Mohamed El-Erian, Allianz chief economic adviser, is pointing to widening cracks in private credit markets. He said the signs mirror JPMorgan Chase & Co. (NYSE:JPM) CEO Jamie Dimon‘s earlier “cockroach” warning — and more “bugs” are now in plain sight.
El-Erian Raises the Termite Question
El-Erian wrote on X on Friday that this week’s private credit news “echoes Jamie Dimon’s recent warning about ‘cockroaches’—the idea that early signs of excesses are likely to be followed by others.”
He listed “valuation gaps and liquidity strains to poor underwriting and fraud” as the “bugs” now emerging.
Then he sharpened the concern: “The big question for markets and the real economy is whether we’re just dealing with cockroaches… or are these termites posing systemic risks?”
El-Erian said he suspects it isn’t a systemic termite issue alone. But he urged investors to watch how private credit interacts with other risks — including “elements of an AI bubble” and “vulnerabilities in certain segments of the global bond market.”
This post was originally published here
