The Wrap: Private Credit, Agentic Trading AI Stocks and DSCR Loans
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This week in “The Wrap,” we feature the top events in Washington and on Wall Street over the past week. And please watch “The Wrap with Chris Whalen” on The Julia LaRoche Show every Saturday on YouTube to catch our discussion of what’s hot and what’s not in the world of finance and investing.
June 26, 2026 | Several major private credit firms capped investor withdrawals this week, as an accelerated exit wave hit the industry. Firms typically limited redemptions to their customary 5% quarterly threshold. The firms that restricted withdrawals include:
Ares Management: The Ares Strategic Income Fund capped withdrawals at 5% after receiving requests to redeem 14.4% of shares.
Apollo Debt Solutions: Apollo's flagship $26 billion retail-focused fund curbed redemptions at 5% after investors attempted to cash out 16.8% of their holdings.
The Next Housing Crisis
This week we published a piece in National Mortgage News about the growing risk from a type of business loan used to finance rental properties – debt service coverage ratio or “DSCR” loans.
These aggressive business purpose loans have caused a foreclosure crisis in Baltimore and other parts of the country and are being promoted and purchased by, you guessed it, private credit firms.
We expected some pushback, but instead everyone in the mortgage industry -- and we mean everyone -- agreed with our take that DSCR loans are the start of a larger problem. And of course, many of the insurance companies that are buying DSCR loans for their portfolios are owned by private credit firms.
One interesting response we got was from a young reporter from The Baltimore Banner in Baltimore, a tiny publication that has done extensive reporting on DSCR fraud in this long-suffering city. The latest article, “The loans behind Baltimore’s foreclosure crisis are surging in cities across the nation,” included this passage:
“The private credit industry has poured money into a variety of sectors in recent years, and high-profile busts have roiled Wall Street and stoked fears about opacity and risk. Still, little attention has fallen on private creditors’ quiet expansion into America’s rental housing market, which was made possible in part through debt service coverage ratio, or DSCR, loans.”
In our 2024 bio of Stan Middleman, the founder of Freedom Mortgage predicted we'd see a housing market reset in 2028. Recalling that the 2008 financial crisis really started in 2005 with the collapse of private alt-A, his timing seems quite prescient.
This time around, perhaps the gold rush into DSCR in '25 fueled by insurers owned by private credit firms was really the beginning of the end of the bull market in residential real estate. BTW, we still have a few signed copies of “Seeing Around Corners” available in The IRA online store.
Are AI Bots Manipulating Stocks?
AI and semiconductor stocks experienced severe volatility this week, with key AI-focused equities dropping anywhere from 4% to 24% over the past five trading days. Are AI powered agentic bots manipulating AI stocks, up and down? We featured an important interview this week (“Fred Ramberg on AI, Agentic Trading and the Necessary Past”) with AI expert Fred Ramberg, who warns:
“Anybody focused on investing not concerned about agentic trading is is fooling themselves. And it comes from a discussion I had with one of my sons about what may be happening inside virtual chat rooms that now exist that humans cannot enter. Only AI agents can enter these chat rooms. And they work with each other, not necessarily on trading and on strategies, but they work with each other on numbers and issues. Humans are barred from these chat rooms.”
Over the past 5 trading days, gold and silver have experienced significant downward corrections, hitting their lowest prices since late 2025. Pressured by a stronger U.S. dollar and hawkish Federal Reserve expectations, gold fell below $4,000, while silver dropped to roughly $57 per ounce before bouncing slightly. We have been using the weakness to add to our LT positions in both metals.
Washington Notes
Meanwhile, Representative Thomas Kean Jr. (R-NJ), who had been missing from Washington for nearly four months with little explanation, is back home in New Jersey, the New York Times reports. He is expected to return to Washington next week.
The Congress passed bipartisan housing legislation, with limits on institutional investor purchases of home significantly watered down. "The bill is a major accomplishment for Congress," notes Ian Katz of Capital Alpha. "But that’s partly because expectations for Congress have sunken so low." Katz:
"Our view from the start has been that the legislation is a collection of small-ball measures that should, if executed properly, smooth the process of home-building and buying in certain circumstances. But it’s not going to reduce mortgage rates or significantly change either supply or demand. That doesn’t mean it’s not useful, but if the bill is landmark, it’s because Congress finally did something in this area – not because the impact would be huge."
President Trump, however, suddenly refused to sign the housing legislation until Congress prioritizes election security legislation, stalling the Republican legislative agenda. The Senate began its recess early while Speaker Mike Johnson (R-LA) once again headed to the White House to salvage the GOP's agenda, Politico reports.
Fresh inflation data out this morning confirms the expected trend – prices are rising. This morning's headline Personal Consumption Expenditures index rose to 4.1% for May compared to 3.8% in April on an annual basis, matching expectations. "Core" PCE rose to 3.4% for May versus 3.3% in April.
Many observers are focused on the end of the Iran war as an indication of inflation, but we continue to expect shortages of key refined products to push prices higher for the balance of the year.
Mark Zandi of Moody’s Analytics wrote in The Philadelphia Inquirer: “$1,000. That's what the Iran war has cost the typical American household so far — at the pump, at the grocery store, in higher mortgage rates, and in what we're spending as taxpayers.”
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