WARNING: This Recession Will be WORSE than 2008.

TL;DR

Analyst Richard Bookstaber warns the convergence of private credit risks, AI overinvestment, Iran conflict, and Taiwan tensions could trigger a crisis worse than 2008.

Key Points

• 1.Moody's recession probability hits 49%. Mark Zandi's ML-based Leading Economic Indicator model hit its highest reading since COVID and Liberation Day, driven by weak labor market data.
• 2.Richard Bookstaber, who predicted 2008, says this crisis could be worse. He argues the danger isn't one risk but four interconnected ones: private credit, AI overinvestment, Iran, and Taiwan.
• 3.Private credit is hiding massive losses. Apollo's co-president warns small-to-medium businesses in private credit may return only 20–40 cents on the dollar, with asset managers having no incentive to mark down valuations since it would cut their 2% management fees.
• 4.The 2008 analogy is financial engineering again. Just as CDOs and credit default swaps turned $1T in housing exposure into $10T of synthetic risk, complex private credit structures may be obscuring similar leverage today.
• 5.Iran is the wildcard tipping point. Kevin estimates a 60% chance the conflict ends quickly; if it lasts more than 6 months, he believes a recession becomes highly likely, partly because Iran disrupts helium supply used in chip manufacturing at TSMC.
• 6.Ed Yardeni warns the buy-the-dip signal may fail. Put-to-call skew in the S&P 500 is at its highest since 2021, suggesting markets may be underpricing the duration and severity of the Iran conflict.