CMR is the leading provider of funding and management support for small to medium-sized businesses and entrepreneurs 

Authored by Vince Quill via CoinTelegraph.com,

The United States Senate voted on Thursday to include an amendment in the 21st Century Road to Housing Act that would prohibit the Federal Reserve from issuing a central bank digital currency (CBDC).

The CBDC prohibition will remain in effect until Dec. 31, 2030, according to the amendment in the bill. The legislation, which passed 89-10, stated:

“The Board of Governors of the Federal Reserve System or a Federal Reserve Bank may not issue or create a central bank digital currency or any digital asset that is substantially similar to a central bank digital currency, directly or indirectly through a financial institution or other intermediary.”

The 21st Century Road to Housing Act, which includes the CBDC ban amendment. Source: US Senate

However, the bill does not prohibit any dollar-denominated digital currency that is “open, permissionless, and private,” such as stablecoins.

US Treasury Secretary Scott Bessent and President Donald Trump have presented dollar-pegged stablecoins as a way to extend US dollar hegemony, while Trump and other Republican lawmakers have taken a hardline stance against CBDCs.

Lawmakers slam CBDCs as authoritarian surveillance technology

More than 30 US lawmakers signed a letter on March 6, urging the Senate to pass a permanent CBDC ban, rather than a temporary moratorium.

“A CBDC would give unelected bureaucrats unprecedented power over Americans’ finances and threaten basic economic freedom,” Representative Ralph Norman, one of the signatories of the letter, said.

A letter signed by 31 US lawmakers urging a permanent ban on CBDCs. Source: Representative Ralph Norman

Representative Warren Davidson, a long-time critic of CBDCs, has also criticized regulated dollar-pegged stablecoins as having the same surveillance capabilities as CBDCs.

Davidson also warned that regulations under the Guiding and Empowering Nation’s Innovation for US Stablecoins (GENIUS) Act create an avenue to “control” and “coerce” the US population through financial surveillance techniques and programmable money.

Hedge fund manager Ray Dalio also recently warned that CBDCs would expand the government’s control over people’s finances. 

“There will be no privacy, and it's a very effective controlling mechanism by the government,” Dalio said in an interview with independent journalist Tucker Carlson.

CBDCs likely won’t be yield-bearing, meaning they do not offer inflation protection and can be automatically taxed or frozen by the government, he added.

By Ben Picton, senior market strategist at Rabobank

Mine, Yours

Major US, European and Asian equity indices all closed in the red yesterday as Brent crude prices again breached the $100/bbl level. Ten year sovereign yields were sharply higher for most countries (Sweden being an exception), with UK Gilts conspicuous for posting an 8.7bps increase. Short end yields rose even faster as markets priced in higher policy rate paths.

Canadian two year yields were up 9.8bps and in New Zealand yields rose 10.1bps. Canada now has 41bps worth of policy rate hikes priced into the forward curve for this year and New Zealand has 77bps priced. Prior to the outbreak of war, the market was still pricing cuts in Canada and it was still seen as uncertain that the RBNZ would be raising rates at all in 2026. Market bets on Fed rate cuts this year are evaporating fast.

Market optimism following Donald Trump’s comment earlier this week that the war is “very complete” and news that the G7 will coordinate on the release of 400mn barrels from strategic reserves appears to have been short-lived. Iranian Supreme Leader Khamenei (the new one) has issued his first public statement, in which he echoed previous IRGC vows to keep the Strait of Hormuz closed.

There was a bit of a ‘Weekend at Bernie’s’ vibe about this as Khamenei himself did not appear on camera. Rumors that he was injured – perhaps severely – in the opening strikes of the war are now circulating alongside suggestions that the Iranian Revolutionary Guard Corps are now running the country and that Khamenei is being used as a convenient figurehead to give the impression of continuity under external pressure.

Despite Khamenei’s vow to keep the Strait closed market pricing is still signalling optimism that the war will be relatively short – although this optimism waned somewhat over the last 24 hours. Prediction markets have a ceasefire before month end as a 21% probability (down 5pts since yesterday), before April 30th as a 45% probability (-2pts since yesterday) and before June 30th as a 61% probability (unchanged).

The Brent crude forward curve remains heavily backwardated, with prices converging back to $75/bbl by mid next year. There has been some speculation in recent days that the US government could play a bit of “mine, yours” in oil derivatives in an attempt to reduce energy prices. Some point to the wild gyrations in crude prices on Monday to suggest that this might have already happened, while others have nod towards a hastily-deleted X post by Energy Secretary Chris Wright claiming that the US navy had escorted an oil tanker through Hormuz as an indication of funny business going on in paper oil markets.

Whatever the case, the FT is today reporting comments from CME Chief Executive Terry Duffy that government intervention in oil derivatives would be a “biblical disaster”. Crypto bros might counsel newly-minted oil traders on the virtues of physical custody, while our own Michael Every has drawn parallels to how pricing in the former Soviet Union worked: “the price of bread is only three roubles, comrade. There is simply none available.”

Not one to be deterred, Secretary Wright said overnight that naval escorts of tankers through the Strait could begin by the end of the month. One might have thought that the (largely unsuccessful) experience of Operation Prosperity Guardian in the Red Sea would serve as a cautionary example that naval escorts could prove ineffective in restarting shipping, but the reaction to Wright’s deleted X post suggests that the market would see this as progress. Nevertheless, the end-of-month timeline implies that prospects of de-escalation in the short term are remote.

The situation in the Strait itself remains troubling. Three commercial ships have been struck over the last two days, with the IRGC saying that “American aggressors and their allies have no right of passage.” The FT reports that ships stuck on the wrong side of Hormuz are ‘Sitting Ducks’ and comments earlier this week from US officials that Iran had begun laying marine mines also complicate the picture for any near-term resumption in shipping.

News emerged yesterday that India and Bangladesh-bound cargoes have been granted permission to transit, and China-bound cargoes have been moving for days. The fact that some shipping is being allowed seemingly confirms that mine laying operations remain limited in scope, but that does not mean that Iran cannot escalate if it chooses to. CNN reports that Iran still has 80-90% of its mine-laying fleet and retains the capability to lay ‘hundreds’ of mines, so the IRGC could conceivably play a bit of “mine, yours” with world energy markets for months.

If Iran allows China and India oil through the Strait, that's more than half of normal oil traffic already (7mmb/d). Throw in the Saudi East-West pipeline for redirection (another 7mb/d) and the blockade suddenly shrinks a lot pic.twitter.com/64xoGJpiHG

— zerohedge (@zerohedge) March 13, 2026

As it stands. the IRGC is now effectively playing Little John with the Strait by insisting that anyone attempting transit must have Iranian permission. The world’s most important hydrocarbon chokepoint has – for now, at least – become an Iranian toll road. Is this acceptable to the United States, or broader Western civilization? Almost certainly not. That makes a Trump TACO all the more improbable, even if it were actually possible without catastrophic loss of US prestige.

So, tanker traffic through the Strait remains at a virtual standstill. Khamenei said in his statement that Tehran believes in “friendship” with Gulf neighbours, but that American bases in Gulf states will continue to be targeted. The message to GCC states is not subtle: break from the US, or suffer the economic and military consequences of continued association.

Of course, while the Iran war continues to dominate all of the headlines, other issues are bubbling away in the world economy. Problems in private credit markets remain a point of risk, perhaps even more so now that swings in commodity and equity markets are precipitating margin calls that need to be funded somehow. A number of funds have placed limits on redemptions, others have sought injections of new capital, and shares in Blackstone, Blue Owl, and KKR have come under pressure. Rising bond yields and widening credit spreads don’t help, and Bloomberg has noted that financials are the worst performing sector of the S&P500 over the last week.

Many portfolios have incorporated private credit exposures in recent years, to the extend that “the golden age of private credit” became a somewhat notorious meme in markets. Some investors have undoubtedly seen their portfolios bolstered as a result of incorporating these exposures, but others may now be hoping that private credit doesn’t ‘mine, theirs’.

Update(1140ET): Italy denies talks with Iran, but still nothing official on a public level from government ministers:

No negotiations are under way with Iran to guarantee safe passage through the Hormuz Strait for Italian ships or oil tankers, an Italian Foreign Ministry source has told Reuters, denying a report in The Financial Times.

“In their diplomatic contacts, Italian leaders want to favour the conditions for a general military de-escalation, but there is no under-the-table negotiation aimed at preserving only some merchant ships at the expense of others,” the source said.

* * *

Amid very confused and mixed messaging coming from Washington over the status and future fate of Hormuz oil transit, the EU is trying its hand at a solution.

France ?and ?Italy have ?opened 'tentative' talks ?with Iran ?seeking ?to ?negotiate a deal to ?guarantee safe ?passage for their tankers ?through vital strait which remains a crucial chokepoint for stalled global crude transit, the ?Financial ?Times reports Friday, citing people briefed on ?the efforts.

This comes as US Secretary of War Pete Hegseth said in a Friday morning Pentagon briefing there is "no clear evidence that Iran has laid mines" in the Strait. This contradicts an avalanche of reporting from earlier this week which said at least a dozen mines were laid.

The two key overnight and morning headlines which have most impacted oil markets remain confirmed India-Iran talks for safe passage, and now EU efforts to do the same...

Regardless, it's more than obvious that the waterway is de facto shut - with perhaps the exception of some Chinese or possibly an Indian vessel being allowed through - also amid persisting threats of rocket and drone attacks.

According to the Financial Times, "European capitals have opened the tentative discussions in an attempt to restart oil and gas exports without expanding the conflict, three officials briefed on the talks told the FT, as shipping companies look to western navies to provide potential escorts for their tankers."

"France is one of the countries involved in the talks, two of the officials said," the report continues. "The first official said Italy had also made attempts to open discussions with Tehran on the issue."

As for whether the war expands or not, that's in no way under Europe's control - but remains something pertaining only to Israel, the United States, and Iran - the main players in the conflict.

The case for some shred of optimism or hope? However, Trump and Hegseth's bellicose tones on Friday morning, vowing to keep ramping up military action over Tehran, underscores continued extreme uncertainty:

If Iran allows China and India oil through the Strait, that's more than half of normal oil traffic already (7mmb/d). Throw in the Saudi East-West pipeline for redirection (another 7mb/d) and the blockade suddenly shrinks a lot pic.twitter.com/64xoGJpiHG

— zerohedge (@zerohedge) March 13, 2026

Meanwhile the Trump administration has sought to push back against reporting by CNN and others which alleges war-planners didn't actually take into account that attacking Iran would result in Hormuz's closure or blockage.

Here's how Hegseth responded to the charge on Friday morning - while trying to paint a general picture that the mainstream media is clouding the picture, and just trying to make Trump 'look bad':

"This is always what they do, hold the strait hostage. CNN doesn't think we thought of that? It's a fundamentally unserious report," Hegseth said. "The sooner David Ellison takes over that network, the better."

Skeptics have pushed back against Pentagon and White House claims of lengthy preparations and plans to use military force to clear the Strait of Hormuz, and yet now 13 days into a war with Iran and there's been no US action in the waterway, and not so much as a single US naval escort that anyone is aware of.

So far there does seem to be a constant flow of words on the issue coming from the White House and Pentagon - and yet a clear strategy still hasn't been articulated, much less clear action taking shape.

Summary:

• Iran reportedly approves Indian government sending two liquefied petroleum tankers through Hormuz

• Japan-based USS Tripoli and its attached Marines headed toward Middle East

• WSJ says Pentagon sends Marine expeditionary unit to Middle East. Oil jumps higher

• Pentagon has just confirms two additional deaths in Thursday's downing of a KC-135 refueling tanker aircraft over Western Iraq: all six US crewmembers are deceased.

• Trump and the Pentagon claim the US and Israel are "totally destroying" Iran as the war enters day 14, with Trump warning Tehran to "watch what happens" and "I am killing them" and "what a great honor it is to"

• Iran’s new Supreme Leader Mojtaba Khamenei is reportedly alive but wounded, "damaged," and "disfigured"

• France and Italy open talks with Iran in hope of securing safe Hormuz Strait passage, FT reporting

• Hegseth briefing: US and Israel have hit more than 15,000 enemy targets since conflict began

• Several senior Iranian officials have been openly marching through the streets of Tehran today even amid smoke from US-Israeli bombing lingers in background.

• CENTCOM: four of six crew members aboard a US refueling aircraft that crashed in Iraq have died. Active search and rescue operation underway 

• Strategic risks remain high as Iran reportedly begins laying mines in the Strait of Hormuz, though oil eased slightly after India said one tanker successfully exited the strait.

* * * 

Update(1105ET): Are we really doing this (again)? The WSJ is reporting a breaking bombshell which suggests US ground forces could be introduced, or else this could also be about securing other areas of the Gulf region:

The Pentagon is moving a Marine expeditionary unit to the Middle East, as Iran steps up its attacks on the Strait of Hormuz, according to two U.S. officials. Defense Secretary Pete Hegseth has approved a request from U.S. Central Command, responsible for American forces in the Middle East, for the expeditionary unit, typically consisting of up to 2,500 Marines, the officials said.

A follow-up update by WSJ appears to offer confirmation:

Defense Secretary Pete Hegseth has approved a request from U.S. Central Command, responsible for American forces in the Middle East, for an element of an amphibious ready group and attached Marine expeditionary unit, typically consisting of several warships and 5,000 Marines, the officials said.

The Japan-based USS Tripoli and its attached Marines are now headed for the Middle East, two of the officials said. Marines are already in the Middle East supporting the Iran operation, the officials said.

 The headline was enough to cause oil to immediately jump higher:

* * * Please consider supporting ZeroHedge with the purchase of a hat, t-shirt, or multitool. Thank you. 

President Trump and the Pentagon have claimed that the US and Israel are "totally destroying" Iran as the war enters day 14. Trump warned Iran to "watch what happens" in a social media post, claiming the United States is "totally destroying" the country militarily and economically as the conflict enters its second week.

Writing on Truth Social, Trump said: "We are totally destroying the terrorist regime of Iran, militarily, economically, and otherwise, yet, if you read the Failing New York Times, you would incorrectly think that we are not winning. Iran’s Navy is gone, their Air Force is no longer, missiles, drones and everything else are being decimated, and their leaders have been wiped from the face of the earth."

He continued: "We have unparalleled firepower, unlimited ammunition, and plenty of time - Watch what happens to these deranged scumbags today. They’ve been killing innocent people all over the world for 47 years, and now I, as the 47th President of the United States of America, am killing them. What a great honor it is to do so!"

War Secretary Pete Hegseth meanwhile claimed Iran's new supreme leader, Mojtaba Khamenei, is wounded and disfigured. According to Reuters, Trump said he believes Khamenei is alive but "damaged." He also spent a lot of time complaining about media coverage: "This is always what they do, hold the strait hostage. CNN doesn't think we thought of that? It's a fundamentally unserious report," Hegseth said. "The sooner David Ellison takes over that network, the better." Doubling down...

Defense Secretary Pete Hegseth said the U.S. and Israel have hit more than 15,000 enemy targets since the Iran conflict began and that the regime’s new supreme leader is likely wounded, as he doubled down on the war’s impact on Iranian military capabilities.

Mojtaba Khamenei - whose father, Ali Khamenei, was killed on the first day of the war after strikes by the United States and Israel - has not appeared publicly since being selected by a clerical assembly. His first comments were read on state television.

On the ground in Tehran, thousands gathered in Enqelab Square in a show of defiance as fighter jets roared overhead and multiple explosions shook the capital. Additional blasts were reported in the nearby city of Karaj.

According to Dropsite News journalist Jeremy Scahill: 

War Secretary Pete Hegseth just claimed that Iranian leaders have gone underground and are hiding, saying "that's what rats do." Meanwhile, several senior Iranian officials have been openly marching through the streets of Tehran today even as US-Israeli bombing continues.

Iran's Foreign Minister Abbas Araghchi:

Today is Quds Day in Iran, and despite the brutal attacks by the Zionist regime and the United States, millions of Iranians have taken to the streets in Tehran and other cities, demonstrating their strong will and determination.

The… pic.twitter.com/GvRkfZw1HT

— Clash Report (@clashreport) March 13, 2026

Oil prices edged lower after India said one of its tankers had exited the Strait of Hormuz, raising hopes some shipping may resume. But CNN reports the Pentagon and the National Security Council significantly underestimated Iran's willingness to shut the strait during planning for the operation.

On the battlefield, Israel said it launched a new "extensive wave" of strikes on Tehran while issuing evacuation orders, as attacks also intensified around Beirut. Meanwhile, Israeli media reported that 11 Iranian cluster missiles penetrated Israeli defenses, with one dispersing about 70 bomblets over central Israel.

WOW. Iran’s top national security official Ali Larijani is marching in Tehran today in broad daylight as part of Al Quds day pic.twitter.com/wlsH195zbj

— Ragip Soylu (@ragipsoylu) March 13, 2026

In Oman, two people were killed after a drone was shot down in Sohar province, according to state media. Saudi Arabia said its air defenses intercepted eight more drones over the kingdom, including near Riyadh.

United States Central Command said four of six crew members aboard a US refueling aircraft that crashed in Iraq have died. It has an active search and rescue operation underway 

NATO also confirmed it intercepted a ballistic missile fired from Iran toward Turkey the third such alleged interception since the war began. "NATO remains vigilant and stands firm in its defense of all allies," NATO spokesperson Allison Hart said.

Ongoing evidence of severe damage in the heart of Tel Aviv and elsewhere in Israel:

???? ??????? ?? ?? ????? ??????, ?????? ?????? ???? ???? ??? ??????? ?? ????? ?????? ???????? ?????? ??????? ?????? ?? ???? ?????? ???? ????? ??????? ?????? ??? ???? ?? ??? ????? ????????.

??????? ????? ????? ??? ?????, ?????? ??????? ???????? ???? ?? ?? ???? ????? ?? ????? ???. pic.twitter.com/oC4cyckEWh

— ????? ????? | ???? ??-????? ???? (@A_Ham96) March 12, 2026

As for the Lebanon front, during a visit to Beirut, Antonio Guterres urged Israel and Hezbollah to "stop the war." He said "My strong appeal to those parties, to Hezbollah and to Israel, is for a ceasefire to stop the war and… allow Lebanon to become a country independent… where its authorities have the monopoly on use of force." He added: "This is no longer the time of armed groups… This is the time of strong states."

According to the Wall Street Journal, Israeli officials now believe Iran's ruling system is unlikely to collapse soon, despite heavy strikes. US intel reports even before Trump ordered the war had forecast as much. Separately, the New York Times reported that Iran has begun laying naval mines in the Strait of Hormuz using thousands of small naval vessels.

Seriously? You think you’re going to retain any credibility by claiming that we prepared for months to use military force to clear the Strait of Hormuz, but now 13 days into a war with Iran after they closed it down and we still haven’t moved?

There’s no reality to this claim at… https://t.co/AbihaizDQ4

— Daniel Davis Deep Dive (@DanielLDavis1) March 12, 2026

As for European involvement, an Iranian Shahed drone strike in Iraq’s Erbil killed a French soldier, 42-year-old Arnaud Frion, and wounded several others, according to French military officials. Germany also signaled it will not join naval protection efforts in the Strait of Hormuz. Chancellor Friedrich Merz said during a visit to Norway: "Germany is not part of this war and we do not want to become part of it."

Is the mini recession in the US job market ending? 

After slumping in late 2025, it has been a rocky road for the US labor market, especially after the February payrolls print shocked with how bad it was. But according to the latest JOLTS job openings and turnover report published by the BLS moments ago, by the time the February NFP picture was taking place, the seeds of a recovery may have been planted already thanks to a surge in US job openings, which rose by 396K in January, the biggest increase since Nov 2024, to 6.946 million from 6.550 million and the highest since last October.

Looking at the details, we find the the biggest increases were in finance and insurance (+184K), which is odd for a sector about to be swept by the private credit crisis. Other sector that saw a big jump in job openings were Trade, Transportation and Utilities, driven by a 130K increase in retail trade jobs; Private education and health services job opening also jumped by 123K, while Leisure and Hospitality increased by 185K. Professional and business services was the only major sector to see a sharp drop in job openings.

The jump in job openings means that after hitting a 5 year high, the labor demand deficit was cut in half, and in January there were 422K fewer job openings than unemployed workers, a big drop from the 953K the month prior.

Despite the jump in openings, the shift wasn't big enough to change the openings to unemployed ratio, which remained at 0.9x, the lowest it has been since 2021.

And another indication that the labor market slump may be ending, after slamming hard at the end of 2025, both the number of hires and quits has rebounded, although it is still too early to determine if this is a regime change or just a dead cat bounce.

Overall, today's JOLTs report was unexpectedly strong and should put to rest some of the fears sparked by last Friday's catastrophic jobs report.

Update(1030ET): The Pentagon has just confirmed two additional deaths in Thursday's downing of a KC-135 refueling tanker aircraft over Western Iraq. This brings the total deaths to six in the incident, which marks the single deadliest aerial event for the US side in the war.

US: ALL CREW MEMBERS OF KC-135 LOSS IN IRAQ CONFIRMED DECEASED

The Pentagon has further reiterated its stance it was not enemy or friendly fire.

* * *

The overnight confirmation that a US KC-135 went down over Western Iraq marks the single deadliest aerial incident suffered by the United States since the start of Operation Epic Fury. A Friday morning Pentagon briefing has confirmed that four of the six crew members on board have died, as rescue efforts for the two other service members continue.

"The circumstances of the incident are under investigation," it said in a statement on Friday. The Pentagon and US CENTCOM have sought to emphasize the KC-135 aircraft was not downed "due to hostile fire or friendly fire," adding that it had crashed at about 2pm Eastern Time (19:00 GMT).

CENTCOM further said it had occurred in "friendly airspace" (of Iraq) but was operating in connection with Operation Epic Fury against Iran.

Adding to the confusion in terms of precisely what happened, the incident appeared to involve two planes, possibly colliding or engaging in close maneuvers, with the second plane - possibly damaged - having "landed safely" in Israel.

The initial official statement CENTCOM issued Thursday evening said:

U.S. Central Command is aware of the loss of a U.S. KC-135 refueling aircraft. The incident occurred in friendly airspace during Operation Epic Fury, and rescue efforts are ongoing. Two aircraft were involved in the incident. One of the aircraft went down in western Iraq, and the second landed safely.

The identities of the service members were being withheld, pending notification of their families.

Pro-Tehran forces have contradicted the whole narrative, claiming instead that they shot the Air Force refueling jet down.

Already Iraqi Shia militia groups have been attacking US bases in Iraq, and are now claiming responsibility for the refueling tanker attack, per CBS:

A group of Iranian-backed militias that collectively refer to themselves as the Islamic Resistance in Iraq claimed Friday that they had caused the deadly crash of an American KC-135 refueling tanker plane in western Iraq, and hit a second aircraft of the same kind. 

The Islamic Resistance in Iraq, in a second claim issued online Friday, said it had "targeted, with appropriate weapons, a second KC-135 aircraft belonging to the American occupation in western Iraq during the past twenty-four hours. Its crew managed to escape after it was hit, and it made an emergency landing at one of the enemy's airports."

There's already been a build-up of skepticism over the 'accident' claims surrounding a growing list of curious battlefield episodes among many pundits.

So we lost three fighter jets to "friendly fire" and one refueling aircraft and almost another one to a mysterious peaceful incident, the USS Gerald Ford spontaneously caught fire, and a National Guardsman died in a "medical episode" in Kuwait.

Healthy skepticism warranted.

— Andrew Day (@AKDay89) March 13, 2026

Still, there's plenty of speculation of what could have caused such a major aerial accident - if it proves such:

Al Jazeera’s Rosiland Jordan, reporting from Washington, DC, said the information shared by CENTCOM is still vague on exactly what happened, despite announcing that the aircraft was not shot down by allies or enemies.

"It looks as if this may have been a refueling attempt or operation, and then this air tanker went down," she said.

Before the aircraft crash, the US military had reported that seven service members had died in the ongoing military campaign, and an eighth died in Kuwait from a “health-related incident” during a medical emergency.

War Secretary Pete Hegseth said in a Friday morning Pentagon press briefing while confirming the deadly refueling tanker incident that "bad things can happen."

The second apparently damaged tanker made an emergency landing in Israel. Purported photos at Ben Gurion Airport of the aircraft:

NEW phots show a U.S. KC-135 refueling aircraft involved in yesterday’s mid-air collision over Iraq landing at Ben Gurion Airport with major damage to its tail stabilizer. pic.twitter.com/yFWPy9lxrO

— Clash Report (@clashreport) March 13, 2026

"War is hell," he said. "War is chaos." He further hailed the plane's crew as heroes and said that "their sacrifice will only recommit us to the resolve of this mission." He added: "But war in this context and in pursuit of peace is necessary."

Authored by Lance Roberts via RealInvestmentAdvice.com,

Dawn Fitzpatrick says overallocated LPs, frozen distributions, and mounting margin-call risk are converging into a sector-wide shakeout. Such will eventually separate survivors from the casualties. I used Claude to source data on private credit and equity funds, sources disclosed at the end.

In July 2024, I penned an article entitled “Private Equity: Why Am I So Lucky,” which began with:

“Lately, I have been getting many questions about investing in private equity. Such is common during raging bull markets, as individuals seek higher rates of return than the market generates. Also, during these periods, Wall Street tends to bring new companies to market to fill the demand of the investing public. Private equity is always alluring, as is the tale of someone who bought the company’s shares when it was private and made a massive fortune when it went public. Who wouldn’t want a piece of that?”

The private equity (PE) business is huge. When I say huge, I mean $4.4 trillion huge.

However, as we warned then, the risks have come home to roost. The private equity and private credit industry is heading into a gut-wrenching period of consolidation. That, according to one of Wall Street’s most influential investors, Dawn Fitzpatrick, CEO of Soros Fund Management. She told attendees at Bloomberg Invest this week that a “massive culling” of alternative asset managers is coming. And that the industry has no one to blame but itself.

Speaking with Bloomberg’s Lisa Abramowitz on Tuesday, Fitzpatrick delivered a blunt diagnosis. For a decade, private managers gorged on cheap money, inflated valuations, and investor enthusiasm for one of the greatest financial expansions ever. Now, she argues, the bill is coming due. “Investors are overallocated to private assets,” she said. “Their private equity is not cash flowing,” and the compounding pressures of frozen exits, extended hold periods, and surging secondary market activity are exposing the structural fragility at the heart of the alternative investment complex.

The Liquidity Reckoning

Fitzpatrick’s comments crystallize a slow-motion crisis that has been building since the 2022 rate-hiking cycle. What seemed irrelevant at the time has now made the exit environment suddenly hostile. The traditional private equity model was simple. Buy a company, leverage it, improve operations over a 3- to 5-year holding period, then sell or IPO it. However, that model has stretched into something unrecognizable. Median hold periods, which stood at 4.2 years in 2010, ballooned to 6.8 years by 2023. They are getting even longer since. Furthermore, the asset class defined by its ability to generate compounding cash-on-cash returns has increasingly become a warehouse of paper gains.

The numbers are stark. According to MSCI research, US private equity funds delivered annualized returns of just 5.8% between 2022 and 2025. That was less than half the S&P 500’s 11.6% over the same period. For investors who sacrificed liquidity and accepted illiquidity premiums, the trade has spectacularly misfired.

A World Of Hurt

Fitzpatrick’s diagnosis wasn’t limited to returns. The real crisis, she argued, is structural. The pensions, endowments, wealth funds, and family offices that seed private vehicles have been caught in a vice they made. For the last decade, they aggressively shifted portfolios toward private assets in pursuit of higher returns. Now, many find themselves overexposed, illiquid, and unable to meet future capital calls without selling positions at significant discounts.

This is the so-called “denominator effect.” That is where falling public equity valuations inflate the proportional weight of private holdings in a portfolio. The result was widespread overallocation across pensions and endowments during the 2022 public market selloff. While public equity recoveries have since eased that mechanical pressure for some, the underlying liquidity problem persists. Notably, private equity is not generating the cash distributions investors need to rebalance and redeploy capital.

According to McKinsey’s 2026 Global Private Markets Report, five-year rolling distributions-to-paid-in capital as a share of AUM hit its lowest recorded level in 2025. That is a consequence of a backlog of unsold portfolio companies that has been accumulating since exits froze in 2022. Data from Bain & Company shows that the GPs attracting capital today are those that delivered steady distributions. Firms like Thoma Bravo, which closed a $24.3 billion flagship fund in 2025, and Bain Capital, which closed a $14 billion vehicle are examples.

For the rest, the window is narrowing fast.

The Secondary Surge and What it Signals

One of the most telling symptoms of the liquidity crisis has been the explosive growth of the secondary market. Secondary transaction volume hit a record $240 billion in 2025, up 48% from the prior year, according to Jefferies. GP-led continuation vehicles, mechanisms that allow managers to hold onto assets longer while offering existing investors an exit option, now account for $115 billion of that total. That number has more than tripled in five years, from $35 billion in 2020.

To some, the surge in continuation vehicles reflects creative financial engineering by GPs navigating a difficult exit environment. To others, including Fitzpatrick, it raises pointed questions about who these structures are really serving. About 30% of surveyed LPs in a McKinsey study described assets in continuation vehicles as “distressed” or “challenged.” According to Fitzpatrick, the managers who survive the shakeout will be those who return capital as promised. Those who don’t will be those funds that find ever more elaborate ways to extend their fee-generating relationships with aging assets.

Private Credit – The Hidden Fuse

If the PE liquidity crunch is the industry’s visible problem, Fitzpatrick’s most pointed technical warning is for private credit. The $1.8 trillion market that has absorbed enormous capital flows over the last decade is now sitting on an underappreciated time bomb.

The concern centers on a mechanism that has received relatively little public attention. The banks that are lending against private credit funds’ own portfolios. As the value of private credit loans gets reassessed, whether by rising defaults, falling collateral values, or increased regulatory scrutiny on the banks themselves, those lenders could begin demanding more collateral from the credit funds.

“Once they do that, those private credit funds are going to have to come up with cash to meet those margin calls.” – Fitzpatrick

Morgan Stanley itself warned in a February 2026 report that approximately 50% of software sector loans in private credit carry lower credit ratings (B- or lower), signaling elevated default risk, and over 80% are issued by private, sponsor-backed companies.

However, Goldman Sachs Asset Management’s global co-head of private credit, Vivek Bantwal, pushed back on at least part of the concern. He argues that withdrawal limits on retail-facing private credit vehicles were “features and not bugs,” protecting funds from fire-sale dynamics. However, the events of this past week are certainly testing that thesis as those very mechanisms are being triggered at multiple funds simultaneously.

Lastly, Ares Management CEO Mike Arougheti, while dismissing UBS’s most extreme 15% default-rate forecast for private credit as “absolutely wrong,” acknowledged that some portfolios saw loss rates of 8% to 10% during the 2008 financial crisis. That is a data point that takes on new resonance in the current environment.

Notably, the events of the past week validate Fitzpatrick’s warning in real time. She warned about the “gating” potential on March 3rd. Since then:

• BlackRock’s $26 billion HPS Corporate Lending Fund capped withdrawals at 5% after shareholders requested 9.3% of shares, returning roughly $620 million of the $1.2 billion investors sought.

• Cliffwater’s $33 billion flagship private credit vehicle, the second-largest retail-facing private credit fund, capped redemptions at 7% in Q1 after investors sought to pull a record 14% of shares — one of the largest withdrawal requests ever seen in the $1.8 trillion market.

• Morgan Stanley’s North Haven Private Income Fund, with nearly $8 billion in assets, returned around $169 million — less than half of what investors requested — after capping redemptions at 5%.

• JPMorgan Chase has begun marking down the value of loans in private credit fund portfolios and restricting its lending to those funds, resulting in $22.2 billion of exposure to the sector.

JPMorgan’s markdowns primarily affect loans to software companies, which the bank views as increasingly vulnerable to AI disruption. Because these loans serve as collateral when private credit funds borrow from banks, lower valuations directly reduce the financing those funds can access — precisely the mechanism Fitzpatrick described.

Who Gets Culled and Who Survives

Fitzpatrick’s warning lands in a market already exhibiting sharp bifurcation. McKinsey’s 2026 Global Private Markets report found that about 40% of dry powder available for deployment has been sitting unused for more than two years. That is a signal that GPs are struggling to find deals at prices that work. Fundraising, meanwhile, has become increasingly winner-take-all. The managers pulling in commitments are concentrated among scaled platforms with demonstrated distribution records. However, smaller and emerging managers face an existential squeeze.

Apollo’s Marc Rowan offered a complementary, if blunter, verdict on the risk landscape.

“People made choices: if you wanted a higher dividend, you could take more risk. That felt really good on the way up. That’s not going to feel so good on the way down.”

But, Ares’ Arougheti held the line on private credit’s long-term structural merits. He argued that diversified, multi-strategy platforms with rigorous underwriting will prove out the asset class even as weaker players stumble. He noted that firms that manage across private equity, credit, real assets, and infrastructure have natural hedges and capital-recycling advantages that pure-play credit shops lack entirely.

The Road Ahead

For Fitzpatrick, the next 18 to 24 months represent a painful but ultimately necessary correction. The industry that, in her view, over-promised and under-delivered on the most fundamental commitment any investment manager makes: returning capital. The macro backdrop: geopolitical turbulence, AI-driven disruption to software valuations, and an uncertain rate environment, amplifies the pressure without being its cause. The cause, she argues, is structural. There were too many managers, too much capital raised at peak valuations, too many continuation vehicles propping up stale assets, and a performance record that, net of fees, no longer justifies the illiquidity premium being charged.

For institutional investors now trapped in the denominator’s grip, the path forward is constrained. Capital calls from existing commitments continue even as distributions dry up. Selling on the secondary market provides exit options, but at increasingly steep discounts. The Bain & Company chair of global private equity practice put a sobering timeline on the resolution: “We’re talking about a 5-plus year problem,” he noted earlier this year, drawing a parallel to the years it took to work through the Great Financial Crisis backlog.

Fitzpatrick’s verdict, in the end, is a market-efficiency argument dressed in the language of capital allocation: the managers who survive will be those who earn their keep. The ones who didn’t — who built empires on fee income and rolled assets forward indefinitely — will face a reckoning as LP patience runs out and capital concentrates among proven performers. In her framing, it is not a crisis but a correction. For the managers who can’t make that distinction about themselves, it amounts to the same thing.

After rebounding solidly in January and February, expectations were for a modest decline in UMich Sentiment in preliminary March data and analysts were right but the 55.5 print (from 56.6 prior) was better than the 54.8 expected.

• Current Conditions actually improved, surprising to the upside (57.8 vs 56.6 prior vs 54.9 exp)

• Expectations fell more than expected (54.1 vs 56.6 prior vs 54.5 exp)

Current Conditions are at their highest level since October while expectations are at their lowest since November.

Source: Bloomberg

Interviews for this release were collected between February 17 and March 9, with about half completed after the start of the US military conflict in Iran.

Interviews completed prior to the military action in Iran showed an improvement in sentiment from last month, but lower readings seen during the nine days thereafter completely erased those initial gains.

"A broad swath of consumers across incomes, age, and political affiliation all reported declines in expectations for their personal finances, down 7.5% nationally," according to UMich Surveys Director Joanne Hsu.

Despite the worries noted by UMich about gasoline prices, inflation expectations continued to slide...

With Democrats fear bias continuing to fade...

Note that for both time horizons, interviews completed after February 28th exhibited higher inflation expectations than those completed before that date (see chart, right panel).

If the war is still going on by month-end, expect inflation fears to surge (via the Democrats), because of this nonsense (h/t @MikeZaccardi via FundStrat)

Why did UMich suddenly starting weighting their survey to Democrats when Trump was elected?