Eurodollar University A Trillion-Dollar Time Bomb Just Went Off on Wall Street
Nov 8, 2025
UBS is shutting down two hedge funds, raising alarm bells reminiscent of 2007. One fund’s exposure to First Brands is under scrutiny due to potential fraudulent collateral. The second fund’s closure indicates widespread investor redemption pressure, leading to fire sales and systemic strain. Losses from First Brands are estimated at 30%, heightening panic in high-grade funds. Current conditions differ from 2008, yet a weakening labor market may accelerate investor exits. The episode highlights the importance of monitoring redemptions and liquidity issues.
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Transcript
Episode notes
Redemptions Are The Real Alarm Bell
- Redemption requests at UBS funds signal escalation beyond isolated losses.
- Redemptions can force monetization and fire-sales that spread liquidity stress.
Cold Feet Spread Beyond Obvious Losses
- A second UBS fund without First Brands exposure getting redemptions implies broader investor panic.
- Investors may withdraw from private credit generally, not just the obvious troubled credits.
Bear Stearns Hedge Fund Prelude
- Jeff recounts the Bear Stearns hedge fund episode in 2007 as an early warning sign before 2008.
- That saga showed redemptions and leverage strains can escalate into broader market distress.