Nomura Warns U.S. Tech Credit Risk Similar to France Before 2000 and 2008
Nomura Securities strategist Naka Matsuzawa warned in a report today that the current credit risk of U.S. tech companies is similar to the sovereign credit pressures in France, resembling the market conditions before the 2000 internet bubble burst and the 2008 Lehman crisis.
His "Decade Credit Cycle" framework shows that about 1 to 2 years after the second round of credit shocks in history, a third round of shocks that could trigger an economic recession often occurs.
The report points out that the 1997 Asian financial crisis, the 1998 LTCM crisis, as well as the 2007 subprime crisis and Bear Stearns crisis, all belong to the second round of shocks; subsequently, the internet bubble burst and the Lehman crisis occurred.
Previously, the Federal Reserve could alleviate credit pressure by pausing interest rate hikes or cutting rates, but current inflation and rising oil prices may limit its policy space.
Nomura believes that the trend of oil prices will determine whether risks escalate further: if the rise is mainly due to economic overheating, central banks will face the dilemma of stagflation with both inflation and credit risks, making it difficult to respond through rate cuts; if driven mainly by geopolitical factors, the Federal Reserve may still adjust policies to prevent localized shocks from evolving into a systemic crisis.
The report also notes that while the CDS spreads of U.S. tech companies have narrowed, the spreads of French and German government bonds continue to widen, reflecting that market credit pressure has not yet dissipated.
Source: Public Information
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Naka Matsuzawa has long constructed credit cycle frameworks at Nomura as a macro strategist in Japan. In 2018, he judged that the global economy had entered the late stage of credit expansion and was heading towards an irreversible downturn, emphasizing that credit contractions in the decade cycle are often triggered by specific conditions rather than a single event.
He positions the current U.S. tech credit and French sovereign pressures as a second round of shocks, with resource mobilization reflected in using historical comparisons (Asian crisis/LTCM corresponding to the internet bubble, subprime/Bear Stearns corresponding to Lehman) to delineate phases, and oil prices as the core variable determining whether the Federal Reserve can quickly ease policies, aiming to bind localized credit pressure with policy space.
Similar frameworks have been used to explain the shocks following credit expansions in the late 1990s and mid-2000s, where the market pricing of tech and real estate-related credit did not immediately end after the second round but saw larger-scale contractions 1-2 years later; the current phase is closer to observing the AI-related credit expansion alongside European sovereign spreads within the same cycle.
This reflects capital concentration and the transfer of pricing power: the risks in the late stage of credit expansion spread from a single asset class to parallel sovereign and corporate credit, with oil prices determining whether central banks can redistribute liquidity through rate cuts; if policy space is constrained, localized shocks are more likely to evolve into systemic pricing re-evaluations.
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- A third round of contraction often occurs 1 to 2 years after the second round of credit shocks.
- Oil prices determine whether central banks face stagflation or can buffer through rate cuts.
- The simultaneous existence of narrowing tech CDS and widening sovereign spreads indicates that credit pressure remains.