Gillian Tett: Five ways to tell if market trouble lies ahead.


Two decades ago, I discovered the signalling power of credit default swaps. When the price of derivatives rises, this shows that investors are worrying that borrowers will go bust.

Back then, one hint of the trouble to come was that CDS prices for mortgage bonds and banks rose — despite the cheer in equity markets. That was a proverbial canary in the coal mine.

Is the same thing happening again today? Quite possibly. 

This week US equity markets hit record highs amid fresh evidence of US economic strength. 

But even as AI hype drives an equity rally, CDS prices for AI-linked borrowers such as Meta, Google and Microsoft have quietly risen, with a particularly marked jump for Oracle.

Investors should be asking at least five questions now to assess whether trouble lies ahead.

Don’t get me wrong: I am not arguing that these questions portend an immediate equity slump. 

Exuberance can last a long time — as we learnt two decades ago. 

But the air in the markets is getting worse. 

Don’t ignore the canaries.

Gillian Tett Financial Times 9 October 2026

https://www.ft.com/content/7acb5862-cde5-49b4-a5f1-5f6e6977a9c7?syn-25a6b1a6=1


On Thursday August 9 2007, financial markets suddenly seized up.

Since I was running the Financial Times markets team, I spent two days frantically trying to identify the reason for the panic. Nobody knew. But that weekend I suddenly woke in the middle of the night with an image of a Spanish bin in my head.

A month earlier I had attended a credit conference in Barcelona, where I read brochures about a little-known, and supposedly safe, entity known as a “structured investment vehicle”. 

The material had seemed achingly dull. So on the way home I tossed the papers into an airport bin — and forgot it. 

But, somehow, my subconscious knew that had been a mistake. So I awoke and went online to uncover what I had left in that bin.

https://englundmacro.blogspot.com/2021/03/on-thursday-august-9-2007-financial.html



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