🚀 Check and run!
Global markets took a sharp hit today after top financial leaders issued stark warnings about potential downturns. Goldman Sachs CEO David Solomon and Morgan Stanley CEO Ted Pick both signaled that equity markets could experience a 10–20% correction over the next 12–24 months, citing elevated risks and market volatility. Adding to investor concern, UBS Chair Colm Kelleher highlighted systemic risk in the private credit market, while uncertainty over the Federal Reserve’s upcoming interest rate decisions compounded fears of further market turbulence.
At the Global Financial Leaders’ Investment Summit in Hong Kong, Solomon told investors that “it’s likely there’ll be a 10 to 20% drawdown in equity markets sometime in the next 12 to 24 months.” His remarks were echoed by Morgan Stanley’s Ted Pick, who added that drawdowns in this range should be seen as “a natural part of market cycles” but nonetheless signal caution for investors.
The immediate reaction was swift. The STOXX Europe 600 fell 1.41% in early trading, the FTSE 100 dropped 1.11%, and the Nikkei 225 shed 1.74%. South Korea’s KOSPI took the hardest hit, down 2.37%. U.S. futures mirrored the gloom: S&P 500 and Nasdaq 100 futures both fell more than a full percentage point ahead of New York’s opening bell, with high-beta tech names leading the decline. Palantir was down nearly 7% in overnight trading, Tesla slipped 2.45%, and Meta dropped 1.22%.
On a different panel, UBS Chair Colm Kelleher warned of “a looming systemic risk” in the insurance and private credit markets, where loosely regulated loan structures and lenient ratings standards could amplify stress in a downturn. “If you look at the insurance business, there is a looming systemic risk coming through because of lack of effective regulation,” Kelleher cautioned.
Meanwhile, uncertainty from the Federal Reserve added another layer of volatility. Fed Governor Lisa Cook and Chicago Fed President Austan Goolsbee both indicated they remain undecided on whether to support another interest rate cut in December, emphasizing that each meeting remains “live” and data-dependent. The comments fueled investor anxiety over the Fed’s policy path amid softening manufacturing data, the ISM manufacturing index for October came in at 48.7%, below expectations and signaling contraction.
The ongoing U.S. government shutdown further darkened sentiment, leaving markets without key economic data such as trade reports. Investors are instead relying on private-sector indicators, adding to the sense of opacity and unease.
For now, the tone from global financial leaders is clear: after a long bull run and surging valuations, a cooling-off period may be inevitable. Whether this correction comes gradually or in waves will depend on the Fed’s next move, the health of the private credit market, and how investors recalibrate in an increasingly uncertain macro environment.