We are not too concerned about cockroaches in the private credit market. Loan losses in that market reduce the rates of return on diversified portfolios of such loans. They don’t trigger an economy-wide credit crunch, which has often occurred when bad loans hit the banking system hard.

The bad news about the cockroaches pushed the S&P 500 back down near its 50-day moving average today. We still expect it to hold, though we can’t rule out a test of the 200-day moving average [6060] if the 50-dma fails to support the index. Widespread expectations of another two Fed rate cuts before the end of this year suggest that further downside should be limited.