Most investors focus on the headlines – the war in Iran and its potential impact on inflation, the Fed, artificial intelligence…
But according to legendary investor, Louis Navellier, one of the biggest risks in the market today has been quietly building in the background.
On Friday digest Lewis’ acquisition of the company brings the curtain down on the $3 trillion private credit market – often referred to as the “shadow banking system.” He explains why rising interest rates are beginning to reveal cracks that Wall Street is only beginning to recognize.
This is not a story about an obvious crash or sudden shock. It’s about risks that slowly build up… out of sight… until they reach a tipping point.
Below, Lewis looks at what’s happening beneath the surface of the market, why it’s important for your portfolio, and what investors should watch next.
He also lays out his full game plan – including where he sees risks and opportunities – In a new presentation you can watch here.
If this situation develops the way Lewis expects, staying ahead will be important for your portfolio.
I’ll let him take it from here
I wish you a good evening,
Jeff Remsburg
***************
In the summer of 2024, it felt like you couldn’t escape the noise.
- The countdown to the Paris Olympics has begun.
- Taylor Swift’s Eras Tour has been everywhere.
- The US presidential election was heating up quickly.
Investors focused on their headlines.
- Every inflation report creates market movements.
- The Fed’s next move dominated the conversation
- AI seemed to be the only trade that mattered
Everyone was focused on those big, obvious stories.
Meanwhile, I was Warning readers About one of the biggest risks that arise in the financial system.
It was happening quietly in the background. Hardly anyone was talking about it.
Now, I’ve never considered myself an alarmist. In fact, my critics and My fans would probably agree that I tend to be more of an eternal optimist.
Therefore, when the red flag was raised, many people were surprised.
But as I explained at the time, if there was anything that could derail a bull market… any kind of “black swan” event… then my money was on it.
I’m talking about Private credit market.
For the past year and a half, I have been warning that this market deserves a lot more attention than it has been getting.
At the time, private credit was being promoted as a safer and more stable form of financing. The problem is that it was also a place where risks could accumulate far from public view.
Now, more people are finally starting to care.
In just the past few weeks, we’ve seen a flurry of headlines suggesting that Wall Street is starting to wake up to the same risks I’ve been pointing out since 2024:
- The Wall Street Journal: “Warning signs of private credit emerge after Blue Owl offloads $1.4 billion in assets”
- Financial Times: “Blackstone’s leading credit fund records its first monthly loss since 2022”
- Bloomberg: “Ares and Apollo pull private credit as displacement grows”
- Market monitoring‘Just a spark could set private credit on fire, warns former Goldman Sachs CEO Blankfein’
per day Souq 360, I’ll explain what’s happening in this $3 trillion “shadow” banking sector – and why we should care.
Because this situation may collapse and affect the entire market, I will also explain how you should prepare…
The $3 trillion shadow banking system
Before I go any further, let me explain what private credit actually is…
Private credit is lending that occurs outside the traditional banking system. These are not loans from JPMorgan or Bank of America. These are loans made by private funds, asset managers, insurance companies, and other non-bank lenders who operate in what many now call the “shadow banking system.”
This market exploded after the 2008 financial crisis. Regulators clamped down on traditional banks, making it difficult for them to make the same strong loans they once did to smaller, weaker and more speculative borrowers.
But the demand for credit has not disappeared. I simply moved.
Private lenders stepped in, and private credit grew from about $300 billion in 2010 to nearly $300 billion. 3 trillion dollars today.
The problem is that a lot of that money flowed to borrowers who weren’t particularly strong to begin with. Then interest rates rose, financing costs jumped, and many of those companies were left trying to survive in a harsher environment.
For a while, Wall Street managed to weather some of these pressures by making loans, restructuring terms, and pushing problems into the future.
But this kind of “expand and pretend” strategy only works for so long.
This is why I believe the private credit market is approaching a real moment of truth.
That’s also why I just finished putting together a new presentation on the whole private credit situation – Which you can watch here.
But to give a brief overview of the situation, I recently sat down with the editor-in-chief of InvestorPlace Luis Hernandez To talk about what’s happening, why it matters, and what investors need to understand now.
Click Play button in the image below to watch my conversation with Louis.
Now is the time to get ready
Now there is a lot to be said about private credit markets – including how we got here, the risks they pose to the market, and what investors can do to prepare.
I’ll have more to say soon about where I think investors should look as this situation develops.
In the meantime, I put… This special offer Together we’ll walk you through the full story of private credit in plain English — how this market has grown so big, why the pressures are building now, and what I think smart investors should do before June 30.
During this presentation, I’ll also tell you more about five resilient companies that have the balance sheet strength, operating momentum, and institutional appeal to attract capital as investors become more selective. And about 10 stocks to avoid… those caught in the crosshairs of the growing private credit crisis.
I encourage you to watch it now while there’s still time to get ahead of the audience.
sincerely,
Louis Navellier
