The blow-ups of Tricolor and First Brands have sparked debates about underwriting and due diligence practices, but the bigger problem in the corporate credit is coming from the US economy, according to the co-chief investment officer at Monarch https://t.co/26PbkgzMIP ...

Market Trends - Small caps are hitting record highs, indicating a shift in investor interest towards cheaper alternatives compared to mega-cap tech stocks, suggesting potential for gains [1][2] - Small caps are more sensitive to interest rates, and lower rates could provide momentum for sustained growth, especially if further rate cuts occur [3] Inflation and Consumer Spending - Recent reports indicate that tariffs are increasing prices, with high-income consumers spending on luxury items while lower-income consumers seek discounts [4][5] - There is concern about inflation impacting profit margins, as companies may either absorb tariff costs or pass them onto consumers, which could hurt revenues [5][6][7] - Despite inflation concerns, revenue growth remains strong, particularly among high-end consumers, as evidenced by positive results from luxury brands [8][9][10] Corporate Credit and Investment Sentiment - Notable investors are shorting corporate credit in developed markets, citing tight spreads, which raises questions about market stability [11][12] - The sentiment among banks remains bullish on the economy, with reports of healthy consumer spending and zero loss provisions from major banks [14][15] - While there are red flags such as tariffs and narrow spreads, there are also positive indicators driving the economy forward, suggesting a mixed outlook [16]