Avi Gilburt

The Financial Stability Board (FSB), the world's global financial regulator, has recently issued another major warning on shadow banking. The watchdog published a report emphasizing that the industry has high leverage and is completely opaque, even to financial regulators.

My broader view on the S&P500 (SPX) is that we are coming to the conclusion of a rally, which can represent a major long-term top in the United States equity market. This would conclude an almost 100-year bull market which began at the bottom of the market crash of 1929. In fact, this could usher in a bear market that would rival the one seen in Japan, which lasted for well over a decade.

In a recent article, the Fed reaches a striking conclusion: post-GFC prudential reforms aimed at large banks have not reduced solvency risk. In fact, deposit-funding risk at large banks has increased. Because the paper has received little mainstream coverage, many may have missed it. We highlight it here because it challenges the prevailing narrative that “large banks are well capitalized and far better prepared for a crisis than before the GFC”- and it does so using the Fed's own analysis.

The recent collapses of Tricolor Holdings, a car dealership, and First Brands, an auto parts company, have triggered a wave of reactions and speculation among mainstream media, analysts, and investors. Many in the investor community appear to have suddenly recognized the extremely high risks embedded in the shadow-banking industry. They also seemed surprised that the largest banks were lending to these companies: JPMorgan and Fifth Third were hit by the Tricolor failure, while First Brands affected Jefferies and UBS, due to their unsecured loan.

Following the recent sharp drop in Zions' share price driven by loan loss provisions, there's been a lot of discussion about the bank. One notable conversation on Bloomberg TV featured the Head of Strategy at a large asset manager and the Head of Research at a major investment bank. Their key takeaway was that the selloff was a knee-jerk reaction because market participants don't track this bank regularly. However, those who follow Zions closely, they argued, know its fundamentals are rock-solid: pristine risk management and underwriting, a comfortable liquidity position, and an excellent, decades-long business model.

The talk of the town in the metals complex has been focused on gold. But, I think silver has yet to see its final parabolic move.

I can provide one word of advice to you regarding the title of this article, which is the same advice that President Biden provided to Iran over a year ago:

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There was a lot of investor hand-wringing and head-scratching experienced this past week. On Wednesday night, NVDA announced its earnings. And, not only was its earnings exceptionally strong, beating Wall Street's expectations for both revenue and earnings per share, they also provided strong forward-looking guidance.

Over the past 12 months, we have published several articles arguing that past-due student loans are very likely to affect the entire retail credit industry. As a reminder, federal student loan payments were paused for 43 months starting in March 2020, pushing delinquencies below 1%. After repayments resumed in September 2023, a one-year "on-ramp" period prevented missed payments from affecting credit reports. That protection expired in October 2024. Since then, more than 17% of student loan borrowers have fallen at least 90 days past due on their payments at least once. As it takes 270 days of missed payments to enter federal student loan default, 4Q25 was the first quarter when new defaults began appearing on credit reports.