Summary – A top-down review of interesting calls and comments made last week in Treasuries, monetary policy, economics, stocks, bonds & commodities. TAC is our acronym for Tweets, Articles, & Clips – our basic inputs for this article.
Editor’s Note: In this series of articles, we include important or interesting Tweets, Articles, Video Clips with our comments. This is an article that expresses our personal opinions about comments made on Television, Tweeter, and in Print. It is NOT intended to provide any investment advice of any type whatsoever. No one should base any investing decisions or conclusions based on anything written in or inferred from this article. Macro Viewpoints & its affiliates expressly disclaim all liability in respect to actions taken based on any or all of the information in this article. Investing is a serious matter and all investment decisions should only be taken after a detailed discussion with your investment advisor and should be subject to your objectives, suitability requirements and risk tolerance.
1. The US Action in Iran:
Nothing is more important than the action taken against Iran and the safety of the lives of American servicemen engaged in that action. So far, the actions of Iran seem directed against Israel & against the allies of America in the Gulf. Based on coverage we have seen, USA & Iran are still far apart in their views of what is needed to end the military engagement. Fortunately, China has stayed its hand despite the promises delivered verbally before.
But tomorrow is another day & we would rather wait to see what markets think & do on Monday.
2. Markets Last Week:
2.5 Treasuries & Interest Rates:
The PPI released on Friday morning was hotter than than expected. But Treasury rates fell hard on that news with the 10-yr threatening to break below 4%. Someone at CNBC pointed that out and exclaimed “does the economy have a credit problem?” It was rare for a CNBC person to exclaim a sacrilege like this but Kudos to the one who said it. Because that question is going to haunt the Treasury market going forward bringing into the daily limelight the “Private Credit” fears.
- 30-year Treasury yield Down 9.2 bps on the week; 20-yr yield Down 9.9 bps; 10-yr Down 12.3 bps; 7-yr Down 12.7 bps; 5-yr Down 13.2 bps; 3-yr Down 11.3 bps; 2-yr Down 9.5 bps; 1-yr Down 2.9 bps;
- TLT Up 1.6%; EDV Up 2.1%; ZROZ Up 3%; HYG Down 35 bps; JNK Down 38 bps;
This past week’s fall in Treasury rates was hard but not as steep & hard as the fall in Treasury yields during the week ending February 15, 2026. We remind readers that MacroViewpoints cut its MV-ONR rate by 25 bps to 3% on February 15, 2026. That was due to serious issues in the U.S. Economy as detailed by Bruce Richards of Marathon and Lakshmi Ganapati of Unicus Research & quoted by us in that article.
Later in this article we will discuss the views of another Credit analyst who lays out a similarity between the credit impact of mortgages & their packaging in 2007-2008 to today’s conditions in the Software sector.
- Mike Zaccardi, CFA, CMT 🍖@MikeZaccardi – 10yr yield down 34bps in less than 4 weeks
@stockcharts Will rates drop on Monday? #Iran
2.1 US Indices:
- VIX up 4% to 19.09; Dow down 1.3%; SPX down 45 bps; RSP up 43 bps; NDX down 21 bps; SMH down 2.1%; RUT down 1.2%; MDY down 88 bps; XLU up 3%;
Cash?
- Mike Zaccardi, CFA, CMT 🍖@MikeZaccardi – Cash continues pouring into money market funds GS
A bearish view:
- Markets & Mayhem@Mayhem4Markets – We’re seeing a sell stocks signal from the BofA bulls vs bears indicator 🧐
A bullish view from mid-March:
- Ryan Detrick, CMT@RyanDetrick – Looking at the past 20 years, it is perfectly normal for S&P 500 weakness in late February and into mid-March, then a major low forms. Yes, 2009 and 2020 are a big reason why, still worth noting.
2.2 MAG 7:
- AAPL down 15 bps; AMZN down 5 bps; GOOGL down 1%; META down 1.1%; MSFT down 1.1%; NFLX up 22.3%; NVDA down 6.7%; MU down 3.7%;
2.3 Key Financials:
- BAC down 6.1%; C down 5%; GS down 7.3%; JPM down 3.4%; KRE down 7.1%; EUFN down 55 bps; SCHW up 1.2%; APO down 12.6%; BX down 6.5%; KKR down 13.3%; XHB down 5%; ITB down 5.3%; NAIL down 15%;
Take a read of Section 3 below:
2.4 Dollar, Commodities & International Stocks:
Dollar was down 4 bps on UUP & down 7 bps on DXY:
- Gold up 3%; GDX up 9%; Silver up 11.4%; Copper up 3.1%; CLF up 9 bps; FCX up 5.8%; MOS down 5.4%; Oil up 6.2%; Brent up 1.3%; OIH up 1.9%; XLE up 1.9%;
- EEM up 38 bps; FXI down 3.9%; KWEB down 5%; EWZ down 1.6%; EWY up 6.7%; EWG up 5 bps; INDA down 2.2%; INDY down 2.6%; EPI down 1.9%; SMIN down 2.9%;
Performance is indeed relative to time:
- Bespoke@bespokeinvest – The emerging markets ETF $EEM has crushed the US over the last year and YTD, but as a reminder, it just recently moved back above its pre-GFC high from 2007. The S&P’s $SPY price is up more than 350% from its pre-GFC high.
3. Private Credit, Private Equity, Life Insurance Companies
How did Software turn into Sub-Prime Housing? Software was always so profitable & so reliable a product for investment, right? But recall that US Housing used to be even more reliable! The question then was who doesn’t pay his/her mortgage? We all learnt the answer in 2008 & so Regulators forced Big Brokers & Banks to push these types of “credits” off their balance sheets. Good riddance to bad rubbish, right?
Not quite according to Dan Rasmussen of Verhad Capital who said to CNBC’s Kelly Evans:
- “Private Credit arose and said jee! The banks are missing a golden opportunity; regulators are forcing them out of this great business”
Dan Rasmussen describes that thinking as:
- “WE’RE GOING TO LAUNCH PRIVATE CREDIT TO DO EXACTLY WHAT BLEW UP IN 2008. WE’RE GOING TO LEND ALL THESE SMALL, RISKY COMPANIES, AND WE’RE GOING TO DO IT BETTER. AND THIS WENT FROM BEING A SMALL LITTLE BACKWATER TO BEING ABOUT EQUAL SIZE THE ENTIRE HIGH YIELD INDUSTRY.”
But what product could they use to play their game? Not housing any more; Mortgages/Condos were so passe! Ah! Software, that magnificent segment of American ingenuity that had made mega billionaires of many geniuses! But software had a problem. Their fortunes relied on a variable factor – sales of these highly expensive creations.
Ergo, rose a new slogan SaaS! Software as a Service. They said software is really a service right? It has to be maintained, continuously updated & the updates & new features had to be sold all over again. So they converted Software they used to sell into a Service that you pay for every month. And they could rest easy.
How wonderful was it for software companies? They now were an assured income stream that subscribers paid for every month. That type of “Recurring Revenue” is priced at a higher valuation than large-ticket lumpy purchases. Software company stocks were now priced at a higher multiple of revenue because of the safer “recurring revenue” model.
As Dan Rasmussen points out,
- ” AND IN THE PAST FEW YEARS, PROBABLY ABOUT 40% OF PRIVATE EQUITY WENT INTO SOFTWARE OR SOFTWARE RELATED BUSINESSES. …. AND SO … THE PITCH OF PRIVATE CREDIT BECAUSE REMEMBER, IF YOU’RE LENDING TO A SOFTWARE COMPANY, SOFTWARE COMPANIES DON’T HAVE ASSETS. RIGHT. IT’S NOT LIKE THEY HAVE FACTORIES OR TRUCKS OR SOMETHING THAT YOU CAN LEND AGAINST. IN FACT, MANY OF THEM DIDN’T HAVE PROFITS. THEY WERE INVESTING THEIR PROFITS FOR GROWTH. SO BROADLY, WHAT PRIVATE CREDIT WAS LENDING AGAINST WAS RECURRING REVENUE.”
And as he elaborates:
- “PRIVATE CREDIT IS FUNDAMENTALLY LENDING TO LEVERAGED BUYOUTS. … THEY’RE LENDING TO PRIVATE EQUITY DEALS.”
But that used to be a measure of safety. Yes, as Dan Rasmussen points out:
- “private credit was a risky business but there is a huge amount of private equity money in front of it; so it is the equity valuation which supports the credit“.
So that’s fine, right? Private Equity is the bastion of the best & the brightest, right? Out of curiosity, how much is the size of this private stuff?
- “PRIVATE EQUITY IS WHAT A $4 TRILLION INDUSTRY? ROUGHLY SPEAKING, PRIVATE CREDIT IS MAYBE A TRILLION AND A HALF. “
With this amount of private equity cushion, why worry? Dan Rasmussen points out”
- “SO THE EQUITY VALUATION IS WHAT SUPPORTS THE CREDIT. WELL, WITH SOFTWARE EQUITIES COLLAPSING, PEOPLE ARE SAYING, WELL, GEE, I DON’T TRUST THAT EQUITY STORY. I DON’T THINK THAT THERE’S AN EQUITY CUSHION HERE. I THINK IN FACT, THERE’S GOING TO BE REAL LOSSES HERE. AND WE’RE SEEING A RISE IN PICK INTEREST. …. SO THESE FIRMS AREN’T EVEN PAYING OFF THEIR LOANS. SO I THINK THE CHICKENS ARE FINALLY COMING HOME TO ROOST HERE.”
And what has been the trigger? Two letters AI. These two letters have cut hard & cut deep into Terminal Software Stock valuations. Given the carnage today, who would believe in high terminal valuations on which private credit & private equity depends?
But let us not worry too much. There is always a Big Player who has missed all the fun so far & now wants to come in playing Big Cousin.
Who are these Big Cousins? Life Insurance Companies. What is the family connection? It is best answered by the celebrated Steve Eisman in his clip below at minute 9:31:
- “What is even more opaque is the impact from the relationship between the private credit loans that private equity makes, which it then often sells into the insurance companies that these same private equity companies own or control, as in the case of Kavari”.
The clientele of these Life Insurance Companies are individuals & families who buy insurance policies to protect themselves & their families. If these life insurance companies get in trouble, will the policyholders be heard?
The Blue Owl & Private Equity/Private Credit section of the clip below begins at minute 4:17.
- “… Blue Owl is a 17 billion market cap private equity company that specializes in making private credit loans. The private credit market has exploded into a $ 1.8 trillion market. It’s huge. And if it ever blew up, it would hurt the US economy badly. Investors have been showing fear about this market for about a year. And the Blue Owl news from last week, in my view, was particularly bad.”
- “Blue Owl froze redemptions from its private credit funds. At the same time, it sold 1.4 billion in loans at roughly par to four buyers. Three buyers were Kalpers, Canada’s OMRs, and British Columbia Investment Management. So far so good. However, the fourth buyer was Kuvari Insurance. And here’s where it gets funky. In April 2024, Blue Owl bought Kuvari Asset Management, the investment management arm of Kuvari Insurance. Blue Owl did this transaction as a way to emulate what Apollo has accomplished with Athen. Often Apollo sells the loans that it originates to its captive insurance company, Athen.”
Frankly none of this is new, especially the concern about Life Insurance Companies. Go back to our October 31, 2025 article to read the discussion on this topic. For easy reference, below is the clip by David McAlvany:
Below is the subset we had quoted in our October 31, 2025 article:
- “Because insurance companies don’t have depositors, the captive asset portfolios at insurance companies have been prime targets for private equity & private credit. This is where these groups get to dump their trash. And the intent of these insurance companies is to continue to add private market holdings the idea is to smooth long term returns … In a BlackRock survey of 463 insurance company executives, 93% expect to increase their exposure to private equity & private credit. Only 3% said they were considering reducing their exposure; insurance companies already hold $2.3 trillion in private assets, $250 billion in CLOs; If you want to know where the next major bailout will have to be, look at insurance companies, look at the annuity powerhouses; when I say that’s where the bodies are buried, we are talking about mass graves; regulatory arbitrage – that’s the game; you can do inside insurance companies what is impermissble in scrutinized & regulated markets; … insurance companies are quickly becoming a version of shadow banks; … the Federal Reserve was writing about Insurance Companies becoming Shadow Banks as far back as 2023; this is not a news flash; it just takes time for rot to sort of fester “
Well! That admonition was 4 months ago. It does look like the rot has already festered somewhat. When does it get so stinky that people notice?
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