It's just the beginning

It's just the Beginning

The past few weeks marked one of the sharpest market declines we’ve seen in years — and despite the increased volatility and large rebounds, it’s likely the beginning of a deeper, structural bear market.

Here’s what could be driving it:

• CRE + Government Debt Time Bomb
  Commercial real estate is sitting on trillions in debt that needs refinancing, and soon — at rates the banks can’t sustain. At the same time, U.S. government debt servicing costs are skyrocketing leading to souring interest payments that are unsustainable. Without a rapid drop in interest rates, both systems are heading toward a funding wall, or worse, a massive default cycle.

• Trump’s Leverage on the Fed
  Trump has made it clear: he wants the Fed to cut rates and J. Powell refuses. Despite the name calling and demands from the White House, Powell has consistently pushed back on the citing inflation uncertainty and a "relatively strong" labor market. That leaves Trump with one remaining lever — crash the markets with to force the Fed’s hand.

• The Fed is Cornered
  Rate cuts might not spark a relief rally because the economy will likely already be in a downturn before they act. Still, Powell may be forced to cut rates sooner than he would otherwise to avoid a broader credit crisis — not just in CRE, but in federal financing too. Expect the pressure campaign from the Trump administration to continue in the form of tariffs until the Fed bends the knee.

There is plenty of uncertainty but this is likely just the start of a new bear market. The cycle isn’t just about rates — it’s about institutional trust, credit, and structural cracks that rate cuts alone won’t patch.

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