Tech bulls risk blowing up as banking turmoil may crash stocks: expert

"This is a rolling crisis," he declared, cautioning that the Federal Reserve's interest-rate hikes are"draining the banking system."

"From credit cards to all different types of companies, credit default swaps are rising on many different financial institutions," he continued."When you see that, be very careful with US equities." Credit default swaps serve as insurance against a company defaulting on its debts, and become more expensive as the perceived risk of a default grows.

McDonald is a former Lehman Brothers trader and the author of"A Colossal Failure of Common Sense," which chronicles how the investment bank ended up collapsing in September 2008 and sparking a global financial crisis.that US stocks could plummet as much as 30% by early May, as higher interest rates choke the economy and frustrated investors switch out of equities into bonds.

McDonald's collection of 21 systemic risk indicators were signaling"one of the highest probabilities of a crash in the stock market looking out 60 days," he said at the time.

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