Expert identifies looming market ‘Black Swan’ that’s a ‘time bomb’

An expert has warned that a major Black Swan event may be forming beneath the surface of global financial markets.

According to Matthew Piepenburg, partner at Von Greyerz AG, the potential crash is emanating from what he described as excessive leverage and derivatives exposure, which he warned are turning into a potential time bomb, he said during an interview with David Lin.

The expert noted that the risk is largely being ignored as investors remain focused on short-term stimulus and rising asset prices.

Piepenburg stated that markets are being propped up by increasingly dovish expectations around U.S. monetary policy.

He argued that investors are pricing in multiple interest-rate cuts as the U.S. faces a heavy debt refinancing cycle.

While lower rates and ample liquidity continue to support equities, major indices are already trading at historically stretched valuations.

“Derivatives are four times the value of all global assets right now. They’re massively overlevered, and we’re at 10 times the leverage. <…> That’s just a ticking time bomb. I’m just waiting for some type of failure of delivery. We should even talk about that on the comics markets because we could see a failure of delivery in silver, for example. <…> That could be a potential black swan,” Piepenburg said.

Impact of liquidity

Piepenburg added that additional liquidity from tax refunds, foreign capital repatriation, and corporate spending could temporarily lift U.S. markets, potentially pushing overvalued assets even higher despite weakening fundamentals.

However, he cautioned that structural risks are building. In his view, rising long-term bond yields threaten expensive equities, capital is rotating out of U.S. technology into global value and hard assets, and commodities appear to be entering the early stages of a long-term supercycle.

At the same time, Piepenburg warned that the greatest risk lies in the scale of derivatives exposure, which now far exceeds underlying global assets and is more leveraged than it was before the 2008 financial crisis.

He added that a single failure, such as a delivery breakdown in commodities markets like silver, could trigger broader contagion.

Overall, Piepenburg described markets as deeply contradictory. Policy support continues to fuel risk-taking, but growing imbalances and leverage mean that any unexpected shock could expose a fragile financial system.

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