again and again.
We continue to see the same thing where it matters, where it hurts the most, namely in security situations. So, Jefferies has another problem brewing with Radiant. We have a few financiers exiting Radiant, which will probably, let's be honest, lead to the collapse of Radiant, and then we'll see what's really going on there.
But another "cockroach" appears. And as I just mentioned, Jeff...this is not, this is not the first time with Jefferies. This is not the second incident with Jefferies. In fact, this is the third case we know of. If you remember, back in February there was another " cockroach", very similar circumstances, MFS in the UK.
And MFS , again, fake accounts, uh , collateral issues, fraudulent collateral, double counting, double collateral, all the same type of behavior. That's why it's so disturbing, because over and over again, no matter how much time passes, we keep encountering the same thing . They keep saying, " Okay, maybe we didn't do enough due diligence." " Now we will definitely hold it." They said this in February.
In February, when the news about MFS came out , they said, "Hey, we're looking for this type of fraudulent behavior." We are ready for this. And they still ca n't catch it . It's still there. Um, as the quote says: “For the last 6 months, the market has been constantly talking about how to prevent fraud .” Target groups were created.
New products have been developed to combat fraud. "Yet it shows that there may remain weaknesses in the ability to detect it." This was in February. After 6 months, we received another case. So, again, as the meme says, "Yes, this is worse because it shows another example, the same type of bubble behavior surfacing, despite promises that we did n't actually do it, but if we did, we'll fix it and make it right." We will notice it before anyone else, and the same thing keeps happening again, and again, and again.
So you can really understand where the credit cycle downturn is at least starting from, because it has all the same hallmarks as credit cycle downturns like in the 1980s. There are many similarities with the 80s and the savings and loan crisis, because it was n't just them then. Non-bank institutions, the so-called " shadow banks" of the time, were also involved.
But the overall message about the stock market, Michael Burry, and 1987—what makes this year different from the last —all comes down to where we are in the credit cycle. And the further we move in the wrong direction, toward a credit cycle downturn, the greater the risk not only for stocks but for everything else going forward.
This applies not only to private lending. The role of private lending is very similar to what we saw in subprime mortgages in 2008. This exposed all the weak points and set off a snowball that had already rolled down far enough and was starting to gather more and more snow. And the bigger the snowball gets , the harder it is to stop it before it hits the bottom and starts destroying everything .
So, that's where all these sentiments come from. The sentiment is driven by the credit cycle, not just private lending, which is increasingly heading for a downturn. At the very least, if not complete confirmation, then at least strong evidence that we are in the downturn of the credit cycle, that there was enough cause for concern during the upswing, and the situation is quite serious, and getting even more serious.
And there's really not much we can do about it, because this is the third time we've seen the Jefferies and " cockroaches" situation, despite increased awareness about it. One last point that I talked about in yesterday's video: of course, this is a factor affecting the yield curve. So, everyone is talking about inflation, rising rates, Treasury issuance , or any other explanation for why the 30-year bond hit its highest rate since 2007 last week .
It doesn't matter. As I mentioned in yesterday's video, the flattening of the yield curve is important, and that flattening is not just driven by macroeconomic circumstances here in China or the rest of the world. The labor market is where the tension lies. We saw this in yesterday's JOLTS data, which I also analyzed in detail.
But the flattening yield curve suggests that the market is expecting a decline. In financial and macroeconomic terms, these two things really go hand in hand. As we know, the weakness of the labor market, the flattening of the curve—this means that not only consumer borrowers will be under pressure, but also their employers.
After all, if they refuse to hire, implement a de facto freeze on vacancies, reduce working hours, they lose the ability to repay debts to all these private creditors, owners of "junk " bonds, CLOs, and so on along the chain. So, all these factors point in the same direction. The credit cycle downturn, the weakness of the economy, the flattening of the yield curve, Michael Bury, who remembers 1987.
Although we are not there yet, more and more parts of the system continue to line up in this direction, which means that the risks of such a scenario are significantly higher now than they were a year ago. So take it as you will. Take Michael Bury's statements as you wish. But I think that deep down most people feel that yes, it really is.
Even if we don't know for sure when all this will happen. And it's entirely possible that we could be sitting here and I'll be visiting Hugh Hendry's Asset Capital next week, next summer, in August 2027 . We could still be talking about stock markets at true peaks. These are long processes. I mean, if you go back to the 1980s.
The savings and loan crisis took several years to unfold. But the further we move in both equities and lending, the greater the risks become.
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