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me in my room deciding if I should sell for a loss or starve to death https://t.co/ZVlBPrUWYi
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me in my room deciding if I should sell for a loss or starve to death https://t.co/ZVlBPrUWYi
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Dimitry Nakhla | Babylon Capital®
RT @DimitryNakhla: 10 Quality Stocks & CAGR Potential Based on 2028 EPS Est & Reasonable Multiples 💵
1. $V 12% | 27x
2. $SPGI 12% | 28x
3. $MSFT 12% | 29x
4. $NVDA 13% | 25x
5. $ABNB 13% | 26x
6. $MA 13% | 30x
7. $BKNG 14% | 21x
8. $ICE 14% | 25x
9. $AMZN 15% | 28x
10. $MELI 17% | 33x
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RT @DimitryNakhla: 10 Quality Stocks & CAGR Potential Based on 2028 EPS Est & Reasonable Multiples 💵
1. $V 12% | 27x
2. $SPGI 12% | 28x
3. $MSFT 12% | 29x
4. $NVDA 13% | 25x
5. $ABNB 13% | 26x
6. $MA 13% | 30x
7. $BKNG 14% | 21x
8. $ICE 14% | 25x
9. $AMZN 15% | 28x
10. $MELI 17% | 33x
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EndGame Macro
Did you know that if you add Subchapter V filings back into Chapter 11 rebuilding the data the way it looked before 2020 the current bankruptcy picture today lands almost exactly in Great Financial Crisis territory?
Look at the comparison…
Great Financial Crisis totals
• 2008: 10,000–11,000
• 2009: 14,000–16,000 (the peak)
• 2010: 12,000–13,000
Reconstructed 2023–2025 totals (Chapter 11 + Subchapter V)
• 2023: 9,441
• 2024: 11,531
• 2025: 11,300–11,500
Once you restore Subchapter V to where it used to sit, the current cycle stops looking normal and starts looking a whole lot like the late 2000s.
tweet
Did you know that if you add Subchapter V filings back into Chapter 11 rebuilding the data the way it looked before 2020 the current bankruptcy picture today lands almost exactly in Great Financial Crisis territory?
Look at the comparison…
Great Financial Crisis totals
• 2008: 10,000–11,000
• 2009: 14,000–16,000 (the peak)
• 2010: 12,000–13,000
Reconstructed 2023–2025 totals (Chapter 11 + Subchapter V)
• 2023: 9,441
• 2024: 11,531
• 2025: 11,300–11,500
Once you restore Subchapter V to where it used to sit, the current cycle stops looking normal and starts looking a whole lot like the late 2000s.
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Offshore
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EndGame Macro
The LEI And CEI Ratio Just Sent Its Loudest Warning Since 2008
This chart is basically a window into how the future of the economy is lining up against the present. The leading index tracks the things that tend to move first like new orders, credit availability, hiring momentum, lending standards, financial conditions. The coincident index reflects what’s happening right now with jobs, incomes, production, and consumer spending.
When the ratio starts dropping slowly, it means the outlook is cooling.
When it falls as sharply as it has here, it means the forward looking part of the economy is breaking away from the current conditions story in real time.
And the fact that it’s down near 0.85 the lowest level since 2008 doesn’t sit in isolation anymore. We now have a matching pattern across the fundamentals with rising consumer delinquencies, record student loan stress, auto loan defaults hitting levels we haven’t seen since before the pandemic, credit card delinquencies past 12%, and commercial real estate near 10% delinquency. Add to that the surge in corporate bankruptcies in 2025 now on track for a 15 year high and you suddenly see this chart less as a theoretical signal and more as a reflection of what’s already gathering under the surface.
The ratio is simply translating what the rest of the data is whispering that the future is deteriorating faster than the present acknowledges.
How Reliable Has This Been Historically?
This measure has always been used as a directional indicator, not a stopwatch. It won’t tell you the exact moment a recession starts, but it has a long track record of flagging when the underlying trajectory has turned. Before every major downturn including the 2007–09 financial crisis this ratio broke first, sometimes a year or more before the coincident data caught up.
It’s not flawless. You can get false positives in weird environments where policy props things up or where one sector takes a hit without dragging down the whole system. But the reliability comes from the persistence and the depth of the decline. Historically, once this ratio falls below certain levels and stays there like the 0.85 range we’re in now the economy has never avoided a meaningful slowdown.
And when you pair that with what we know today with student loan delinquencies hitting all time highs, auto loans and credit cards showing pre recession patterns, office real estate cracking, and nearly 800 corporate bankruptcies projected for the year you no longer have a standalone model. You have convergence.
What It Means Right Now
The chart is essentially confirming what the underlying stress data is already saying, the forward slice of the economy has turned, even if the coincident numbers still look serviceable.
The question now isn’t whether the warning is real, it’s whether the coincident side can hold up long enough for the leading indicators to recover. Historically, that’s not how it plays out. When household delinquencies rise across every major loan category, when recent grads are entering the workforce with higher debt and weaker credit, when corporate bankruptcies climb to their highest level since 2010… the coincident index rarely stays immune for long.
The ratio is simply telling us, with the same rhythm it always has, that the next phase of the economy is already taking shape and the rest of the data is starting to agree.
tweet
The LEI And CEI Ratio Just Sent Its Loudest Warning Since 2008
This chart is basically a window into how the future of the economy is lining up against the present. The leading index tracks the things that tend to move first like new orders, credit availability, hiring momentum, lending standards, financial conditions. The coincident index reflects what’s happening right now with jobs, incomes, production, and consumer spending.
When the ratio starts dropping slowly, it means the outlook is cooling.
When it falls as sharply as it has here, it means the forward looking part of the economy is breaking away from the current conditions story in real time.
And the fact that it’s down near 0.85 the lowest level since 2008 doesn’t sit in isolation anymore. We now have a matching pattern across the fundamentals with rising consumer delinquencies, record student loan stress, auto loan defaults hitting levels we haven’t seen since before the pandemic, credit card delinquencies past 12%, and commercial real estate near 10% delinquency. Add to that the surge in corporate bankruptcies in 2025 now on track for a 15 year high and you suddenly see this chart less as a theoretical signal and more as a reflection of what’s already gathering under the surface.
The ratio is simply translating what the rest of the data is whispering that the future is deteriorating faster than the present acknowledges.
How Reliable Has This Been Historically?
This measure has always been used as a directional indicator, not a stopwatch. It won’t tell you the exact moment a recession starts, but it has a long track record of flagging when the underlying trajectory has turned. Before every major downturn including the 2007–09 financial crisis this ratio broke first, sometimes a year or more before the coincident data caught up.
It’s not flawless. You can get false positives in weird environments where policy props things up or where one sector takes a hit without dragging down the whole system. But the reliability comes from the persistence and the depth of the decline. Historically, once this ratio falls below certain levels and stays there like the 0.85 range we’re in now the economy has never avoided a meaningful slowdown.
And when you pair that with what we know today with student loan delinquencies hitting all time highs, auto loans and credit cards showing pre recession patterns, office real estate cracking, and nearly 800 corporate bankruptcies projected for the year you no longer have a standalone model. You have convergence.
What It Means Right Now
The chart is essentially confirming what the underlying stress data is already saying, the forward slice of the economy has turned, even if the coincident numbers still look serviceable.
The question now isn’t whether the warning is real, it’s whether the coincident side can hold up long enough for the leading indicators to recover. Historically, that’s not how it plays out. When household delinquencies rise across every major loan category, when recent grads are entering the workforce with higher debt and weaker credit, when corporate bankruptcies climb to their highest level since 2010… the coincident index rarely stays immune for long.
The ratio is simply telling us, with the same rhythm it always has, that the next phase of the economy is already taking shape and the rest of the data is starting to agree.
⁉️ Has the US economy fallen into A RECESSION?
US Leading Economic Index (LEI) to Coincident Economic Index (CEI) ratio fell to the lowest since the FINANCIAL CRISIS low.
The LEI/CEI ratio has fallen for 4 years now.
This has been a leading indicator for US recessions. https://t.co/lyRpct7LQc tweet
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Fiscal.ai
Berkshire Hathaway currently has their largest cash exposure in more than 20 years.
Cash (and short-term investments) currently account for 31% of Berkshire's Total Assets.
$BRK https://t.co/uabk05mNQV
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Berkshire Hathaway currently has their largest cash exposure in more than 20 years.
Cash (and short-term investments) currently account for 31% of Berkshire's Total Assets.
$BRK https://t.co/uabk05mNQV
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EndGame Macro
The Fed Is Shrinking, Stocks Have Been Soaring And Here’s Why
The Fed’s balance sheet has been shrinking for three years down roughly 24% while the S&P 500 has climbed more than 80%. If you came of age in the post GFC world where stocks only go up when the Fed prints, this looks impossible.
But the chart isn’t breaking the rules. It’s revealing that the rule people believed in was never that simple. QE adds liquidity, yes. But markets don’t move mechanically they move on expectations, on changes in the cost of money, and on how investors imagine the next year will look compared to the last. Over this period, mega cap earnings held up better than feared, recession calls kept getting pushed out, and the market began pricing in a softer rate path long before the Fed actually shifted. The balance sheet was shrinking, but the story investors were trading was improving.
And here’s the uncomfortable layer beneath it…the economy itself has been deteriorating underneath the index. Bankruptcies are climbing toward 15 year highs. Consumer delinquencies, student loans, autos, credit cards have been rising. Commercial real estate is cracking. None of that registered in the S&P because the companies feeling that pain aren’t the ones driving the index. The chart is telling you that the stock market wasn’t pricing the lived economy, it was pricing a narrow group of giants and a future shaped by an expected Fed pivot.
Why Stocks Can Still Rise While the Fed Shrinks
QT isn’t the entire liquidity universe. You can close one valve while others stay wide open. Massive fiscal deficits, corporate buybacks, foreign inflows, stabilizing bank reserves, money market dynamics all of these offset the balance sheet runoff in ways that matter far more to day to day market behavior. Markets react to the net flow of liquidity, not one line item on the Fed’s spreadsheet.
But there’s also the psychological element. Markets price where policy is going, not where it currently stands. When investors sense the Fed is done hiking or even preparing to cut the reaction often overwhelms whatever QT is still happening in the background. The direction of monetary policy moves stocks more than the size of the Fed’s portfolio.
And then there’s the concentration problem. This rally hasn’t been broad or evenly distributed. A handful of dominant companies…firms flush with cash, global in reach, and largely insulated from consumer credit cracks have pulled the index up on their own. When the top 10 companies carry that much weight, the S&P can rise even while the broader economy is clearly losing altitude.
My Read
This chart doesn’t overturn the idea that liquidity matters. It just shows that liquidity comes from many places, and the market doesn’t wait for the Fed to spell out the future before it trades it. A shrinking balance sheet can exist alongside rising equities as long as profits look stable, dominant companies keep buying back shares, and investors believe the policy environment ahead will be easier than the one behind.
Meanwhile, the deterioration in delinquencies, bankruptcies, and household strain doesn’t negate the rally, it simply highlights the gap between the parts of the economy that drive the index and the parts that feel the stress first. Markets move on what they think comes next, and for the last three years, that imagined future looked better to investors than the headlines or the lived experience of most Americans suggested.
That gap can persist for a while. It just rarely persists forever.
tweet
The Fed Is Shrinking, Stocks Have Been Soaring And Here’s Why
The Fed’s balance sheet has been shrinking for three years down roughly 24% while the S&P 500 has climbed more than 80%. If you came of age in the post GFC world where stocks only go up when the Fed prints, this looks impossible.
But the chart isn’t breaking the rules. It’s revealing that the rule people believed in was never that simple. QE adds liquidity, yes. But markets don’t move mechanically they move on expectations, on changes in the cost of money, and on how investors imagine the next year will look compared to the last. Over this period, mega cap earnings held up better than feared, recession calls kept getting pushed out, and the market began pricing in a softer rate path long before the Fed actually shifted. The balance sheet was shrinking, but the story investors were trading was improving.
And here’s the uncomfortable layer beneath it…the economy itself has been deteriorating underneath the index. Bankruptcies are climbing toward 15 year highs. Consumer delinquencies, student loans, autos, credit cards have been rising. Commercial real estate is cracking. None of that registered in the S&P because the companies feeling that pain aren’t the ones driving the index. The chart is telling you that the stock market wasn’t pricing the lived economy, it was pricing a narrow group of giants and a future shaped by an expected Fed pivot.
Why Stocks Can Still Rise While the Fed Shrinks
QT isn’t the entire liquidity universe. You can close one valve while others stay wide open. Massive fiscal deficits, corporate buybacks, foreign inflows, stabilizing bank reserves, money market dynamics all of these offset the balance sheet runoff in ways that matter far more to day to day market behavior. Markets react to the net flow of liquidity, not one line item on the Fed’s spreadsheet.
But there’s also the psychological element. Markets price where policy is going, not where it currently stands. When investors sense the Fed is done hiking or even preparing to cut the reaction often overwhelms whatever QT is still happening in the background. The direction of monetary policy moves stocks more than the size of the Fed’s portfolio.
And then there’s the concentration problem. This rally hasn’t been broad or evenly distributed. A handful of dominant companies…firms flush with cash, global in reach, and largely insulated from consumer credit cracks have pulled the index up on their own. When the top 10 companies carry that much weight, the S&P can rise even while the broader economy is clearly losing altitude.
My Read
This chart doesn’t overturn the idea that liquidity matters. It just shows that liquidity comes from many places, and the market doesn’t wait for the Fed to spell out the future before it trades it. A shrinking balance sheet can exist alongside rising equities as long as profits look stable, dominant companies keep buying back shares, and investors believe the policy environment ahead will be easier than the one behind.
Meanwhile, the deterioration in delinquencies, bankruptcies, and household strain doesn’t negate the rally, it simply highlights the gap between the parts of the economy that drive the index and the parts that feel the stress first. Markets move on what they think comes next, and for the last three years, that imagined future looked better to investors than the headlines or the lived experience of most Americans suggested.
That gap can persist for a while. It just rarely persists forever.
The Fed's balance sheet has shrunk 24% over the past 3 years while the S&P 500 has advanced 82%, dispelling the myth that the stock market is dependent on QE to rise. $SPX https://t.co/U5p5fTKgcX tweet