Winter 2025-2026 Newsletter

Winter Quarter Highlights at Santa Clara University: 

• During the winter quarter, I took four courses: OMIS 34 (Science, Technology, and Society), FNCE 150 (Introduction to FinTech), FNCE 132 (Financial Derivatives), and MGMT 162S (Leavey Scholars Senior Capstone). 

• I continued to work in the Department of Modern Languages and Literature, where most of my time is spent making copies, faxing documents (yes, faxing is still a thing), and making fliers for course registration on Canva. 

Professional:

While this section is much shorter than in my last email, which detailed my experience over the summer interning at JPMorgan in Seattle, here are a few of the professional/career development highlights from the past few months:

• Meetings: While I admittedly fell slightly short of my goal of meeting with one professional a week for a virtual coffee chat, I still met with several new people who are now on this mailing list, reconnected with two of my mentors and several colleagues, many of whom are from JPMorgan’s Seattle office. These conversations have been a highlight of my college experience, as I am able to learn from professionals and receive guidance on my career. These conversations are also a major reason why I am working at JPMorgan post-grad.

• News: This quarter, I am trying to get back into reading/listening to the news every day like I did this past summer. Doing this over the summer made me realize how important it is to stay up to date on current events, as it gives you a much better perspective on what is happening around the world and generally makes you a smarter person.

Life: 

I have been very fortunate to travel a lot over the past few months:

• Right after I sent my last newsletter, I traveled with my mom for a three-week trip to India 🇮🇳, Nepal 🇳🇵, and Thailand 🇹🇭: We spent 7 days in India, 11 days in Nepal, and 2 Days in Thailand. This trip was absolutely amazing, and I learned an incredible amount about each country’s culture. I highly recommend traveling to Nepal, in particular, if you ever get the chance. We trekked across a portion of the Himalayas, and the people were incredibly kind, and the views were spectacular. 

• Utah and Tahoe: I am an avid skier, so I was very glad to be able to go skiing in Utah for a weekend and make it up to Tahoe a couple of times. Despite the poor conditions this year, it was a blast, and I can only hope there is more snow next year!

• Japan 🇯🇵: For Spring Break, a few friends and I went to Japan. We skied in Niseko for four days and were in Tokyo for four days as well. We had a great time on this trip, and it cemented my belief that Japan has the best cuisine in the world. 

Spring Quarter: 

• I am currently in my final quarter of courses at SCU (still can’t believe it). This quarter, I am taking two finance classes: Risk Management and Financial Modeling, and two other courses:  Theology of Marriage (fulfills my core religion requirement), and Effective Communication in Business (fulfills business core curriculum). 

• I also just finished my year-long role as Treasurer of Alpha Kappa Psi, the co-ed professional business fraternity that I am a part of. The past year as treasurer was challenging, but it gave me great experience in understanding how to budget and keep track of finances for a fairly large organization. 

What’s Next:

After my graduation on June 13th, I will be working full-time at JPMorgan in the Commercial and Investment Bank, starting June 22nd. The next two and a half months before graduation will go fast, so I am trying to enjoy what time I have left as much as possible. 

Recommendation: 

My recommendation for this newsletter is to pay closer attention to the growing risks in the private credit market and the increasing linkages between private credit and the traditional banking system (I have discussed this connection generally in a previous newsletter; if you are interested in reading more, you can find it here). 

My recommendation stems from an article I recently read in The Wall Street Journal entitled “Why Bank Stocks are Getting Beaten Up Over Private Credit.” One of the most important takeaways from this article is that private credit is not independent from the traditional banking system, as is often perceived. While private creditors are often positioned as independent alternatives to banks, in reality, they are heavily reliant on banks to fund the loans they make. Here is a simple explanation of how the private credit system works: A startup needs money, so it goes to a private credit company to request a loan. However, the private credit company does not have enough cash on hand to make this loan, so it goes to a bank (like Wells Fargo), borrows money, and then lends it to the startup. As a result, there are two layers of debt: the startup company is in debt to the private credit company, which is in debt to the bank. As you might assume, this can pose considerable risks to banks, as the article highlights. 

In strong market conditions, the leverage that private credit takes on by borrowing from banks can enhance returns. While I assume most of you understand how this works, as many of you work in the business sector, here is a simple explanation of what leverage is and how it can work for you. Suppose Company A has $100 of its own cash on hand; however, it wants more, so it borrows an additional $100 from a bank. Company A now has $200 of cash and can loan out that $200 as a result. Say Company A earns 10% on the $200 in loans it makes, meaning it earns $20. However, the bank Company A borrowed $100 from only charges 5% interest, or $5. So Company A earns a $15 profit ($20-$5) instead of the $10 ($100 * 10%) it would have earned if it just lent out the $100 it had prior to borrowing from the bank. So by using leverage (borrowing money), private credit can achieve amplified returns under favorable financial conditions. However, during poor market conditions, such as now, borrowers may struggle to repay their debt. For example, instead of a 10% return on investment, it may turn out to be 2% because the companies it lends to are unable to repay their loans. The private credit company still owes 5% to the bank, resulting in a 3% loss. This highlights how leverage can amplify both returns and losses, making it a powerful yet risky tool. 

This dynamic is particularly concerning in today’s environment because, as the article highlights, private-credit funds are facing greater pressure from investor redemptions and, as a result, may be forced to draw more on their bank credit lines to meet their current cash needs. Notably, these private credit funds have used only about “50%-65% of their available borrowing capacity” (WSJ), leaving significant room to increase borrowing in times of stress, which directly increases the banks’ exposure and risk. Additionally, bank lending to nonbank financial institutions, which includes private credit, has already grown rapidly to “$1.9 trillion, up from $1.1 trillion just three years ago,” representing “14% of total bank lending” (WSJ). This shows that banks are becoming increasingly exposed to these funds at a time when loan quality appears to be deteriorating, as higher interest rates and slower economic growth make it harder for borrowers to repay. This creates a negative feedback loop: stress in private credit, driven by borrower non-repayment, leads private credit companies to borrow more from banks, which increases risk for banks as private credit may struggle to repay their loans. This phenomenon has led to a growing concern that banks could be “left holding the bag” if conditions worsen (WSJ). Going forward, a key variable to watch will be whether private-credit firms begin drawing heavily on their unused credit lines, as this would further increase bank exposure. 

Ultimately, my point in highlighting this article is to draw attention to the issues private credit is facing and the impact this is having on banks as well, given their mutual reliance on one another. For investors, this matters because it helps explain the recent underperformance in bank stocks and highlights risk that may not be fully priced into the market. I hope this article encourages increased scrutiny of private credit markets and encourages you to consider how this interdependence can increase instability across the entire financial system. 

If you have any other book recommendations, podcasts, etc., please feel free to send them to me!

I hope you all have a great rest of your spring, and I look forward to reconnecting in the future. Please don’t hesitate to reach out.

All the best,

Jenson