Core Viewpoint - The recent bankruptcies of "First Brand" and "Three Colors" companies in the U.S. have raised alarms about high-risk lending behaviors in the private credit market, reminiscent of the pre-2008 financial crisis [1][3]. Group 1: Company Bankruptcies - "First Brand" is an American auto parts manufacturer, while "Three Colors" is a subprime auto loan company that declared bankruptcy in September [1]. - The bankruptcies have resulted in losses for credit investors and are under scrutiny by the U.S. Department of Justice [1]. Group 2: Lending Practices - "Three Colors" bundled loans issued to borrowers with little to no credit history and sold them to investors after structuring them into different tranches, some of which received AAA ratings shortly before the company's collapse [3]. - "First Brand" utilized specialized funds to secure credit against its invoices [3]. Group 3: Market Implications - Andrew Bailey, Governor of the Bank of England, indicated that these bankruptcies might signal deeper issues within the private credit market, similar to the warning signs before the 2008 crisis [3][4]. - The International Monetary Fund (IMF) warned that European and American banks have a risk exposure of up to $4.5 trillion to private credit groups, hedge funds, and other non-bank financial institutions, which could amplify the effects of any economic downturn [3]. Group 4: Regulatory Considerations - The Bank of England is considering conducting a "system-wide exploratory scenario test" next year to assess the resilience of the private credit market in crisis situations [4].

Core Viewpoint - The article analyzes the price movements of copper during the 2008 financial crisis, highlighting three distinct phases and the interplay between copper's financial and commodity attributes [1][2]. Phase Summaries Phase 1: Market Liquidity Risk Exposure (2007.08-2008.06) - During this phase, liquidity risks and the subprime mortgage crisis began to emerge, but did not yet exert widespread pressure on the financial system. Copper prices fluctuated within a range of approximately $6,400 to $8,700 per ton, with short-term liquidity risks causing temporary declines, but commodity attributes providing price support [3][8]. - The subprime mortgage market expanded due to low-interest rates and high-risk lending practices, leading to increased mortgage default rates as housing prices began to fall [4][5]. Phase 2: Subprime Crisis Escalation to Financial Crisis (2008.07-2008.10) - The liquidity crisis evolved into a debt crisis, with significant losses reported by major financial institutions. The TED spread surged, indicating a severe liquidity squeeze, and copper prices plummeted from around $8,500 per ton to approximately $4,000 per ton, effectively halving [10][12]. - The financial attributes of copper were negatively impacted by rising risk aversion and tightening liquidity, while demand from downstream sectors weakened significantly, leading to a substantial oversupply of refined copper [11][12]. Phase 3: Economic Stabilization and Copper Price Recovery (2008.11 onwards) - In response to the economic downturn, global central banks implemented aggressive monetary and fiscal policies, leading to a gradual stabilization of economic fundamentals. Copper prices began to recover, with a bottom price around $3,000 per ton at the end of 2008 [15][19]. - The S-shaped cost curve of copper mining contributed to a rapid rebound in prices, as the market transitioned from recession to recovery, with copper prices showing sensitivity to changes in liquidity conditions [20][21]. Key Insights - Understanding copper price fluctuations requires recognizing when its financial or commodity attributes dominate market behavior [24]. - When copper prices approach the lower end of the cost curve, price volatility tends to increase, leading to rapid rebounds after significant declines [24]. - Among base metals, copper is most closely tied to macroeconomic conditions, making market expectations of economic performance a critical factor in copper price determination [25].