#354 Larry McDonald: Private Credit Is This Cycle's Subprime — And Retail Investors Are Holding the Bag

New York Times’ bestselling author Larry McDonald, founder of The Bear Traps Report, returns to The Julia La Roche Show for an in-person episode discussing the risks in the markets today. McDonald makes the case that private credit is this cycle's subprime — opaque, over-leveraged, and already cracking — and warns that the retail investors who were sold quarterly liquidity on an inherently illiquid asset class are about to find out the hard way. He also breaks down why stagflation is the defining macro theme of 2026, why the 60/40 portfolio is broken, and why the great migration out of financial assets and into hard assets — energy, copper, gold, and commodities — is only in the second or third inning. Plus: a surprising first-ever Bitcoin buy, why natural gas is his top multi-year trade, and the under-the-radar risk nobody is talking about.

Links:

How To Listen When Markets Speak: https://www.amazon.com/Listen-When-Markets-Speak-Opportunities-ebook/dp/B0C4DFVFNR

Colossal Failure of Common Sense: https://www.amazon.com/Colossal-Failure-Common-Sense-Collapse/dp/B002IFLWMK

Twitter/X: https://twitter.com/Convertbond

Bear Traps Report: https://www.thebeartrapsreport.com/

0:00 Intro: Welcome back Larry McDonald, founder of The Bear Traps Report & author of "How to Listen When Markets Speak"

1:21 Private credit: is this cycle's subprime already here?

7:30 The Trump off ramp: 2025 vs. 2026 and what's different this time

9:43 Stagflation: sticky energy prices, slowing growth, and the TACO trade

13:14 The Fed's next move — hike or cut?

15:30 The great migration: from financial assets to hard assets

16:58 Mag7 double-digit drawdowns and the rotation playing out now

19:36 Is there a relationship between energy costs and the private credit crisis?

22:41 Gold, silver and precious metals — tourists flushed out, time to buy

26:13 First ever Bitcoin buy — the gold-to-Bitcoin ratio and why now

30:10 The under-the-radar risk: UK fiscal crisis and bond vigilantes

32:30 US fiscal picture: $39 trillion in debt and the dollar's secular decline

36:48 Why anyone still owns long-term bonds — and why that's changing

39:21 Lehman lessons

43:09 Is private credit already a crisis?

48:00 Parting thoughts and how to find The Bear Traps Report