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Dimitry Nakhla | Babylon Capitalยฎ
RT @DimitryNakhla: Visa was JUST trading at a 4% FCF yield & legendary investor Chris Hohn increased his $V stake by +47%, making it 18% of TCI Fund ๐ต
Hereโs what $V has returned (CAGR %) each time it hit a 4% FCF yield for the first time in a given year since 2016
1. +17.8% CAGR | (1/19/16)
2. +16.2% CAGR | (9/27/17)
3. +15.6% CAGR | (2/8/18)
4. +12.2% CAGR | (8/5/19)
5. +15.6% CAGR | (3/16/20)
6. +17.1% CAGR | (3/7/22)
7. +18.0% CAGR | (9/21/23)
8. +13.9% CAGR | (4/24/24)
9. โ | (11/14/25)
___
๐๐๐๐๐๐๐๐๐๐โผ๏ธ
๐๐ก๐ข๐ฌ ๐๐จ๐ง๐ญ๐๐ง๐ญ ๐ข๐ฌ ๐ฉ๐ซ๐จ๐ฏ๐ข๐๐๐ ๐๐จ๐ซ ๐ข๐ง๐๐จ๐ซ๐ฆ๐๐ญ๐ข๐จ๐ง๐๐ฅ ๐๐ง๐ ๐๐๐ฎ๐๐๐ญ๐ข๐จ๐ง๐๐ฅ ๐ฉ๐ฎ๐ซ๐ฉ๐จ๐ฌ๐๐ฌ ๐จ๐ง๐ฅ๐ฒ ๐๐ง๐ ๐๐จ๐๐ฌ ๐ง๐จ๐ญ ๐๐จ๐ง๐ฌ๐ญ๐ข๐ญ๐ฎ๐ญ๐ ๐ข๐ง๐ฏ๐๐ฌ๐ญ๐ฆ๐๐ง๐ญ ๐๐๐ฏ๐ข๐๐, ๐๐ง ๐จ๐๐๐๐ซ, ๐จ๐ซ ๐ ๐ฌ๐จ๐ฅ๐ข๐๐ข๐ญ๐๐ญ๐ข๐จ๐ง ๐ญ๐จ ๐๐ฎ๐ฒ ๐จ๐ซ ๐ฌ๐๐ฅ๐ฅ ๐๐ง๐ฒ ๐ฌ๐๐๐ฎ๐ซ๐ข๐ญ๐ฒ.
๐๐๐๐ฒ๐ฅ๐จ๐ง ๐๐๐ฉ๐ข๐ญ๐๐ฅยฎ ๐๐ง๐ ๐ข๐ญ๐ฌ ๐ซ๐๐ฉ๐ซ๐๐ฌ๐๐ง๐ญ๐๐ญ๐ข๐ฏ๐๐ฌ ๐ฆ๐๐ฒ ๐ก๐จ๐ฅ๐ ๐ฉ๐จ๐ฌ๐ข๐ญ๐ข๐จ๐ง๐ฌ ๐ข๐ง ๐ญ๐ก๐ ๐ฌ๐๐๐ฎ๐ซ๐ข๐ญ๐ข๐๐ฌ ๐๐ข๐ฌ๐๐ฎ๐ฌ๐ฌ๐๐. ๐๐ง๐ฒ ๐จ๐ฉ๐ข๐ง๐ข๐จ๐ง๐ฌ ๐๐ฑ๐ฉ๐ซ๐๐ฌ๐ฌ๐๐ ๐๐ซ๐ ๐๐ฌ ๐จ๐ ๐ญ๐ก๐ ๐๐๐ญ๐ ๐จ๐ ๐ฉ๐ฎ๐๐ฅ๐ข๐๐๐ญ๐ข๐จ๐ง ๐๐ง๐ ๐ฌ๐ฎ๐๐ฃ๐๐๐ญ ๐ญ๐จ ๐๐ก๐๐ง๐ ๐ ๐ฐ๐ข๐ญ๐ก๐จ๐ฎ๐ญ ๐ง๐จ๐ญ๐ข๐๐.
๐๐ง๐๐จ๐ซ๐ฆ๐๐ญ๐ข๐จ๐ง ๐ก๐๐ฌ ๐๐๐๐ง ๐จ๐๐ญ๐๐ข๐ง๐๐ ๐๐ซ๐จ๐ฆ ๐ฌ๐จ๐ฎ๐ซ๐๐๐ฌ ๐๐๐ฅ๐ข๐๐ฏ๐๐ ๐ญ๐จ ๐๐ ๐ซ๐๐ฅ๐ข๐๐๐ฅ๐ ๐๐ฎ๐ญ ๐ข๐ฌ ๐ง๐จ๐ญ ๐ ๐ฎ๐๐ซ๐๐ง๐ญ๐๐๐ ๐๐ฌ ๐ญ๐จ ๐๐๐๐ฎ๐ซ๐๐๐ฒ ๐จ๐ซ ๐๐จ๐ฆ๐ฉ๐ฅ๐๐ญ๐๐ง๐๐ฌ๐ฌ. ๐๐๐ฌ๐ญ ๐ฉ๐๐ซ๐๐จ๐ซ๐ฆ๐๐ง๐๐ ๐๐จ๐๐ฌ ๐ง๐จ๐ญ ๐ ๐ฎ๐๐ซ๐๐ง๐ญ๐๐ ๐๐ฎ๐ญ๐ฎ๐ซ๐ ๐ซ๐๐ฌ๐ฎ๐ฅ๐ญ๐ฌ.
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RT @DimitryNakhla: Visa was JUST trading at a 4% FCF yield & legendary investor Chris Hohn increased his $V stake by +47%, making it 18% of TCI Fund ๐ต
Hereโs what $V has returned (CAGR %) each time it hit a 4% FCF yield for the first time in a given year since 2016
1. +17.8% CAGR | (1/19/16)
2. +16.2% CAGR | (9/27/17)
3. +15.6% CAGR | (2/8/18)
4. +12.2% CAGR | (8/5/19)
5. +15.6% CAGR | (3/16/20)
6. +17.1% CAGR | (3/7/22)
7. +18.0% CAGR | (9/21/23)
8. +13.9% CAGR | (4/24/24)
9. โ | (11/14/25)
___
๐๐๐๐๐๐๐๐๐๐โผ๏ธ
๐๐ก๐ข๐ฌ ๐๐จ๐ง๐ญ๐๐ง๐ญ ๐ข๐ฌ ๐ฉ๐ซ๐จ๐ฏ๐ข๐๐๐ ๐๐จ๐ซ ๐ข๐ง๐๐จ๐ซ๐ฆ๐๐ญ๐ข๐จ๐ง๐๐ฅ ๐๐ง๐ ๐๐๐ฎ๐๐๐ญ๐ข๐จ๐ง๐๐ฅ ๐ฉ๐ฎ๐ซ๐ฉ๐จ๐ฌ๐๐ฌ ๐จ๐ง๐ฅ๐ฒ ๐๐ง๐ ๐๐จ๐๐ฌ ๐ง๐จ๐ญ ๐๐จ๐ง๐ฌ๐ญ๐ข๐ญ๐ฎ๐ญ๐ ๐ข๐ง๐ฏ๐๐ฌ๐ญ๐ฆ๐๐ง๐ญ ๐๐๐ฏ๐ข๐๐, ๐๐ง ๐จ๐๐๐๐ซ, ๐จ๐ซ ๐ ๐ฌ๐จ๐ฅ๐ข๐๐ข๐ญ๐๐ญ๐ข๐จ๐ง ๐ญ๐จ ๐๐ฎ๐ฒ ๐จ๐ซ ๐ฌ๐๐ฅ๐ฅ ๐๐ง๐ฒ ๐ฌ๐๐๐ฎ๐ซ๐ข๐ญ๐ฒ.
๐๐๐๐ฒ๐ฅ๐จ๐ง ๐๐๐ฉ๐ข๐ญ๐๐ฅยฎ ๐๐ง๐ ๐ข๐ญ๐ฌ ๐ซ๐๐ฉ๐ซ๐๐ฌ๐๐ง๐ญ๐๐ญ๐ข๐ฏ๐๐ฌ ๐ฆ๐๐ฒ ๐ก๐จ๐ฅ๐ ๐ฉ๐จ๐ฌ๐ข๐ญ๐ข๐จ๐ง๐ฌ ๐ข๐ง ๐ญ๐ก๐ ๐ฌ๐๐๐ฎ๐ซ๐ข๐ญ๐ข๐๐ฌ ๐๐ข๐ฌ๐๐ฎ๐ฌ๐ฌ๐๐. ๐๐ง๐ฒ ๐จ๐ฉ๐ข๐ง๐ข๐จ๐ง๐ฌ ๐๐ฑ๐ฉ๐ซ๐๐ฌ๐ฌ๐๐ ๐๐ซ๐ ๐๐ฌ ๐จ๐ ๐ญ๐ก๐ ๐๐๐ญ๐ ๐จ๐ ๐ฉ๐ฎ๐๐ฅ๐ข๐๐๐ญ๐ข๐จ๐ง ๐๐ง๐ ๐ฌ๐ฎ๐๐ฃ๐๐๐ญ ๐ญ๐จ ๐๐ก๐๐ง๐ ๐ ๐ฐ๐ข๐ญ๐ก๐จ๐ฎ๐ญ ๐ง๐จ๐ญ๐ข๐๐.
๐๐ง๐๐จ๐ซ๐ฆ๐๐ญ๐ข๐จ๐ง ๐ก๐๐ฌ ๐๐๐๐ง ๐จ๐๐ญ๐๐ข๐ง๐๐ ๐๐ซ๐จ๐ฆ ๐ฌ๐จ๐ฎ๐ซ๐๐๐ฌ ๐๐๐ฅ๐ข๐๐ฏ๐๐ ๐ญ๐จ ๐๐ ๐ซ๐๐ฅ๐ข๐๐๐ฅ๐ ๐๐ฎ๐ญ ๐ข๐ฌ ๐ง๐จ๐ญ ๐ ๐ฎ๐๐ซ๐๐ง๐ญ๐๐๐ ๐๐ฌ ๐ญ๐จ ๐๐๐๐ฎ๐ซ๐๐๐ฒ ๐จ๐ซ ๐๐จ๐ฆ๐ฉ๐ฅ๐๐ญ๐๐ง๐๐ฌ๐ฌ. ๐๐๐ฌ๐ญ ๐ฉ๐๐ซ๐๐จ๐ซ๐ฆ๐๐ง๐๐ ๐๐จ๐๐ฌ ๐ง๐จ๐ญ ๐ ๐ฎ๐๐ซ๐๐ง๐ญ๐๐ ๐๐ฎ๐ญ๐ฎ๐ซ๐ ๐ซ๐๐ฌ๐ฎ๐ฅ๐ญ๐ฌ.
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memenodes
Friend: โSo, you gonna cash out at least now,when Bitcoin hits $100K?โ
Me: https://t.co/hsRKygxmhM
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Friend: โSo, you gonna cash out at least now,when Bitcoin hits $100K?โ
Me: https://t.co/hsRKygxmhM
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WealthyReadings
Stop complaining about the $PYPL CFO telling the truth.
Weakness is here for longer. The mistake isn't on them for being honest; it's on us for selecting a weaker stock than we thought.
Accept the truth and move on. Don't blame it on them.
Focus on your next move. That is all that matters.
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Stop complaining about the $PYPL CFO telling the truth.
Weakness is here for longer. The mistake isn't on them for being honest; it's on us for selecting a weaker stock than we thought.
Accept the truth and move on. Don't blame it on them.
Focus on your next move. That is all that matters.
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EndGame Macro
๐ฏ๐ต The Calm Before the Carry Trade Cracks
Japanโs 10 year yield pushing up means bond prices are slipping and lenders are basically saying, โIf Iโm going to lend to Japan, I want more interest.โ Simple.
Why it matters is Japan has been the worldโs cheap funding source for years. Borrow yen for almost nothing, go buy something that pays more somewhere else. The moment Japanese yields rise, even a little, it changes the math on a massive amount of global positioning.
Even with Japanโs 10Y around 1.89%, the U.S. curve is still sitting much higher, front end near the high 3s, 10Y around 4.06%, 30Y around 4.73%. The UK is even higher at the long end. So yes, Japan is lifting off zero, but globally itโs still cheapish compared to where real yield is being paid.
Now look at USD/JPY. Weโre still around 155+. Thatโs the twist. If Japan were truly escaping the cheap money era in a way markets believed would stick, youโd usually see the yen start to firm. But it hasnโt. That tells you the market still thinks Japanโs move is gradual, and the dollar still has gravity with higher yields, safe haven reflexes, and years of embedded behavior that treats the yen like a funding tool.
So whatโs the outcome?
First, higher Japanese yields start pulling some money back home, not dramatically at first, but enough to matter. Japanโs savings pool is huge. If you can finally earn something domestically, you donโt need to reach as far into U.S. credit, EM, or long duration bets. Even small shifts there ripple because the base is so large.
Second, this should support the yenโฆ but only if it actually compresses the gap with the U.S. and changes behavior. Right now the curves say the gap is still wide, and the FX chart says the same thing in plain language that the world is still choosing dollars, and the yen is still being used like a tool. Fund first, think later.
Third, this is a volatility story more than a Japan growth story. Japan lifting off the floor isnโt just Japan news. Itโs the last big anchor moving. Markets can handle it if it creeps. They struggle if it jumps because a ton of global risk taking assumes yen funding stays cheap and predictable.
My Read
This isnโt about whether the 10 year is 1.89% today. Itโs about the regime shiftโฆJapan is drifting from yields are a policy choice to yields are a market problem again. Once markets believe that, global flow math changes.
And USD/JPY at 155+ isnโt a comfort blanket. Itโs a warning label. It screams one way positioning. One way markets donโt unwind politely. They sit thereโฆ until something forces them to move.
If a global slowdown takes hold (increasingly likely)
That something is usually growth breaking. In a slowdown, U.S. and European yields tend to fall faster than Japanโs simply because theyโve got more room to fall. That compresses the spread which matters for USD/JPY. At the same time, risk off behavior unwinds carry trades and thatโs when the yen can strengthen quickly because people rush to close funding.
So you get the nasty cocktail of weaker growth, falling global yields, spread compression, and a sudden urge to derisk. In that environment USD/JPY doesnโt gently drift lower. It can drop in chunks, because the funding trade flips and money heads home.
Rising JGB yields are the market tapping the glass. Japan isnโt just a country, itโs a funding pillar. And when that pillar starts shifting while USD/JPY is still pinned high, thatโs when the whole room can move all at once.
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๐ฏ๐ต The Calm Before the Carry Trade Cracks
Japanโs 10 year yield pushing up means bond prices are slipping and lenders are basically saying, โIf Iโm going to lend to Japan, I want more interest.โ Simple.
Why it matters is Japan has been the worldโs cheap funding source for years. Borrow yen for almost nothing, go buy something that pays more somewhere else. The moment Japanese yields rise, even a little, it changes the math on a massive amount of global positioning.
Even with Japanโs 10Y around 1.89%, the U.S. curve is still sitting much higher, front end near the high 3s, 10Y around 4.06%, 30Y around 4.73%. The UK is even higher at the long end. So yes, Japan is lifting off zero, but globally itโs still cheapish compared to where real yield is being paid.
Now look at USD/JPY. Weโre still around 155+. Thatโs the twist. If Japan were truly escaping the cheap money era in a way markets believed would stick, youโd usually see the yen start to firm. But it hasnโt. That tells you the market still thinks Japanโs move is gradual, and the dollar still has gravity with higher yields, safe haven reflexes, and years of embedded behavior that treats the yen like a funding tool.
So whatโs the outcome?
First, higher Japanese yields start pulling some money back home, not dramatically at first, but enough to matter. Japanโs savings pool is huge. If you can finally earn something domestically, you donโt need to reach as far into U.S. credit, EM, or long duration bets. Even small shifts there ripple because the base is so large.
Second, this should support the yenโฆ but only if it actually compresses the gap with the U.S. and changes behavior. Right now the curves say the gap is still wide, and the FX chart says the same thing in plain language that the world is still choosing dollars, and the yen is still being used like a tool. Fund first, think later.
Third, this is a volatility story more than a Japan growth story. Japan lifting off the floor isnโt just Japan news. Itโs the last big anchor moving. Markets can handle it if it creeps. They struggle if it jumps because a ton of global risk taking assumes yen funding stays cheap and predictable.
My Read
This isnโt about whether the 10 year is 1.89% today. Itโs about the regime shiftโฆJapan is drifting from yields are a policy choice to yields are a market problem again. Once markets believe that, global flow math changes.
And USD/JPY at 155+ isnโt a comfort blanket. Itโs a warning label. It screams one way positioning. One way markets donโt unwind politely. They sit thereโฆ until something forces them to move.
If a global slowdown takes hold (increasingly likely)
That something is usually growth breaking. In a slowdown, U.S. and European yields tend to fall faster than Japanโs simply because theyโve got more room to fall. That compresses the spread which matters for USD/JPY. At the same time, risk off behavior unwinds carry trades and thatโs when the yen can strengthen quickly because people rush to close funding.
So you get the nasty cocktail of weaker growth, falling global yields, spread compression, and a sudden urge to derisk. In that environment USD/JPY doesnโt gently drift lower. It can drop in chunks, because the funding trade flips and money heads home.
Rising JGB yields are the market tapping the glass. Japan isnโt just a country, itโs a funding pillar. And when that pillar starts shifting while USD/JPY is still pinned high, thatโs when the whole room can move all at once.
Someone explain to me what the outcome of this will be like Iโm a 4th grader.
Seriously.
Paging all bond experts. https://t.co/G34Bu8qLEv tweet
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EndGame Macro
The Yen Carry Isnโt Dead It Just Went Underground
The BIS series only tells you about banks yen denominated cross border loans. That used to be a decent proxy for the classic carry trade back in the 2000s, borrow yen in cash, buy something with a higher yield.
But that world died with the GFC. Not because carry disappeared, but because the plumbing changed. Post 2008, most of the real yen funded activity stopped running through bank balance sheets and started running through derivatives desks, hedge funds, systematic strategies, and cross currency swaps. None of that shows up in this chart.
So when he says this isnโt a carry trade anymore, what heโs really saying is that the old form of it isnโt happening. Which is true.
But it doesnโt tell you much about the new form.
Where the yen trade actually lives now
The modern yen carry isnโt a banker in Tokyo handing out yen loans to a banker in London. Itโs hedge funds running leverage through FX swaps. Itโs multinational corporates hedging in one pocket and investing in another. Itโs CTAs piling into trend trades when USD/JPY breaks levels. Itโs the cross currency basis shifting when global dollar funding tightens or loosens.
These flows matter far more for todayโs market behavior than the balance sheet lending of the early 2000s era. And they all share a single traitโฆthey can unwind fast, violently, and at scale when the yen spikes or Japanese yields move sharply.
You donโt need a huge notional carry stock for that. You just need positioning, leverage, and volatility.
My Read
The old school yen carry isnโt the dominant force anymore. But the conclusion that the carry trade is dead misses the modern dynamics.
The real risk is that the yen is still treated as funding, even if the channels look different. And when a funding currency changes regime, the pain doesnโt show up in a BIS line chart, it shows up in forced deleveraging, margin calls, and cross asset volatility.
So the question isnโt whether the carry trade is dead. Itโs whether markets are still implicitly short yen volatility without realizing it. Thatโs the setup that tends to blow up in real time.
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The Yen Carry Isnโt Dead It Just Went Underground
The BIS series only tells you about banks yen denominated cross border loans. That used to be a decent proxy for the classic carry trade back in the 2000s, borrow yen in cash, buy something with a higher yield.
But that world died with the GFC. Not because carry disappeared, but because the plumbing changed. Post 2008, most of the real yen funded activity stopped running through bank balance sheets and started running through derivatives desks, hedge funds, systematic strategies, and cross currency swaps. None of that shows up in this chart.
So when he says this isnโt a carry trade anymore, what heโs really saying is that the old form of it isnโt happening. Which is true.
But it doesnโt tell you much about the new form.
Where the yen trade actually lives now
The modern yen carry isnโt a banker in Tokyo handing out yen loans to a banker in London. Itโs hedge funds running leverage through FX swaps. Itโs multinational corporates hedging in one pocket and investing in another. Itโs CTAs piling into trend trades when USD/JPY breaks levels. Itโs the cross currency basis shifting when global dollar funding tightens or loosens.
These flows matter far more for todayโs market behavior than the balance sheet lending of the early 2000s era. And they all share a single traitโฆthey can unwind fast, violently, and at scale when the yen spikes or Japanese yields move sharply.
You donโt need a huge notional carry stock for that. You just need positioning, leverage, and volatility.
My Read
The old school yen carry isnโt the dominant force anymore. But the conclusion that the carry trade is dead misses the modern dynamics.
The real risk is that the yen is still treated as funding, even if the channels look different. And when a funding currency changes regime, the pain doesnโt show up in a BIS line chart, it shows up in forced deleveraging, margin calls, and cross asset volatility.
So the question isnโt whether the carry trade is dead. Itโs whether markets are still implicitly short yen volatility without realizing it. Thatโs the setup that tends to blow up in real time.
The Yen Carry Trade Is Dead
Despite a falling FX and low rates, the yen carry trade remains muted. Naked FX borrowing ended with the GFC, with the only thing left a lingering nostalgia for a trade that mattered 20yrs ago.
https://t.co/1h7Zlp3KVQ https://t.co/2llIZerTqt tweet
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EndGame Macro
RT @RVlahutin: Finlandโs underground data centers heat cities ๐๐ป
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RT @RVlahutin: Finlandโs underground data centers heat cities ๐๐ป
Data centres eat electricity.
But their waste heat?
Finland turns it into home heating.
Cities are plugging data-centre heat into district-heating systems โ cutting waste and cutting emissions. https://t.co/78z1icRbBH tweet
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EndGame Macro
When the Market Gets This Narrow, History Doesnโt End Well And Michael Burry Knows It
Burry is talking about a backdrop, the kind of environment that doesnโt break all at once, but grinds people down over time. When you lay the data out, you can see why he stepped back.
A market that looks strong but rests on a narrow base
Right now the top ten stocks make up about 37% of the entire U.S. market. Thatโs the highest concentration in over 50 years. Itโs tighter than the Nifty Fifty era, tighter than the dot com peak in 2000, and even tighter than the U.S. market was in 1929, before the crash wiped out nearly eighty percent of total market value.
Concentration by itself doesnโt cause a collapse, but it makes the whole structure fragile. When the index is carried by a handful of megacaps, leadership doesnโt rotate smoothly, it tends to break. Thatโs how markets shift regimes, and historically that shift is rarely gentle.
A consumer picture that doesnโt match the headline narrative
Underneath the index, households are feeling pressure. Student loan delinquencies are sitting near 9.4%, the highest since the data began. Credit card delinquencies are above 3%, auto loans over 5%, and commercial real estate office delinquencies have pushed past 11% an all time record.
At the same time, consumer sentiment is hovering near the lows of 2022 despite wage growth. When optimism stays weak while missed payments rise, itโs a sign the stress is real. It doesnโt show up immediately in earnings or GDP prints, but it shows up eventually and when it arrives, it tends to reshape the market narrative quickly.
The wall waiting in 2026
Then thereโs the refinancing problem looming ahead. Around $460 billion in commercial real estate loans come due in 2026, most of them written at rates that donโt exist anymore and backed by buildings that are worth less than they used to be. And right beside that sits a U.S. government interest bill that keeps rising, crowding out flexibility just as growth is slowing.
That kind of setup doesnโt trigger a dramatic one day break. It weighs on the system month after month, year after year, until valuations, earnings, and investor expectations finally have to adjust.
What Burry is really getting at
Heโs saying the basic math that held up the last decade doesnโt hold anymore. Potential growth is lower. Potential job growth is lower. Consumers are strained. Debt service costs are rising across households, commercial real estate, and the federal government. And the market has become so narrowly led that it resembles the most extreme historical periods, including 1929.
This is called realism. When the underlying regime shifts, returns donโt collapse in a straight line, they just get harder, more volatile, and more disappointing. Thatโs what a number of bad years looks like. Itโs not spectacular. Itโs tiring.
And thatโs the world Burry is describing.
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When the Market Gets This Narrow, History Doesnโt End Well And Michael Burry Knows It
Burry is talking about a backdrop, the kind of environment that doesnโt break all at once, but grinds people down over time. When you lay the data out, you can see why he stepped back.
A market that looks strong but rests on a narrow base
Right now the top ten stocks make up about 37% of the entire U.S. market. Thatโs the highest concentration in over 50 years. Itโs tighter than the Nifty Fifty era, tighter than the dot com peak in 2000, and even tighter than the U.S. market was in 1929, before the crash wiped out nearly eighty percent of total market value.
Concentration by itself doesnโt cause a collapse, but it makes the whole structure fragile. When the index is carried by a handful of megacaps, leadership doesnโt rotate smoothly, it tends to break. Thatโs how markets shift regimes, and historically that shift is rarely gentle.
A consumer picture that doesnโt match the headline narrative
Underneath the index, households are feeling pressure. Student loan delinquencies are sitting near 9.4%, the highest since the data began. Credit card delinquencies are above 3%, auto loans over 5%, and commercial real estate office delinquencies have pushed past 11% an all time record.
At the same time, consumer sentiment is hovering near the lows of 2022 despite wage growth. When optimism stays weak while missed payments rise, itโs a sign the stress is real. It doesnโt show up immediately in earnings or GDP prints, but it shows up eventually and when it arrives, it tends to reshape the market narrative quickly.
The wall waiting in 2026
Then thereโs the refinancing problem looming ahead. Around $460 billion in commercial real estate loans come due in 2026, most of them written at rates that donโt exist anymore and backed by buildings that are worth less than they used to be. And right beside that sits a U.S. government interest bill that keeps rising, crowding out flexibility just as growth is slowing.
That kind of setup doesnโt trigger a dramatic one day break. It weighs on the system month after month, year after year, until valuations, earnings, and investor expectations finally have to adjust.
What Burry is really getting at
Heโs saying the basic math that held up the last decade doesnโt hold anymore. Potential growth is lower. Potential job growth is lower. Consumers are strained. Debt service costs are rising across households, commercial real estate, and the federal government. And the market has become so narrowly led that it resembles the most extreme historical periods, including 1929.
This is called realism. When the underlying regime shifts, returns donโt collapse in a straight line, they just get harder, more volatile, and more disappointing. Thatโs what a number of bad years looks like. Itโs not spectacular. Itโs tiring.
And thatโs the world Burry is describing.
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