Chamath's CDS Bet: Outlining Major Corporate Debt Default Risks

with all of the tariffs the one thing that we haven't sufficiently talked about is there is a tremendous amount of corporate debt that supports these businesses today And you would say well if long-term rates go down there's no real risk But the tariff picture actually impacts revenues And the problem with that is that there's a lot of companies that have debt covenants tied to revenue and IBIDA And so this is what I spoke about at the beginning of January which is the one risk that is uncontrollable is what happens to corporate debt and could we see a wave of defaults and a wave of action Best performing asset Everybody loves this one What do you got I would be long CDS

I'm buying insurance using credit default swaps I think that there is a small chance of some volatility next year I hope it doesn't happen I hope that this trade loses money but if it hits it will be the best performing asset of 2025 It has hit For every billion dollars of risk you would have put on would have cost you about a million And that million would have made you about $7 million in about 3 months Why is this important The CDS actually represents the structural risk in the United States corporate economy So when you see these spreads blowing out this is actually a very important warning sign This is what was the canary in the coal mine for the great financial crisis

The tariff picture and the recession picture will get played out in this chart And I think it's something that folks can and should probably pay tremendous attention