Bubble Warning: Credit, Housing, AI

Welcome viewers to the special podcast on March 26th, 2026 of the Secrets on Wall Street channel. I am Elise, who will accompany you to uncover the hidden corners and piece together the messy puzzle pieces of the global financial market today. The economic picture right now can be summarized in one word, instability. We are standing at a dangerous crossroads where geopolitical escalation, monetary inflation, liquidity crises, and the freezing of the real estate market are simultaneously suffocating the economy. Let's dive deep with Elise into each hot spot on Wall Street today. Part one, investors' blind spot facing the Middle East crucible. Tensions have peaked as the U.S. and Israel attacked Iran, causing the Strait of Hormuz to be closed and choking off 20 percent of the global oil supply. While the stock market seems to remain quite unbothered and has only fallen slightly, BlackRock president Rob Capito warned that investors are severely underestimating the risks from this war. According to Mr. Capito, the conflict could wipe out two percentage points of economic growth and drive inflation higher by a similar margin. Oil could even spike to $150 a barrel even if the war ends tomorrow because supply chains have been disrupted. Apollo president Jim Zelter also agreed, noting that U.S. consumers are facing a confidence shock regarding spending, which increases the risk of a recession. The chaos of news-based trading has cost major funds dearly. A prime example is the giant hedge fund Caxton Associates, which has just evaporated over $1.3 billion, equivalent to 15 percent of its value, this month alone. Caxton's bets on bonds and commodities collapsed as 10-year U.K. government bond yields surged to their highest level since 2008, resonating with President Trump's inconsistent tweets about negotiations with Iran. One of the most perplexing secrets on Wall Street right now is the price of gold. Despite war and inflation, gold has slid 15 percent since the end of February, falling to around the $4,000 per ounce mark. Many blame rising oil prices and a high February PPI inflation index, 0.7 percent, for driving money away from gold. However, this is a very short-sighted view. History proves that war always goes hand-in-hand with monetary inflation. In just six weeks, the Pentagon has requested $200 billion in emergency funding for the war with Iran, more than the less than $180 billion incurred for the Ukraine war over more than four years. This explosion in the national debt could push price inflation to double digits by mid-to-late 2026. Given the massive quantum of debt, the U.S. cannot afford high nominal interest rates to fight inflation, forcing the Fed to keep the real Fed funds rate negative. Therefore, experts project that gold's current decline is only temporary. Gold prices will soon break out and could exceed the $6,000 per ounce mark in the near future. Part 3. The Illusion of Private Credit Shattered On Wall Street, a liquidity crisis is silently unfolding. Asset management giants like Ares Management, Apollo, BlackRock, and Morgan Stanley are simultaneously activating mechanisms to gate investors from withdrawing capital from private credit funds. In the first quarter alone, the market received $13 billion in withdrawal requests, but up to $4.6 billion was unfulfilled. The $10.7 billion Ares Strategic Income Fund faced a wave of withdrawals accounting for 11.6% of its assets from the ultra-wealthy, but they only fulfilled just over two-fifths of those requests and applied a 5% redemption cap. Although the funds continually reassured that their portfolios remain healthy, the truth is that many investors are trapped with their own money, raising the risk of declining capital fundraising in the future. Part 4. Frozen Real Estate and the Shattered American Dream Finally, it is impossible not to mention the bleak picture for the American people. The housing market has not crashed like in 2008, but has fallen into a state of localized freezing. 30-year mortgage rates hitting 7% make it unaffordable for buyers, while sellers hold tightly to their favorable 3% pandemic-era loans and refuse to sell their homes. As a result, new home sales in January plummeted by 18%, the worst drop in 13 years. The younger generation is being marginalized as the median age of first-time homebuyers has been pushed up to 40 years and older. Even President Trump has reversed his campaign pledge to increase housing supply out of fear of reducing property values for the boomer generation. The shattering of the American Dream, combined with inflation and job insecurity, is creating a deep atmosphere of frustration among the youth. In summary, From Elise's perspective, the developments on March 26, 2026 are the very first cracks signaling the deflation of a series of bubbles. From the credit bubble and housing bubble 2.0 to the AI bubble and finally a long unwinding of the US bond bubble. Be cautious with disbursement decisions at this time because the numbers on the surface are hiding a massive underlying storm. Thank you for tuning in to the Secrets on Wall Street Bulletin. Don't forget to hit subscribe to join Elise in decoding the market's next mysteries. Goodbye and see you again.