The Crash Signal Nobody Is Talking About: Tech's Hidden Credit Warning

The stock market keeps going up,

but something in the credit markets is

quietly flashing red. In this video,

we break down a chart that most

investors completely ignore. The tech

sector 5-year credit default swaps.

will explain what it is,

how to read it,

what it's telling us right now, and why

index fund investors may be far more

exposed than they realize.

So, if you're watching this right now, I

want you to stop whatever you're doing

and really pay attention

because today we are talking about

something that most financial channels

are completely ignoring. And honestly,

that's exactly what makes it so

important.

The reason they're ignoring it is

because not many people are familiar

with the credit for one.

So, we're looking at the chart today,

just one chart. But this chart, when you

learn how to read it, tells you a story

that could change the way you think

about your portfolio entirely.

The title says it all.

Tech sector credit risk pricing. Now,

let's be honest. That sounds like a

boring headline, but trust me, by the by

the time you're done today, we are going

to understand exactly why this matters

to every single person who owns an index

fund, a 401k, or any kind of investment

that has anything to do with tech

stocks.

So, let's get into it.

First, first, let's set the scene. This

chart is called the tech sector credit

risk pricing chart.

Comes from top-down charts and use data

from LSEG which stands for the London

Stock Exchange Group. These are serious

institutional level data sources. This

is not some random internet chart. This

is the kind of data professional money

managers look at.

Now

the chart covers the years from 2004 all

the way to 2026.

That's over 20 years. It's very

important because it happens the

financial world and this chart captured

most of all of them. Right? There are

two lines on this chart. Very simple.

Let me walk through both of them. So how

to read each one. The black line that's

on the left side of the chart represent

the US TMT stocks. As you may or may not

know, TMT stands for technology, media,

and telecommunications.

Think of it as basically a price index

u of big tech and related companies.

As the black line goes up, tech stocks

are going up and uh related companies.

As the black goes up, the tech stocks

are going up. Simple enough, right? So,

and if you could see that black line has

been at one of the most incredible runs

in the stock market history,

starting around 2009 and basically going

up and to the right for 15 years. The

red line on the right side of the chart,

it uses a different scale.

The red line represent the tech sector,

five years CDS.

CDS stands for credit default swap.

And basically what we're saying is uh

the credit default swaps which I used to

work a lot quite a bit a lot with it.

Basically insurance. You're insuring a

credit. You're insuring a bond. and

you're ensuring the ultimate credit of a

company of a loan, right? Uh so in case

there is a default, then you're covered.

So that's a mathful mathful. So let me

explain what actually means in plain

language.

A credit default swap is basically an

insurance policy.

Imagine you lend your neighbor $100, but

you're a little nervous, right? And what

if they can't pay you bad? So you go to

someone else and say, "Hey, I'll pay you

a small fee every month and if my

neighbor doesn't pay me back, you cover

the loss." That's an arrangement. That's

an insurance. And essentially, this is

what a CDS is.

In the financial world, big banks, hedge

funds, and institutions, they do this

constantly. They buy and sell protection

on corporate debt. So when you see the

tax sector 5ear CDS going up on this

chart that means

that the market is pricing in more risk

it means the smart money is paying more

for protection against tech companies

defaulting or running into serious

financial problem.

So when the red line goes down it means

confidence is high. It means it cost is

cheaper for you to buy protection to buy

insurance. The market feels safe. People

aren't paying much for that insurance.

So, think of the red line as the fear

gauge for the tax sector.

Higher the red lines, the more fear. And

the lower the red line, more confidence.

Okay, got it? So, let's look at what the

chart is actually showing us. But before

we go into it, don't forget to subscribe

and give us a like. And if you want to

go deeper, don't

think about becoming a channel member. I

come to my members everyday life and I

go into details into what I'm doing,

some of my positions and you know,

you'll learn a thing or two. Let's start

at the very left side of the chart. The

year is 2004.

At this point, the black line, tech

stocks sitting around 7 to 800. It is

relatively flat. Tech is still

recovering from the dotcom crash of 2001

and 2002.

The sector is healing, right? The red

line, the CDS is already elevated

in the early 2000 because memories of

the dotcom burst are fresh and but but

by 2004, 2005, 2006, the red line is

actually coming down and credit markets

were coming down. Confidence was

building.

Something very important was happening

in the broader economy. Housing prices,

some of you might remember, were

skyrocketing. Banks were giving out

mortgages to basically anyone. Leverage

was everywhere. And the financial system

was quietly becoming more fragile by the

day.

But look at this chart. In 2006 and

early 2007, you feeling pretty good.

Tech stocks were holding steady. Credit

risk was manageable. and the economy

seemed fine on the surface.

Then come 2008.

So look at the chart right around 2008

going in 2009. The red line doesn't just

go up, it explodes. It goes from

somewhere around 100 or 150 all the way

to 800 basis points. That is a massive

almost vertical spect risk pricing. So

basically we're saying at that time you

paying a 100 basis point which is $1%

you know to hedge your position. Now

that same position was costing you 8%.

What does that mean? It means the market

was absolutely panicking. Institution

were paying enormous amount of money for

protection against tech and corporate

defaults. Of course, they all assumed

that whoever you were buying protection

from were was actually going to be able

to pay you, which was not the case, but

that's a different topic. So, the whole

system was cracking apart. And the black

line, you see the tech stocks

absolutely collapse.

You can see it falling sharply right

around the same period

when the red line goes up. The tech

stocks got crushed during the financial

crisis just like everything else. Now,

here's what's fascinating. The CDS

market, the red line, actually started

rising before

the stock market fully broke. Remember

that

credit markets tend to sniff out trouble

before the stock market reacts because

they are focused on credit, on risk. the

smart money, the people trading CS

contracts were getting nervous and

paying up for protection even before the

worst headline hits. You know, unlike

retailers, you know, the retail uh crowd

which tends to buy when everybody else

is buying, they will actually say, hm,

something is going on. This is one of

the most important lessons in investing.

Credit markets are often earlier than

stock markets when it comes to sensing

danger. And if you want to watch the

stock market, you can miss out crucial

early warning signs. That is the reason

I tell my members to watch the 10-year

yield. And we watch it every day. Right

now, it's kind of out of hand because

it's above the bed fund rate, which it

should not be. So, after that terrifying

spike in 2008, 2009, something

remarkable happened. The red line, the

credit risk, came crashing down. Central

banks around the world cut interest

rates to basically zero.

The Federal Reserve launched massive

bond buying programs. Government pump

trillions into the economy and it worked

at least in terms of stabilizing the

financial system. And look at the black

line. From 2010 onwards,

tech stocks began one of the greatest

bull markets in history. Every year

almost without fail the black line

marched higher and higher. Facebook,

Amazon, Apple, these companies grew into

the largest corporations on earth. The

red line which is a CDS crisis stayed

mostly low

calm throughout most of these decades

because basically the cost of risk the

riskiness of the credit were okay. I

mean there were small bumps. You can see

a little bump around 2011 when Europe

had a debt crisis. Another little bump

around 2015, 2016, a significant spike

in 2020 when COVID hit the world. But

every single time and every single time

the fear subsided, the red line came

back down and tech stocks resume their

climb.

This created belief in the market, a

very deeply heard belief that tech

stocks only go up and any dip is a

buying opportunity that the Federal

Reserve will always step in to save the

market.

And for 15 years, that belief was

rewarded

because it's important to understand

where we are now. In early 2020, COVID

hits. You can see on the chart, the red

line spikes sharply again. Credit risk

shoots up. People are terrified.

Global economies are shutting down. The

stock market drops about 30% in a matter

of weeks.

But then something unprecedented

happens. The Federal Reserve cut rates

to zero within days. The US government

sends out a stimulus checks. Congress

passes trillions in relief packages. And

the stock market doesn't just recover.

It rockets to all-time high within

months in a very worst situation you

could think.

The red line CDS risk comes right back

down. Market confidence is restored

almost immediately.

The Fed is backstopping everything.

And from 2020 to 2024, the black line,

you know, tech stocks nearly doubles and

more depending on which part of the tech

stock you are measuring. This is a world

most investors have come to know. This

is the world they expect to continue.

Okay,

here we are. Look at the far right

of the chart.

You are now in 2025

going into 2026.

The black line tech stocks is near the

top of the chart.

It's an all-time high. We are talking

about valuation that by historical

standards are incredibly stretched. The

AI boom has added trillions of dollars

in market values to companies like

Nvidia,

Microsoft, Meta. Everyone is excited.

Everyone thinks the next big thing is

artificial intelligence.

But now look at the red line all the way

to the right of the chart,

the credit risk age. It is rising

quietly,

steadily, and in recently it ticked up

noticeably. Now to be fair, it's not a

2008 levels, right? huge spike that you

see, but it's nowhere close to the

terrifying spike that we saw. But there

is the thing that is not the right

comparison to make. The right question

is why is it rising now?

When tech stocks at alltime high.

In a healthy market, when stocks are

this elevated, you typically expect

credit risk to be low and stable.

investor would be confident. Companies

would with strong balance sheets, the

CDS would be quiet. Everybody's making

money. But instead, there's growing

anxiety in the credit market. Something

is making the institution who trade

these instruments nervous enough to pay

more for protection. So, they're all

buying protection. And what happens when

you buy protection, right? It's at let's

say it's at uh 200 basis points. You

say, "I'm going to pay 200 basis points

for this." Then somebody says, "Yes,

I'll pay 210. I'll pay 220 and then

you're selling the protection. Now

obviously remember for you to buy

protection you're buying protection from

another institution. So the other

institution is taking on the credit risk

and the price goes up and up and up.

It's a measure of something happening.

So let's walk through the main reason

you know analysts believe this is

happening. First interest rates. For

most of 2010 interest rates were near

zero. That meant borrowing was cheap and

easy. Tech companies could borrow money

at almost no cost to fund their growth.

But since 2022,

as you remember, the Fed has been rising

rates.

Why? Because they mean they want to

fight inflation.

And for companies that depends on cheap

capital, that is a real challenge.

Second,

valuations are stretched beyond belief.

When you look at the traditional

measures or whether the stock is cheap

or expensive, a lot of big names are

trading at level that assume years and

years of perfect growth. Any stumble,

any disappointment as we saw last week

and these stocks could fall hard. The

credit markets understand this, but most

expensive stocks mean more downside

risk.

Third, concentration risk.

This is huge. This is just because the

S&P which is mostly an index that an

index that funds track is now more

concentrated in a handful of tech names

than almost any point in its history.

Apple, Amazon, Nvidia.

So they actually very heavily exposed to

tech.

So we do not have a diversified

portfolio,

right? What do we have?

We have really a

we we what we have is is a concentration

portfolio, a concentrated portfolio

and that's a problem.

What are we going to do? What's going to

happen next?

So

concentration is an issue. Now

let me explain in real simple term

because it's one of the most important

concept of the video. Most people who

invest in 401k or just standard

brokerage account have been told buy the

index fund

diversify

and you'll be fine. And for a long time

this was excellent advice. But here's

the problem nobody's talking about. When

you buy an S&P 500 today, you're not

equally spread around 500 companies. The

index is market cap weighted. It means

the bigger the company, the more of the

money goes into it. So right now,

the top 10 companies in the S&P, most of

them tech companies, make up somewhere

between 30 and 35% of the entire index.

So if you have $100,000 in the S&P 500,

roughly $30,000 is a infold, you know,

handful of mega cap tech stocks. So

that's the trap and and and that's what

the chart is warning you about.

What does history say? Well, let me go

back to the chart one more time and

point out a pattern. Every single time

the red line, which is a CDS, has spiked

significantly, it has coincided with or

immediately preceded

a significant drop in tech stocks. every

time in 2008, 2012, 2015, 2016, 2020,

uh, COVID spike, massive short-term,

2022 when we have rates rises and the

CDS moves up and now in 2025, 2026, the

CDS is rising again.

So, what should you actually do?

Well,

it looks a bit scary, I know, but first

of all, you shouldn't panic. This is not

sell everything video, right? It timing

the market is nearly impossible and

people who try do it usually ends up

worse off when they state the course,

but there are smart practical things you

could think about. First, check your

actual concentration. Go look at what

your index funds actually hold. You

might be surprised how much of it is in

your tech names. Two, consider some

genuine diversification. Not just

different index fund, but actually

different sector, commodities, value

stock, international markets. I do talk

about these things when I speak to my

members every day to prepare them

because the time to do it is not when

everything is coming down, it's on the

way there. Three, have a plan. One of

the biggest mistake investors make is

not thinking in advance about what

they'll do if the market drops 20 30%.

Now, how often does the market drops 20

30%? Not very often. In fact, the last

time it dropped 30%, 20% on one day was

in 1987. But we have seen a couple of

draw downs. 15% 10%

80% over three years for the for the

NASDAQ. So things happen more often than

you think. Couple of percents here and

there. And don't forget if you lose 1%

for you to go back where you were, you

need to make 2%.

If you have a plan, you're far less

likely to panic and sell at the worst

possible moment.

And for stay informed charts like these

is for one reason. The credit market is

in the canery of the coal mild of the

financial system. Watch it, understand

it. You know, this is what

my members and subscribers

get from a channel like the black swan

is you you understand what's happening.

So, you don't listen to the news or

react to the news or react to the

narrative, which is pretty strong right

now.

Especially if you're thinking of getting

into Bitcoin, they're saying Bitcoin is

going to go to zero. really you sure

about that? If you're not, you're going

to lose out on a big run up. So, let me

zoom out for the big picture so you you

get a bigger idea. Right. So, we're

living through an extraordinary moment

in financial history. Right now, the

last 15 years have been defined by cheap

money, technological

revolution, and rising asset prices.

Index fund investors have been richly

rewarded. But no trend lasts forever.

Every era in financial markets

eventually gives away to a new one. The

era of the dotcom dominance ended in

2001.

The era of financial engineering ended

in 2008. And at some point, we don't

know when, but the era of mega cap tech

dominance will also face a serious test.

The chart we looked at today is not

screaming the end is near, but it is

gently persistently reminding you that

risk doesn't just disappear because

things have been good. In fact,

sometimes the longer things have been

good, the bigger the risk has quietly

built up.

So, let me give you some final thoughts

here.

the smart investors I've

ever studied, the one who survived the

crash of 87,

2000, 2008, they all had something in

common. They weren't necessarily smarter

than everyone else. They weren't

necessarily better at predicting prices,

but they were aware.

They kept their eyes open. They look at

the signals others were ignoring. They

ask uncomfortable questions when things

seems too good to be true. That's all

I'm asking you to do. Not to panic, not

to sell everything, just to look at the

signal of the credit. And of course, if

you could subscribe,

uh, that also would be a good thing. And

make sure you understand what you

actually own because the chart doesn't

lie. The credit market has been a more

honest narrator of financial reality

than almost any other measure out there.

And right now it is quietly asking a

question that every techsavvy investors

should be asking themselves. Are you

more exposed than you realized?