Credit Markets: Not Crisis, But Not Calm

+ Ben Sasse, Paul Tudor Jones, Michael Milken, Owen Lamont, Marc Seidner & More

Author

The Idea Farm
May 03, 2026

Sponsored by

“Self-control is empathy with your future self.”

— Seinfeld

Research

Acadian says current anxiety is about quant crowding mostly overstated. They explain today looks very different from 2007, with muted factor performance, limited signs of positioning stress, and systematic investors often leaning against retail driven growth speculation.

Man Group examines how trend followers should allocate across markets, showing that there is no single optimal mix. Portfolios that maximize long term Sharpe differ meaningfully from those designed to perform during crises, forcing investors to choose between return and protection.

Source: Man Group database. Date range: Dec 2011 - Oct 2025.

The Fed’s ownership of $2.7 trillion of agency MBS in 2022 was 32% of the entire $8.5 trillion MBS market. Brookings shows that whilst Fed MBS purchases between 2020 and 2022 successfully lowered mortgage rates, they simultaneously drove home prices higher by stimulating demand. The Fed’s MBS purchases were equal to nearly 90% of the growth in MBS during the 2020-2022 QE period.

Carlyle - 2026 credit market outlook: This side of paradise (10 pages)

Carlyle argues that Q1’s funding liquidity shock may signal a turn in the credit cycle, not a crisis. BDC discounts, software loan stress, and weaker fund flows could shift bargaining power back toward creditors.

PIMCO analyzes how equity and credit investors are reassessing BDC valuations differently, and why high yield defaults continue to play out primarily through distressed exchanges.

Bonus Content

The 2026 Investment Company Fact Book reviews trends and activities in the investment company industry. Link

Goldman Sachs analyzes how fast can gulf crude oil production can recover after the Strait of Hormuz reopens. Link

What else does the past tell us? Robin Wigglesworth and Gillian Tett share six lessons from history’s greatest financial crises. Link

In wine country, sales are down and fraud Is rampant. Link

Last Friday, Intel's stock price finally surpassed its 2000 dot-com bubble peak after 26 years. Link

Owen Lamont found 33 companies that have changed their names to be AI-related in the past three years. He explains what that means as a bubble indicator. Link

A different approach to diversification

Traditional diversifiers do not always behave the way investors hope, especially during periods of rapid equity stress.

The Alpha Architect Tail Risk ETF, ticker CAOS, seeks to provide asymmetric returns during fast crashes while targeting net positive returns over the long term.

With equity valuations near all-time highs, historically high government debt levels, and potential inflation looming on the horizon, it may be time to look beyond bonds for diversification.

To learn how CAOS may help diversify your portfolio and for more important information about the Fund, head to funds.alphaarchitect.com/caos 

Investing involves risk, including possible loss of principal. Investors should carefully consider the investment objectives, risk, charges, and expenses of the funds. This and other important information is in the indicated fund's prospectus, which may be obtained by calling (215) 882-9983 or by visiting https://funds.alphaarchitect.com/documents/. The prospectus should be read carefully before investing. Diversification does not guarantee a profit or protect against a loss in a declining market. The Fund is distributed by PINE Distributors LLC.

Podcasts

4/16/2026 - 39 minutes

Mike Milken reflects on his career, advancing medical research, his philanthropy, and the future of the American Dream.

4/28/2026 - 67 minutes

Paul Tudor Jones discusses whether we are in a bubble, the difference between trading and investing and the ideas that have shaped his life both inside and outside of markets.

4/9/2026 - 68 minutes

Ben Sasse reflects on facing terminal illness, the clarity it brings to faith and family, and his perspective on politics and purpose.

What Else Is Happening 

5/1/2026 - 40 minutes

PIMCO’s Marc Seidner discusses why bonds are attractive again, portfolio positioning across fixed income, and how macro uncertainty is shaping investor allocations.