Serious problems in financial companies have a way of spilling over into the general economy. They often start in one obscure corner of the financial markets.
Back in October 2025, following the collapse of firms like First Brands and Tricolor, JPMorgan CEO Jamie Dimon warned of hidden risks in the $3 trillion private credit market. “When you see one cockroach, there are probably more,” Dimon said, suggesting that further defaults and “garbage lending” issues will likely emerge:
Year-to-date, the markets biggest private credit firms have seen their share prices decline substantially. (Source: YCharts/ Animal Spirits)
In 2026, we may want to get out the pest traps. During the bull market over the last three years, Wall Street’s largest financial firms have that have been betting big in the space and losing:
“You often don’t know there’s a problem with a private credit deal until it blows up and gets written down,” notes our Portfolio Director, Andrew Packer.
Andrew spent a few minutes covering this part of the market in yesterday’s livestream for Grey Swan Trading Fraternity members.
He’s also been tasked to outline the scope of the crisis at this year’s MoneyShow Masters Symposium and how to use tools like credit spreads to protect your portfolio. Here’s where you can sign up to hear Andrew’s presentation in person – down in Hollywood, Florida, April 9-11.
The real warning sign was posted when big financials pushed to add private credit investments to retail investor portfolios, your 401(k) and IRA funds.
Red Flag: Wall Street calls retail investor capital “exit liquidity.” As the enormous AI trade nears its peak, now is a good time to be cautious on the financial sector as a whole.
~ Addison
P.S. Grey Swan Live! returns today, at 2 p.m. ET.
John Robb, author of Brave New War and Grey Swan Investment Fraternity contributor, joins us for a discussion on the war with Iran, how it’s being fought, and what it means for the dollar and other assets. It will also be an opportunity to further delve into how these moves impact countries such as China.
With market volatility on the rise and a new set of global challenges arising from this conflict, you won’t want to miss out on this week’s Grey Swan Live!
Robb’s expertise on network warfare is central to understanding the Trump strategy for disrupting operations by killing 40 top Iranian leaders. In a globally connected tech economy in the 21st century, the strategies and weapons of warfare are evolving rapidly.
