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The Music Has Stopped in Private Markets
Allocations by institutional investors, represented by public pensions, have plateaued in recent years. This is unsurprising given the sheer volume of capital already committed, combined with the fact that private equity, the larger of the two allocations, has failed to deliver returns comparable to public markets for many years.
The tapering of new institutional commitments, coupled with a clogged exit environment, created pressure across the private-markets ecosystem. Asset managers still had large portfolios to finance, consultants still had asset classes to recommend, and distributors still needed new products to sell. The solution was a structural innovation that allowed the industry to expand its investor base: semi-liquid vehicles designed specifically for individual investors and marketed as the “democratization” of private markets.
These structures typically offer periodic liquidity, often through quarterly redemption windows, while investing in assets that may take years to sell at reliable prices. The appeal is obvious. Investors are offered exposure to private markets together with the appearance of stability and the reassurance that they can redeem capital periodically.
The problem is that this model violates the previously explained principle of finance. Long-duration, difficult-to-price assets should never be financed with short-term liabilities unless a lender of last resort stands behind the structure. When that rule is ignored, the structure is unstable. As long as inflows continue and redemptions remain manageable, it seems advantageous to both investors and fund managers. But once investors begin to withdraw capital, the mismatch between liquidity promises and underlying assets becomes visible very quickly.
History provides many examples of this dynamic. Wildcat banks in the 1800s, trust companies in the early 1900s, and investment bank warehousing facilities in the early 2000s. In each case, when confidence weakened, investors rationally attempted to redeem before others did. It doesn’t take long before investors run, simply in anticipation of other people running – which is the hallmark of a bank or fund run. This risk is substantially amplified when individual investors provide a large percentage of the capital.
Taken together, semi-liquid private credit and private equity funds are unusually vulnerable to run mechanisms. Not only are Illiquid assets financed with redeemable capital, but the underlying investments were raised at the tail-end of two aged investment cycles. Financial history suggests that such combinations rarely remain stable for very long. They may function smoothly for several years. But when confidence weakens, the structural mismatch becomes impossible to ignore.
That day arrived on February 18, when Blue Owl announced that it had permanently eliminated quarterly liquidity in its OBDC II private credit fund.
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Are Mortgage Rates Approaching a Top?
Mortgage rates have had a really bad month.
After falling to the lowest levels in three and a half years in late February, they abruptly changed course.
The reason why wasn’t a mystery. An unexpected war broke out in Iran, sending oil prices above $100 a barrel and mortgage rates back above 6.50%.
At last glance, the 30-year fixed is priced around 6.625% and mortgage rate charts look parabolic.
But maybe, just maybe, we are nearing a top for mortgage rates.
Is the Worst Almost Over for Mortgage Rates?
Before we talk about mortgage rates possibly falling, I will admit that I think it gets worse before it gets better.
The war in Iran is still developing and they’re sending lots of troops to the region.
At the same time, it seems President Trump is pushing more and more for a ceasefire and an end to the conflict.
Of course, Iran keeps countering any talk of progress on that front, which makes you wonder what’s actually going on.
So given that uncertainty, I believe mortgage rates still have a bit more room to move higher.
However, given the movement that has already taken place, in such a short span of time, you could argue it’s nearing a top.
After all, the 10-year bond yield surged from around 3.95% in late February to nearly 4.50% today.
That’s a massive move in less than a month, which tells you it might be a bit overdone.
And given most expect the 10-year to trade in a range of 3.75% to 4.50%, we are basically already at the high end.
However, once you sprinkle in the surging oil prices, and accompanying gas prices, you can see where the 10-year could go a bit higher.
But even then, is it 4.70% or something around those levels?
If so, we’re talking only another 20 basis points higher for mortgage rates, assuming spreads don’t widen.
Could a 6.875% 30-Year Fixed Be the Next Stop?
To my point about rates getting worse before they get better, I do see the next logical step being a 30-year fixed around 6.875%.
Before they get there, it’ll be 6.75%, but basically another 0.25% higher relative to current levels.
Importantly though, I don’t know if they make it all the way back to a 7-handle again.
I actually hope they don’t because the damage to home buyer sentiment will be very real.
The housing market got battered by 7% mortgage rates time and time again over the past few years.
Then we finally shook them last spring and didn’t look back. The last thing this very fragile housing market needs is to return there.
If we do the math, a 10-year bond yield at around 4.70%, up from current levels of roughly 4.42% would push the 30-year fixed up about another 0.25%.
So if Mortgage News Daily’s rate index is at 6.62% today, that would get us to around 6.87%.
Since mortgage rates are priced in eighths, that would be very convenient math.
Of course, that still requires the 10-year bond yield to rise pretty significantly from current levels.
This does assume mortgage spreads don’t widen, though they too already have so you could argue that’s already baked in.
The spread between the 10-year bond yield and 30-year fixed was below 200 bps in late February and now it’s around 220 bps.
In other words, both yields and spreads have already factored in the war and higher gas prices. Perhaps it’s mostly baked in.
Trump Will Want Lower Mortgage Rates Before the Midterms
There’s one last thing working in favor of mortgage rates not moving much higher, nor staying high.
We have the midterm elections this year, albeit not until early November.
However, knowing that, there’s going to be a lot of eyes on the economy from now until then.
And issues like high gas prices and high mortgage rates won’t play well for the President or his constituency.
So you better believe he will do everything in his power to get gas prices AND mortgage rates down again.
If that all goes according to plan, it might mean elevated mortgage rates from now through summer, then rates drifting back toward recent lows in fall.
In the meantime, we still have to pay attention to the economic data that is released, both CPI and PPI reports (and PCE) to determine if inflation is rising again, and labor data like the ever-important jobs report.
Mortgage rates could move lower faster if inflation turns out to be cooler than expected, or if jobs data is worse than anticipated.
The opposite is also true.
Before creating this site, I worked as an account executive for a wholesale mortgage lender in Los Angeles. My hands-on experience in the early 2000s inspired me to begin writing about mortgages 19 years ago to help prospective (and existing) home buyers better navigate the home loan process. Follow me on X for hot takes.
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Harvard Business School professor Sandra Sucher tells HBR: “This is the time to take action to move the needle.”
Uneasy mix of celebration and anxiety dominates the ‘Davos of energy’ as the Iran war drags on
Festive music from the band Sweet Crude blared at a party minutes after President Donald Trump’s former defense secretary warned that ending the war now would cede ownership of the narrow Strait of Hormuz—the world’s most critical choke point—to Iran.
“We’re in a tough spot, ladies and gentlemen,” said retired Gen. Jim Mattis at the CERAWeek by S&P Global conference in Houston. “I can’t identify a lot of options.”
The dichotomy of the celebratory, yet nerve-wracking vibes dominated the unofficial “Davos of energy” event this week that still attracted a record of over 11,000 attendees from 90 countries—a veritable who’s who of the energy sector around the world—not counting the fossil fuel protestors outside.
The mood was meant to be triumphant. There’s ongoing crude oil and gas growth, but most prominent is the unprecedented wave of electricity demand from AI, triggering an infrastructure boom for pipelines, export hubs, and power, including gas-fired generation, renewables, nuclear, and more—truly an all-of-the-above energy renaissance that could still suffer from geopolitical turmoil.
So, the extension of the unexpected Iran war overshadows everything. The industry still cannot come to grips with the previously unfathomable scenario of the strait staying shuttered for a prolonged period of time. The Strait of Hormuz is the narrow, precarious waterway between Iran and the Musandam Peninsula through which flows roughly 20% of the world’s oil and natural gas, fertilizer for agriculture, helium for semiconductors, and petrochemicals that go into almost everything. Much of the world, especially in developing Asia, is already suffering the consequences and the ripple effects will continue to spread the longer the war draws out.
“There’s a lot of somber talk,” said Arjun Murti, energy macro and policy partner at the Veriten research and investment firm. “The strait does need to open in some fashion pretty soon. It’s not good for anybody.”
Even if American oil, gas, and chemicals producers rake in higher profit margins for now, they’ll suffer from the volatility and longer-term demand destruction later, especially if a global recession—or worse—takes hold.
Iran dominated the news so much that Venezuela seems like old news. The in-person appearance at CERAWeek of Venezuelan opposition leader and Nobel Peace Prize winner María Corina Machado was almost an afterthought. The four-hour-long security lines at Houston’s airports were a much more prominent topic of conversation.
With oil prices trading above $100 per barrel—up about 75% since the beginning of the year—Chevron CEO Mike Wirth warned the real impacts are only starting to take hold and that commodities remain underpriced. “There are very real physical manifestations of the closure of the Strait of Hormuz that are working their way around the world through the system that I don’t think are fully priced in,” he said, adding that markets are trading off “scant information.”
Shell CEO Wael Sawan said energy supply shortfalls could hit Europe very soon. Releases of emergency oil supplies only fill part of the gap. “South Asia was first to get that brunt. That’s moved to Southeast Asia, Northeast Asia, and then more so into Europe as we get into April.”
The Dow chemical CEO said the inflationary effects will extend at least through the end of this year. “The die is being cast for the rest of the year for what’s going to happen in the markets,” said CEO Jim Fitterling. “It’s like the unwind we saw on supply chains during COVID.”
Jack Fusco, CEO of Cheniere Energy—now the leading liquefied natural gas exporter in the world as a result of Qatar’s supplies being severely damaged and offline—said the final waterborne shipments from before the war from Qatar just made landfall, so the physical shortfalls are only beginning. “I don’t think you’ve seen a real impact just as of yet,” Fusco said, adding that he’s literally taking phone calls of “Help!” from Asia.
Political massaging
Key members of the Trump administration trekked to Houston, including Energy Secretary Chris Wright and Interior Secretary Doug Burgum, attempting to assuage the concerns of industry leaders and encourage them to produce more oil and gas.
This occurred as President Trump declared the war won—while sending more troops to the Persian Gulf for a potential escalation—and said oil prices would quickly fall again, which doesn’t exactly motivate more oil production.
“Markets do what markets do,” said Wright, a former oil and gas CEO, arguing that “prices have not risen enough yet to drive meaningful demand destruction.”
“It’s short-term disruption right now, but to end a multi-decadal problem and lead to a world that’s much more peaceful, can be much more prosperous, and much more securely energized,” Wright told the CERAWeek audience.
The next day, Wright, who remained in Houston most of the week, said investors are wrong when they pigeonhole energy as a single sector.
“Energy is not one sector. Energy is the enabler of absolutely everything we do,” Wright said. “Energy is life.”
That sentiment is exactly what makes everyone so nervous about the continuation of the Iran war—one started by the U.S. and Israel—and the greatest energy supply shock in history.
There’s a sense of a freeze across the energy industry, stifling long-term planning—except for examining many potential scenarios—and allowing for only short-term operational adjustments. Many top CEOs avoided interviews outside of the main stage for fear of speculating on the war and politics. Houston-based Exxon Mobil CEO Darren Woods didn’t come at all. And top Middle Eastern leaders, such as the CEO of Saudi Aramco, canceled their travel plans.
Some sent recorded video messages instead. Sultan Ahmed Al Jaber, the CEO of the Abu Dhabi National Oil Company (ADNOC), accused Iran of “choking the throat” of the “global economy.”
“Weaponizing the Strait of Hormuz is not an act of aggression against one nation. It’s economic terrorism against every nation,” Al Jaber said. “And no country should be allowed to hold Hormuz hostage. Not now, not ever.”
Kuwait Petroleum CEO Sheikh Nawaf al-Sabah said he is “outraged” by Iran’s unprovoked counterattacks against its Gulf neighbors. Kuwait and Iraq have already shut off most of their oil production, while Saudi Arabia and the United Arab Emirates have implemented major cutbacks as well.
“It’s a domino effect,” al-Sabah said. “The costs of this war don’t stay within geographical lines in this region. They extend all the way through the supply chain.”
The unknowns are really what’s scariest, said Veriten founder and CEO Maynard Holt.
“You have this confluence of factors—an administration keeping a very tight circle to maintain the element of surprise, the Europeans taking a limited role, energy players and various other Middle East actors deciding not to speculate in public, all with a backdrop of a potentially calamitous extended blockage of Hormuz,” Holt told Fortune.
“That whole stew just raises the overall anxiety while also limiting the public discussion.”
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100% Bonus Depreciation is Back—Here’s How Investors Can Take Advantage in 2026
This article is presented by Cost Segregation Guys.
If you’ve been following real estate tax strategy for the past few years, you’ve watched a powerful deduction slowly disappear in the rearview mirror. Bonus depreciation went from 100% in 2022 to 80%, then 60%, then 40%—a slow bleed that left a lot of investors shrugging and saying, “Well, I guess we just wait it out.”
The wait is over. Thanks to the One Big Beautiful Bill Act (OBBBA), signed into law on July 4, 2025, 100% bonus depreciation has been permanently reinstated for qualifying property acquired and placed into service on or after Jan. 19, 2025.
But here’s the thing most investors are missing: Bonus depreciation is only as powerful as your ability to use it correctly. And that’s where cost segregation enters the picture.
Before we get to the strategy, let’s back up and talk about the problem it’s designed to solve.
The Standard Depreciation Schedule: Slow, Painful, and Not Optimized for You
When you buy a rental property, the IRS doesn’t let you deduct the full purchase price on day one. Instead, it requires you to depreciate the asset over its “useful life”—27.5 years for residential properties and 39 years for commercial.
What does that mean in practice? Let’s say you buy a $500,000 single-family rental. Under standard depreciation, you’d deduct roughly $18,182 per year for 27.5 years. It’s better than nothing, but it’s far from exciting—and it treats your entire investment as if it’s one monolithic asset aging at the same rate.
The IRS’s logic: The structure, such as the walls, foundation, and roof, depreciates over decades. But that’s not all you bought.
Your $500,000 rental property isn’t just a building. It’s a collection of hundreds of individual components, and many of them have much shorter useful lives than 27.5 years.
The standard schedule ignores this entirely. It lumps everything together, assigns one timeline, and calls it a day. For the investor, this means leaving a significant deduction on the table every single year.
What Gets Lumped Together That Shouldn’t Be
Here’s where it gets interesting and where most investors have a blind spot.
When you purchase a property, the building itself isn’t the only thing with depreciable value. Inside and around that structure are dozens of assets that the IRS actually classifies as personal property or land improvements. These are categories with much shorter depreciation schedules: five, seven, or 15 years.
But under the standard depreciation approach, these components get buried inside the “building” bucket and depreciated at the building’s rate. They’re in there; you’re just not getting the faster deductions you’re entitled to.
The fix is a detailed engineering and tax analysis that identifies and reclassifies these components: cost segregation.
Real-Life Examples: What’s Really in Your Property
But before we get there, let’s make the problem concrete with some real-world examples.
Flooring
That hardwood floor in your rental? Or the luxury vinyl plank you installed during your last renovation? Under standard depreciation, it’s riding the 27.5-year schedule along with the walls and foundation.
But specialty flooring, such as carpet, decorative tile, and vinyl plank, is generally classified as five-year personal property. That means it could be depreciated in full in year one under the new 100% bonus depreciation rules, instead of dripping out over nearly three decades.
Appliances
Movable personal property with a five-year depreciable life includes refrigerators, ranges, dishwashers, and washer/dryer units, but if they’re not broken out explicitly, they get absorbed into the building’s 27.5-year depreciation schedule. That’s a significant difference. Fully deducting a $12,000 appliance package in year one versus spreading it over 27.5 years is not a minor distinction on a tax return.
Parking lots and land improvements
Own a small multifamily property or short-term rental with a paved driveway or parking area? That asphalt belongs in the 15-year land improvements bucket, not the 27.5-year building bucket. Same goes for landscaping, fencing, outdoor lighting, and sidewalks. These are all separate asset classes with faster depreciation schedules, and they’re routinely overlooked in a standard depreciation analysis.
These categories are right there in the IRS cost segregation tax code. The challenge is identifying and documenting them properly, which is exactly what cost segregation is designed to do.
The Concept of Asset Components: Not All of Your Building Is a Building
The key insight behind cost segregation, and why 100% bonus depreciation is such a game-changer right now, is this: A real estate investment is not one asset. It’s hundreds of assets, each with its own classification, useful life, and depreciation timeline.
The IRS recognizes this. The tax code distinguishes between:
- Real property: Real property (the structure itself) is depreciated over 27.5 or 39 years.
- Personal property: Personal property (movable components like appliances, flooring, and fixtures) is depreciated over five or seven years.
- Land improvements: Land improvements (site improvements outside the building) are depreciated over 15 years.
Standard depreciation doesn’t make this distinction for you. It defaults to treating nearly everything as the building. That’s the path of least resistance for a tax preparer who isn’t a cost segregation specialist, like Cost Segregation Guys, but it’s a costly default for the investor.
To illustrate the gap: A professional cost segregation study typically identifies 20% to 30% of a property’s purchase price as shorter-lived components eligible for accelerated depreciation. On a $1 million property, that’s $200,000 to $300,000 that could potentially be deducted in year one under current bonus depreciation rules, rather than spread across 27.5 years.
The math on that is significant. The strategy is real. And now that 100% bonus depreciation is back and permanent, the opportunity to use it is bigger than it’s ever been.
There’s a Method to Break These Out Properly
So how do you actually identify and reclassify these components? How do you separate the flooring from the foundation, the appliances from the structure, the parking lot from the land? And how do you do it in a way that holds up under IRS scrutiny?
The answer is a cost segregation study, a detailed engineering-based analysis that goes component by component through your property, assigns the correct asset classifications, and documents everything to the IRS’s standards.
It’s not something you do with a spreadsheet. It requires trained professionals who know both the engineering side (what’s actually in a building and how it depreciates) and the tax side (how the IRS classifies different asset types). Done correctly, it’s one of the most powerful tax strategies available to real estate investors. With 100% bonus depreciation now permanent, the return on a well-executed cost seg study has never been higher.
Final Thoughts
While 100% bonus depreciation is back permanently, a deduction you don’t know how to capture is a deduction you don’t get.
The standard depreciation schedule was never designed to optimize your tax position. It was designed to be simple. Simple and optimal are two very different things.
The investors who will benefit most from the current tax environment are the ones who took the time to understand what they actually own—down to the flooring, appliances, and asphalt—and structured their depreciation accordingly.
That process starts with knowing what to look for. And now you do.
Chase United Business Cards: 100,000 Point + 2,000 PQP Offers Or 115,000 Points
Update 3/27/26: This is now showing a May 20 end date.
Update 2/3/26: Available again. There is also a 115,000 point offer but that requires a United code.
The Offer
Direct link to offer
- Chase is offering increased offers on the Chase United Business cards of 100,000 miles and 2,000 PQP.
Our Verdict
Recently this was as high as 135,000 miles on the regular card and 120,000 on the club card has been offered as well. Because of that I don’t really think this is worth it and won’t be adding this to the best credit card bonus page.
Hat tip to DDG
Why Do Basketball Players Miss Shots They’ve Made Before? Same Reason Smart People Struggle With Decisions
If you run a business, you’ve seen some version of this.