The success and depth of US capital markets to finance entrepreneurs and successive tech revolutions has been extraordinary – fuelling the exceptionalism of the US economy. In contrast, the UK is more risk adverse towards start-up opportunities. That’s largely cultural, a reflection of the more mature, later-stage British Economy. What will happen when the US economy is also past its top, and following the UK into maturity?

I have no interest in golf – it’s a good walk spoilt. But the rumoured collapse of the rogue LIV Golf Tour, and the disinterest fans are showing in attending Trump’s price-gouging Football World Cup, may be hints the sports investment bubble is about to burst. If it does, it could trigger a confidence wobble across private capital. It could also spell opportunity!

The threat board is looking crowded this morning. From UK political risk, escalating conflict risks, a possible credit burp and what happens next in unsustainable narratives – who knows what further No-See-Ums lurk in the background. Yet markets party on. What can possibly go wrong…..?

Markets are less fragile than we think. There are always people watching, waiting and ready to catch bargains. Some risks are in plain sight. But in Private Capital Markets they are hidden – which is why many market players believe the scale of losses might be hidden. Will Private Markets trigger the next crisis? I doubt it.

Headlines about a deepening stock sell off, the rising “fear” gauge, and unsustainable valuations, are dominating the news flow. Relax. End of the world market crashes happen all the time. Sit back and enjoy the show. Get your buying boots ready.

The AI Bubble floats on a wave of Confidence – confidence the global economy needs it, the USA will lead it, the hyperscalers and AI firms can afford it, energy is not an issues, and competition from China, tech evolution and quantum are not future problems. All the market sees is opportunity. We've been here before.

Markets feel increasingly nervous. Although someone has cranked up the party music to 11, and the euphoria is still pouring, concerns about banking and loan exposures are rising. If there is a wobble, then it’s likely to be leverage on leverage that sees a bunch of private credit lenders in trouble.

While Trump fumes at Jay Powell for not slashing rates, Scott Bessent is the adult-in-the-room minding the Fed isn’t too battered by the President’s harangues. No doubt they chat about the structure of the market and the rising risks to it – including stablecoins.

When markets are hitting record highs is the time to be cautious, and ask why? US Stocks and Bonds are at record levels, despite the current uncertainties and policy instability. What’s driving it is a mix of themes, including market evolution. But also a market potentially complacent about approaching threats.

Blain’s Morning Porridge 24th April 2025 – Private Assets, Contagion [...]