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Nomura warns AI Credit risk approaches the dot-com bubble and Lehman crisis; oil prices become a key variable
BlockBeats reports,October 22, Nomura Securities strategist Naka Matsuzawa warned in a report released today that current credit risks facing U.S. technology companies and pressure on French sovereign credit resemble the market environment before the 2000 year dot-com bubble burst and the 2008 year Lehman crisis. The “ten-year credit cycle” framework he developed shows that approximately 1 to 2 years after a second wave of credit shocks has historically occurred, a third wave of shocks that could trigger an economic recession often follows.
The report noted that the 1997 Asian financial crisis, the 1998 year LTCM crisis, and the 2007 year subprime crisis and Bear Stearns crisis were all second-wave shocks, followed by the dot-com bubble burst and the Lehman crisis, respectively. Previously, the Federal Reserve was able to ease credit pressures by pausing rate hikes or cutting rates, but current inflation and rising oil prices may limit its policy space.
Nomura believes that oil price trends will determine whether risks escalate further. If rising oil prices are mainly caused by economic overheating, central banks will face the stagflationary dilemma of simultaneous inflation and credit risks, making it difficult to address the crisis through rate cuts; if the increase is driven mainly by geopolitical factors, the Federal Reserve may still be able to adjust policy and prevent a localized credit shock from developing into a systemic crisis.
The report also noted that the spread of current U.S. technology companies CDS has narrowed somewhat, but the spread between French and German government bonds continues to widen, indicating that market credit pressures have not yet dissipated.
Original link https://m.theblockbeats.info/flash/373178