Weekly News – May 9

Rite Aid hits the skids, WW body slammed by Ozempic, Claire’s feeling the strain, Andrew Milgram and Tony Yoseloff at the Milken conference, Podcast of the Week, LME litigation in STG, and much, much more…

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Rite Aid hits the skids, WW body slammed by Ozempic, Claire’s feeling the strain, Andrew Milgram and Tony Yoseloff at the Milken conference, Podcast of the Week, LME litigation in STG, and much, much more…


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Bruce Richards On the Markets

?How to Best Navigate Opportunity in the Golden Era of Credit Amid Uncertainty

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Body slammed by Ozempic

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tariff strain hitting the consumer

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Testing the limits of a non-pro rata LME….

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?How to Best Navigate Opportunity in the Golden Era of Credit Amid Uncertainty


The U.S. economy remains resilient on the surface, with strong job and wage growth keeping recession risks at bay. Fed Chairman Powell held rates steady, providing little guidance about his policy outlook as they maintain their “wait and see” mode. Powell is keeping rates firm to stem the risk of higher inflation, while also leaving lots of dry powder in the event of job losses. My bottom line is Fed is on hold until later this year. As noted, continued economic growth is masked by a weak Q1 GDP print where the technical decline of -0.3% was driven by imports, which normalized equates to an adjusted-GDP of approximately +3%.


As inventories run down, the true cost of tariffs will appear as imports were pulled forward in Q1 and importers will be forced to restock goods with tariffs. The tariff tax will put pressure on corporate earnings and consumers’ costs. I don’t expect recession this year, but I do expect stagflation, where inflation is higher, growth is lower. Companies exposed to imports will see earnings compress/margins squeezed, especially in the consumer sector.


Equities are the first to be impacted, credit is much better insulated. Within credit markets, private credit continues to be the star performer. Volatility has been well behaved, returns have been strong, and I expect this to continue to be the case. Direct Lending is nuanced, since one is best served by lending to non-cyclical businesses that are not impacted by tariffs. There are 10,000+ middle markets companies to invest in, so there is considerable flexibility afforded to lenders in portfolio construction. Middle markets carry the best risk reward with DL, since covenants are tighter, LTVs are lower, yet spreads offered in middle markets provide a higher return vs. larger deals.


ABL secured by mission-critical hard assets such as transportation, aviation, infrastructure, and equipment continue to deliver the best collateral characteristics and consistent performance. Unlike consumer-based ABL, hard asset-backed loans offer lower loss rates/stronger recovery rates and higher MOICs.


In a market clouded by macro uncertainty, the key is not just achieving 12% IRR, it’s doing so with discipline, moderate risk, and low relative volatility (annual IRR that is higher than the observed annual volatility). Private Credit, when executed with precision has outperformed Private Equity on a risk-adjusted basis, which is remarkable to observe. No wonder the biggest, smartest PE managers are raising more capital in their Private Credit programs than they are in Private Equity.


It is great to be an investor in the golden era of credit, where alpha is alive and well, where the winnings accrue to those who have unique sourcing channels, underwrite wisely, originate selectively, structure prudently, and have dedicated expertise across the full opportunity set: Direct Lending, ABL, and Opportunistic Credit.

To follow Bruce’s thoughts on the markets, investing and more, follow

@bruce_markets

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Our Take:

The Daily Cost of BK Legal fees Are Increasing.

Are we shocked? No.

We took a deep dive to see what is driving up the daily cost of restructurings and the culprit: Increasing Legal Hourly Rates. We analyzed final fee apps for top debtor law firms from 2018 to 2024 and found average hourly legal fees have increased by over 65% since 2018. Maybe a little bit of sunlight is the right disinfectant to help remedy the problem….

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