Market conditions and observations for Sunday, September 14th, 2025

T-16: Time bomb in silence

Summary: The market is closed and the hellish kettle opens

Sunday, September 14th. Global financial markets are closed and there is no numerical movement. But this silence is nothing but the eerie silence before the storm. Over the weekend, structural corruption that had been taking place deep in the US subprime auto loan market was delivered to our desks through multiple DRs (decision-making requests). This is unmoving evidence that an alchemy called "securitization," reminiscent of the 2008 financial crisis, is once again eroding the entire system. Market participants are watching with bated breath as the market begins tomorrow, Monday. The return of Black Monday is no longer just speculation.

New fires that emerged over the weekend

  • Tricolor's bankruptcy and double collateral suspicions: Tricolor Holdings, a major subprime car loan company, has gone bankrupt. The background to this is a malicious allegation of fraud, called "double collateral," in which the same asset is sent to multiple financial institutions as collateral. There is confusing information that the US Department of Justice (DOJ) has launched an investigation.
  • Pollution to the core of the financial system: The root of this problem lies in a serious conflict of interest in large investment banks such as JPMorgan and Barclays, both as warehouse loans (warehouse lines) lenders, and underwriters of ABS (asset-backed securities), which bundle and securitize the loans. They form risks and sell them all around the world.
  • Deja Vu, 2008: This structure is exactly the same as the CDO (rebate-backed securities) that caused the subprime mortgage crisis. The fraud of a single company is beginning to develop into a situation that shakes the trust of the entire financial system through the process of securitization.

Observation and analysis

Our analysis shows that this collapse of the subprime automotive loan ABS market will dramatically increase the likelihood of "Walpurgis (US Treasury Primary Bid not being completed)" on September 30th. This is because JPMorgan and Barclays are also primary dealers who are obligated to ultimately underwrite US Treasury.

The huge losses in the ABS market hit their balance sheets directly and take away the capacity to take on US Treasury bonds. "Automobiles, Sovereigns, Doom Loop" --A chain of nightmares has become a reality, with the burning of car loans destroying national credit (sovereign bonds).

There is no guarantee that Black Monday will occur on 0915. However, it is only certain that Pandora's box opened this weekend when the market was closed.