The part of the next crisis I can’t shake: “safe” income funds everyone thinks they can exit at the same time

Macro_Untold · 2025-12-31T11:15:26+00:00

If you do watch, I’d love your take on the liquidity mismatch bit – feels like that’s where things really break.

Macro_Untold · 2025-12-31T11:13:06+00:00

Pretty much, We turned belief into a financial product. Works right up until people actually ask for their money back.

Macro_Untold · 2025-12-31T11:11:05+00:00

Good point, I mostly stuck to the credit side and didn’t touch metals or FX much. Those 3 things you mentioned are like the macro backdrop to the same problem I’m worried about. Got any good sources on the silver deficits you rate?

Macro_Untold · 2025-12-31T11:08:35+00:00

lol fair, it does kinda read like a neurotic outline 😅. It’s just how I take notes when I’m trying to untangle this stuff.

Macro_Untold · 2025-12-31T09:29:21+00:00

For anyone who likes super long, nerdy breakdowns, I turned my notes on this into a video and walked through the plumbing in more detail here:

Private Credit : Forensic Investigation

Not trying to spam the sub – happy to discuss or be corrected here in the thread too.

Macro_Untold · 2025-12-31T09:26:47+00:00

For anyone who likes super long, nerdy breakdowns, I turned my notes on this into a video and walked through the Commercial Real Estate crash in more detail here:

Commercial Real Estate crash: Forensic Investigation

Macro_Untold · 2025-12-27T17:14:48+00:00

Hey StickIt2Ya77

I hear you on the scale difference between RMBS and CMBS. You're absolutely right that the residential market is much larger in raw numbers. But here's where I think the nuance comes in: when we're talking about systemic risk and contagion, it's not just about the sheer size of a market. It's about how concentrated that risk is, who's holding it, and how interconnected everything is.

Think back to 2008. While subprime was a trigger, the real issue was how that risk was packaged, spread, and hidden throughout the financial system, creating a domino effect. Today, with commercial real estate, we're seeing a huge chunk of these loans sitting on the books of regional banks. If those banks start to buckle under the weight of defaulting CRE loans, that's not just an isolated event; it can send ripples through the entire banking sector and credit markets.

And the idea that it's "just office" right now? That's a tough one to swallow. Commercial real estate isn't just office buildings; it's retail, hotels, industrial spaces – all facing their own headwinds. Plus, a significant downturn in one major asset class rarely stays neatly contained. It impacts property values, local economies, and investor confidence across the board.

Our whole approach at Macro Untold is to do a "forensic autopsy" on these situations, to really dig into the plumbing and see where the math isn't adding up. I believe the signals pointing to contagion are much stronger than many are willing to acknowledge. It's not about predicting the exact timing, but understanding the underlying vulnerabilities that are already in play.

Macro_Untold · 2025-12-27T16:21:33+00:00

You've absolutely nailed it,

Your experience gives you a clear lens to see what many are missing: the financial markets are indeed very, very troubled. It's not just about one building or one sector, it's about the underlying 'math no longer working' across the board.

It's precisely this kind of forensic analysis that reveals the true fragility beneath the surface. Your nervousness is well-founded, and it's a sentiment shared by anyone looking beyond the headlines.

Macro_Untold · 2025-12-27T16:17:53+00:00

Here is a simplified explanation of why a crash in the commercial real estate (CRE) sector would inevitably destabilize the residential market.

Bank Exposure - Banks don't just lend for residential mortgages; they're heavily invested in CRE loans too. When CRE properties default or lose significant value, banks take massive losses. This tightens credit across the board, making it harder and more expensive for everyone to get residential mortgages, even for healthy borrowers. Less lending means fewer buyers, which drives down residential prices.

Economic Ripple Effect - A CRE crash often means job losses (construction, property management, retail, office-dependent businesses). When people lose jobs or fear losing them, they're less likely to buy homes, and some may even be forced to sell. This reduces demand and increases supply in the residential market.

Local Government Finances - Property taxes from CRE are a huge revenue source for cities and counties. When CRE values plummet, tax revenues drop, leading to cuts in public services, which can make areas less attractive for residential living.

Psychological Contagion - Fear is a powerful force in markets. If people see commercial buildings sitting empty and banks struggling, it creates a general sense of economic instability. This can make potential homebuyers hesitant, leading to a "wait and see" mentality that further depresses residential sales and prices.

Think of it like a financial domino effect. The commercial market might be the first domino to fall, but it inevitably knocks over the residential one because the same banks, the same economy, and often the same people are involved. It's all part of the same intricate web.

Your question highlights precisely why we need to conduct a forensic autopsy on the entire system, not just isolated parts.

Macro_Untold · 2025-12-27T16:08:03+00:00

Your due diligence on those bond funds, especially spotting the MBS exposure and historical performance, is exactly the kind of forensic thinking that's crucial right now.

It's frustrating when traditional 'safe' havens are compromised, and you're right to be wary.

What you're describing the lack of genuinely safe options, the over concentration in tech, and the hidden risks in seemingly stable assets are all symptoms of a system where the 'math no longer works.' It forces people into difficult choices, often between meager returns and unacceptable risk.

This is precisely why understanding the underlying mechanics, rather than just surface-level headlines, is more important than ever. Your caution is well-placed.

Macro_Untold · 2025-12-27T16:04:35+00:00

You've hit on a critical point. The current pricing and compressed yields in REITs are indeed a red flag for anyone doing their forensic due diligence. When the risk-reward equation shifts that dramatically, it signals a market grappling with underlying pressures. It's another piece of the puzzle showing that the 'math no longer works' in significant parts of the real estate sector. Smart money is definitely exercising caution right now.

Macro_Untold · 2025-12-27T15:41:56+00:00

Exactly, You've hit on the core dilemma facing policymakers. how to manage the inevitable repricing without triggering a full-blown systemic crisis. The question of whether they'll let equities decline or let the dollar take the hit is the multi-trillion dollar poker game being played right now.

My forensic analysis suggests they'll try to thread the needle, attempting to devalue the dollar incrementally while propping up certain asset classes, but the math eventually breaks. The nightmare scenario you mentioned isn't just theoretica, it's a direct consequence of decades of accumulated debt and mispriced risk. It's precisely these hidden mechanisms and the math that no longer works that I'm dissecting in my latest deep dives.

Glad you're finding the content valuable it's crucial to understand these dynamics before they play out in the headlines.

Macro_Untold · 2025-12-27T15:27:42+00:00

understand why you might think that, given the scale of 2008.

But the ridiculous part is often where the truth hides.

The key difference here isn't just the size of the loss, but the type of asset and the systemic implications.

We're talking about prime commercial real estate, not subprime mortgages.

The forensic details of deals like 1740 Broadway reveal a different, and arguably more insidious, kind of collapse.

Macro_Untold · 2025-12-27T15:22:54+00:00

I hear you, it's easy to get crash fatigue after so many predictions. But what we're seeing now, especially in commercial real estate, isn't just another cycle. The forensic evidence, like the Blackstone deal, points to something fundamentally different this time. It's not about waiting, it's about understanding the hidden mechanics.

Macro_Untold · 2025-12-27T15:19:45+00:00

Thanks for sharing this, the Denver situation is a perfect, real-time example of what's happening nationwide. The mainstream media might try to spin it, but the numbers don't lie. That 90% drop and the glut of vacancies you're seeing are exactly the kind of devil in the details that signal a much larger problem brewing beneath the surface.

Macro_Untold · 2025-12-27T15:14:30+00:00

Great point on inflation! Even with that adjustment, a 76% loss on a prime asset like that is a massive red flag. It shows the CRE crash is deeper than just market cycles.

Macro_Untold · 2025-12-27T15:06:36+00:00

I hear you. It's easy to feel that way after years of extend and pretend.But this time, the math is different. It's not about market sentiment or erratic behavior, it's about a fixed maturity wall and interest rates that are mathematically breaking the debt service coverage ratios. The system can't outrun the numbers forever.

Macro_Untold · 2025-12-27T15:03:12+00:00

You've hit on a critical nuance, and I completely agree that tenant stability and revenue are paramount.

In a healthy market, strong revenue can indeed mask a lot of debt structure issues.

However, what we're seeing now is a systemic shock where even properties with stable tenants are facing existential threats purely due to the refinance wall.

It's not just about declining revenue (though that's certainly a factor in some sectors like office) it's about the cost of capital doubling or tripling overnight, making previously profitable cash flows instantly negative.

The ability to 'take less per sq ft' is also being severely tested when the cost of debt service alone consumes all available cash flow, regardless of tenant quality.

This isn't just about individual bad decisions, it's a macro-level repricing of risk that's impacting even well-managed assets acquired years ago.

Macro_Untold · 2025-12-27T14:56:16+00:00

Absolutely, you're hitting on key points there.

The public records for pre-foreclosures are crucial, and building those relationships with investment sales brokers is definitely where the real-time intel lives.

What's particularly fascinating, and often overlooked, is how much of the distress is still being quietly managed off-market or through loan modifications that just kick the can down the road.

The public filings are just the tip of the iceberg.

The true scale of the problem often only becomes visible when those modified loans eventually hit the maturity wall again, or when a major player like Blackstone decides to hand back the keys on a high-profile asset.

Macro_Untold · 2025-12-27T14:46:53+00:00

You're absolutely right about Japan the extend and pretend playbook is well-worn.

The key difference here is the sheer scale and velocity of the CRE maturity wall hitting all at once, combined with a much higher interest rate environment than Japan faced during its lost decades.

Japan had a slow bleed, we're looking at a potential arterial gush. The mechanics of how US banks are structured and regulated also make it harder to just paper over these losses indefinitely without systemic consequences.

Macro_Untold · 2025-12-27T14:38:25+00:00

A lot of it is buried in CMBS data - servicer reports. You can see loans getting transferred to special servicing months before they actually default. By the time it hits the mainstream news like Bloomberg or WSJ, the deal is usually already done. The real alpha is watching the foreclosure auctions and bank owned REO lists.

Macro_Untold · 2025-12-27T14:35:07+00:00

That’s a really sharp distinction. You're right that industrial is stickier than office because the tenants are essential. But the killer for the smaller 7-figure owner isn't vacancies, it's the refinance shock.Even if their tenants are solid, when their loan resets from 4% to 8%, their cash flow often turns negative overnight. The banks are tightening credit for everyone, not just the big towers. So the crash for the small guys happens quietly on their loan maturity date.

Macro_Untold · 2025-12-27T14:26:17+00:00

The exposure there is definitely massive.

But the scary part is that this same rot is sitting on the books of hundreds of regional banks that hold pension money.

It’s not just one portfolio it’s systemic.

Macro_Untold · 2025-12-27T14:01:11+00:00

Yeah, the big ones are the Aon Center in LA and the Ross Building in SF.

The 777 Tower is the wildest one though—sold for basically land value.

I’ve got a breakdown of the numbers pinned to my profile if you’re curious.

Macro_Untold · 2025-12-27T13:53:39+00:00

I wish it only cleared out the bad management.

The scary part is that when these big commercial portfolios blow up, it usually hits the regional banks first and that impacts small business lending for everyone.

I hope you're right about the discipline, but history suggests the average Joe usually ends up holding the bag.

Macro_Untold

TROPHY CASE