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Credit Concerns Hit Banks, Private Equity… And Opportunities In The Software Selloff 2/27/25 - CNBC's "Fast Money" | Wave AI Podcast Notes

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Credit Concerns Hit Banks, Private Equity… And Opportunities In The Software Selloff 2/27/25

CNBC's "Fast Money"

Fri Feb 27 2026

Stocks selling off to close out the week, as investors digested a hot inflation report. The credit-linked concerns weighing on banks, credit card companies and asset managers, and the stocks one top bank analyst is leaning into on the weakness. Plus, the software slump continues with the IGV software ETF down more than 20% so far this year, but Morgan Stanley’s Katerina Simonetti is laying out where she sees some opportunity in the tech tumble. Fast Money Disclaimer

Summary

Podcast Summary: CNBC's "Fast Money" – Credit Concerns Hit Banks, Private Equity… And Opportunities In The Software Selloff

Date: February 27, 2026
Host: Melissa Lee
Notable Panelists: Tim Seymour, Steve Grasso, Mike Co, Bono

Episode Overview

This episode of "Fast Money," broadcast from the NASDAQ Marketsite, zeroes in on a volatile day for the financial sector as credit concerns batter banks, spook private equity, and create ripple effects in lending and asset management. The roundtable interrogates whether this is the start of a real credit crisis or an overreaction by markets, explores AI-driven disruption in both finance and employment, and analyzes where opportunities lie amid the rout—particularly in resilient bank names and oversold software stocks.

Major stories include the fallout from a troubled UK mortgage lender, widespread layoffs at Block attributed to AI, energy sector movements tied to Iran tensions, a US government ban on Anthropic AI, and the outlook for Target ahead of its earnings under a new CEO. The panel brings in experts to parse whether this is a disaster, a buying opportunity, or just a showcase of market overreaction.

Key Discussion Points and Insights

1. Credit Market Stress: Banks, Private Credit, and Asset Management

[00:46–10:59]

Financials Led the Selloff:
– Major financial stocks like Goldman Sachs (-7%), American Express (-8%), JP Morgan, BlackRock, Blackstone, and KKR all saw sharp declines.
– Regional banks and the KBW Bank Index posted their worst day since April 2025; private equity names like Apollo and Ares are down 30% from highs.
Root Causes:
– Tim Seymour: "It tells you the market's looking for anything to have a bad day. And it tells you also, you know, the debate of AI versus credit debate, which is going to be today or is it AI inspiring credit concerns?" ([02:27])
– Rumors of a collapse at a "little known UK mortgage lender" heightened anxieties about complex mortgage derivatives.
– Signs of “credit spread widening” with more put buying on high-yield and investment grade bond ETFs (Mike Co, [06:30]).
AI-Fueled Fears:
– There is concern over AI’s role in job loss, especially white-collar, and its effects on consumer credit quality and spending.
– However, some panelists caution against an excessively bearish outlook, seeing the panic as overdone.
Opportunities Amidst Panic:
– Panelists urge distinguishing between systemic contagion and isolated disruptions.
– "I think American Express is very emblematic of the concerns around there...this is an opportunity to buy high-quality name when sentiment has just kind of seemingly just bled into everything." ([03:56])

2. Private Credit and Opacity Risks

[11:06–15:28]

Expert Guest: Chris Maranack, Breen Capital
– Sees strong cash flow and resilient earnings setups for banks, minimal risk from expected loss changes.
– "I think the Regionals and the mid sized banks are really where the activity is. I think that's where you still see consolidation opportunities ahead." ([11:39])
Concerns About Nonbank Lending:
– Growth in non-depository financial institution (NDFI) loans far outpaces traditional corporate lending (35% vs. single digits).
– Maranack: "We need more information, more granularity, just like we had as you had issues in commercial real estate..." ([13:59])
Takeaway:
– Short-term stress may linger, but fundamentals and cash flows in the space are strong; buying opportunities likely as panic subsides.

3. AI Layoffs and Prolific Job Cuts: The Block Example

[07:42–09:37; 37:15–41:20]

Block (formerly Square) Lays Off Nearly Half Workforce:
– The move, attributed to efficiency and AI-driven automation, is perceived as both an efficiency win and a social risk. – Block stock jumped +16% on the news, highlighting market preference for leaner, more tech-enabled business models despite human costs. – "I don't think Jack Dorsey just did this willy nilly...I think Jack Dorsey has made it clear for a long time he is ready to utilize new technology to its advantage." ([08:11])

4. Geopolitical Tensions: Iran and the Energy Complex

[15:55–19:06]

US-Iran Negotiation Stalemate Drives Oil Up:
– Secretary of State and President Trump issue hardline statements, resulting in a ~3% spike in oil prices. – If peace prevails, blowoff expected in energy shares; risks flagged for airlines/cruise lines if military escalation occurs.
– "I'd be a seller of energy if we get a peaceful outcome." ([18:01])

5. Anthropic Banned by US Government: AI-Driven Regulatory Risk

[19:06–22:36]

Ban on Anthropic AI in Federal Supply Chain:
– Prompted by disputes over Pentagon access and ethical red lines (autonomous weapons, surveillance).
– Contract loss is ~$200m, but the supply chain risk has larger implications for enterprise clients (e.g., Amazon). – Kate Rooney: "The risk...is that there could be this chilling effect on the enterprise business..." ([21:09])

6. Software Selloff and Investor Opportunity

[31:43–34:50]

Guest: Katerina Simonetti, Morgan Stanley
– Believes AI transformation favors embedded adopters, including financials, health care, industrials, and materials. – "We are extremely excited about the AI adopters across the industries...the biggest disruption happening outside of tech." ([32:51])
– Sees "market corrections" as likely entry points during the sorting of AI winners/losers; not a time to avoid but carefully pick up value.

7. AI’s Limits and Human Alpha: Harvard Study

[38:01–41:15]

Guest: Prof. Lauren Cohen, Harvard Business School
– AI model can predict 71% of mutual fund trading, but the 29% that's unpredictable is where outperformance lies. – "Asset managers do, that's predictable...But I think one of the key jewels...is that 29% that's where the outperformance is." ([38:12]) – Unlikely that AI will soon reliably predict market prices—behavior yes, prices no. Human decision-making still adds value.

8. Target Earnings Preview: Sentiment & Option Activity

[42:48–44:49]

All eyes on Target’s (TGT) first report under new CEO:
– Options imply a ~10% post-earnings move; puts are notably more active amid a strong recent run. – Tim Seymour: "I actually think we're going to hear some pretty good news in terms of where they are starting to see credit card spend, some inflection, some of the margin mix getting a little bit better." ([44:07])

9. Solar Selloff—Germany Ends Subsidies

[29:57–31:15]

German policy to end subsidies for solar puts pressure on stocks, but exposure varies: – First Solar largely domestic (USA/LatAm), less affected. – Enphase and SolarEdge more vulnerable due to international (esp. European) revenue mix.

10. Notable Market Moves / Final Trades

[45:19–45:58]

Panel Final Picks:
– Mike Co: "Despite the Anthropic news...Alphabet is a good play."
– Tim Seymour: "Target...bad news already out there, expecting good news."
– Bono: "Abbott Labs—cardiometabolic play without GLP-1 risk."
– Steve Grasso: "IJR (iShares Small Cap)—quality small caps."

Notable Quotes & Moments

Tim Seymour on the Mood in Financials:
– "This does feel very much a...software driven rout that leads to credit lending. There are all kinds of terms of small bugs that crawl around...they're called cockroaches...[that’s] the new term for credit lenders." ([02:27])
On AI vs. Human Judgment (Lauren Cohen):
– “About 71% of trades are predictable. But...29% aren’t. I think the interesting question...That 29%, that's where the outperformance is.” ([38:12])
Chris Maranack on Bank Resilience:
– “We have a very strong cash flow and good earnings set up for the first quarter. The credit risk of these companies I think has been minimal.” ([11:13])
On Block's Layoffs:
– “This is block actually in the stock rewarded that view. I read one broker report where it was like this is that day. Do you remember when you heard Block was going to cut half their staff? Because this was an important day in the history.” ([08:42])

Timed Segment Highlights

Financial Sector Selloff and Credit Fears: [00:46–10:59]
Block Layoffs & AI Disruption: [07:42–09:37; 37:15–41:20]
Geopolitics/Energy Market Moves: [15:55–19:06]
Anthropic Ban & Supply Chain Fallout: [19:06–22:36]
International & Solar Stock Commentary: [29:57–31:15]
AI, Software, and Market Correction Opportunities: [31:43–34:50]
Asset Management & AI Paper: [38:01–41:15]
Target Earnings Option Preview: [42:48–44:49]
Final Trade Ideas: [45:19–45:58]

Podcast Language & Tone

The episode maintains a blend of urgency and cautious optimism. Panelists are candid—sometimes wry—about market panics, software and AI-fueled disruption, and the difference between catastrophic narrative and statistical trading opportunity. The expert guests echo the pragmatism, encouraging viewers to focus on cash flow, valuation, and transparency as buffers against headline anxiety.

Useful For: Investors evaluating whether the current rout in financials and tech is short-lived, traders seeking volatility and sector rotation opportunities, or anyone tracking AI’s growing impact on jobs and asset management.

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Transcript

A (0:00)

Hello, I'm Lara Castleton with Janice Henderson.

B (0:03)

Investors. We've worked to help our clients achieve superior financial outcomes and fulfill our purpose of investing in a brighter future together.

A (0:11)

To learn more, go to Janashenderson.com Few things are as uplifting as the greatest moments in sports, and nothing brings us together quite like Team USA at the Olympic Winter Games. From NBCUniversal's iconic storytelling to the innovative technology across Xfinity and Peacock, Comcast brings the Olympic Games home to America, sharing every moment with millions. When Team USA steps onto the world stage, we're not just watching, we're cheering together. This winter, we're all on the same Team Comcast, proud partner of Team usa.

B (0:46)

Live from the NASDAQ marketsite in the heart of New York City's Times Square, this is fast money. Here's what's on tap tonight. Credit crunch to anything tied to lending, from private credit to card companies to money center banks getting hit hard today. The fallout for financials and whether there's any relief in sight. And the job threat block cutting nearly half its workforce as technology tools reshape the way it does business. We talked to the author of one new study about just how deep the impact could be. Plus, tensions with Iran send energy stocks higher. Is there a light at the end of the tunnel for solar stocks? And we count down to Target's first earnings report under its new CEO. What we can expect from the retailer and how options markets are preparing for Tuesday's release. I'm Melissa Lee, come to you live from studio via the nasdaq. On the desk tonight, Tim Seymour and ice and Steve Grasso and Mike Ko. We start off with the financial sector route that roiled Wall Street. While major indices were down across the board, it was the financials posting the biggest losses. The S&P 500 and Goldman Sachs, American Express, JP Morgan together were responsible for cutting more than 600 points from the Dow. Seemingly every group in the space getting hit. Money center regional banks deep in the red. The KBW Bank Index ETF posting its worst day since April of last year. Credit card companies like Capital One and Amex also trading sharply lower. Asset managers taking on the chin to blackrock, Blackstone, KKR and Brookfield dropping on credit concerns. Goldman Sachs down more than 7%, one of the worst performing stocks in the Dow and the S&P 500 today. And private equity stocks taking another hit. Blue Owl, Jefferies, Apollo and Aries now down more than 30% from their highs. So what do these continued concerns in the credit markets tell Us, Tim?

A (2:27)

Well, it tells you the market's looking for anything to have a bad day. And it tells you also, you know, the debate of AI versus credit debate which is going to be today or is it AI inspiring credit concerns? And there's some of that. There's also, you know, there's a little known unknown UK mortgage lender that collapsed that created a lot of tension about complex mortgage derivatives yet again. And there was a number of banks that were tied to that. So it was a week when you had investment grade credit begin to widen. We haven't had a credit widening period. I'm not sure that we've had one yet. But this is the beginning of something that I think is very concerning. You know, you talk about a KKR and a Blackstone. I mean these stocks have been not just, you know, falling, they've they've sliced right through some really important levels. This does feel very much a, you know, an AI software driven route that leads to credit lending. There are all kinds of terms of small bugs that crawl around. They can't get out of that. You know, they're called cockroaches. And apparently that's the new term for credit lenders that the big banks don't like. But that, that's the story to me and that's the story of today on a week when it seemed like it was this kind of has stolen the Nvidia headline.

A (11:39)

Very minimal. I think that this is going to come and go as an issue and I think we still have a lot of positives in terms of credit demand and actual opportunity for the sector to move forward. Hi, Bono in here. When looking at opportunities in terms of, you know, taking advantage of sentiment, kind of really shifting and accelerating to the downside, would you be focused on the money center banks like bank of America or some of the regionals or perhaps some other tertiary type of name that can kind of allow one to express a positive view here and really get a safe compounding cash flow positive story amidst the chaos. So I think the Regionals and the mid sized banks are really where the activity is. I think that's where you still see consolidation opportunities ahead. I think overall the value proposition is excellent for those names are trading about 10 and a half to 11 times earnings. There still are opportunities for those companies to surprise on earnings. I think credit overall is still very solid and I think that you still have a good combination of expense, operating leverage as well as loans that are rolling over in terms of new yields going up. So the fact that the Fed may not cut right away is actually bullish for margins and for spread income. Hey, Chris, you're right, I think, I mean, I agree with you. You're pointing out that both balance sheet and credit exposure for some of the biggest banks in the world and even the regionals, which are also significant sized banks. But how about what's been going on with KKR and Blackstone? How about what's been going on with folks that have exposure to either complex derivative products or private credit? What is that telling you? Is the market right? And we can have this kind of bifurcation and may not be contagion in the 2008 style, but it could mean that there's Some of these companies still could have a long way to go. Tim, you're correct and I think what the market wants is more transparency. I think the banks are lending pretty hard into the NDFI non depository financial space. They grew 7% the last quarter versus 2% for the total loan book. We have to see more information on these companies, on what exactly is happening with these credits and that's on the KKRS and the others who are lending as well as the banks who are providing lines of credit. I think we need more information, more granularity, just like we had as you had issues in commercial real estate and hotels and other problems the past several years.

B (19:06)

Meantime, President Trump directing all U.S. federal government agencies to immediately stop using anthropic technology following a feud between the AI giant and the Pentagon. Kate Rooney's got the details on this. Kate. Hey, Melissa. The latest we just got out of the Pentagon is a statement from Pete Hegseth saying that they are officially labeling anthropic a supply chain risk. This was what we anticipated. This was part of the threat from the Pentagon during this standoff between the company and the US Government saying here this week anthropic, quote, delivered a masterclass in arrogance and betrayal as well as a textbook case of how to not do business with the US Government or the Pentagon. He says our position will never waver. They need unrestricted access to Anthropic's models for every lawful purpose. It's quite a long statement, so I won't read the entire thing. But we also had President Trump accusing Anthropic of essentially trying to strong arm the Department of War. So echoing here what Trump said in Hegseth statement, Trump saying, quote, he was directing every federal agency to immediately cease all use of anthropic technology. Says we don't need it, we don't want it, we'll not do business with them again. We also says there's going to be a six month phase out of their technology, threatens major civil and criminal consequences if they don't comply with that Anthropic and The Pentagon, as I mentioned, had been at odds over the use of the company's models for classified networks. The red lines we've heard from CEO Dario Amadei were around using this technology for autonomous weapons and mass domestic surveillance. We also mentioned the supply chain risk that is now official. There were some prediction markets popping up around this on Calci. You can see there now it's official. 94% probability. I would put that now at 100, but we did just get that confirmed. The volume around that contract doubled in the last couple of hours here. But that is the latest officially a supply chain risk and big implications for one of the biggest companies in the US the fact that the federal government is cutting off ties with Anthropic, it makes the designation as a supply chain risk sort of moot. I mean, it is already sort of taking it to the fullest. But in terms of anthropic valuation, Kate, how should we think of this in that context in terms of how valuable a government contract is? So I would actually put it in two buckets, Mel, so that the US government ceasing ties with Anthropic, that's about a $200 million contract for Anthropic. So that's sort of in its own vacuum. And then you think about the supply chain risk, that actually has bigger implications for this company because it threatens what enterprises, what companies would actually be able to work with Anthropic and if they have government contracts themselves. So the risk when you talk to investors is that there could be this chilling effect on the enterprise business. Take, you know, an Amazon, for example, they do government work. Is there going to be an effect of them saying, okay, well, if you're a supply chain risk, that's an unprecedented move. That's what they did with Huawei. And that's not typical unless it's a company that works with U.S. adversaries. So I would say that is the bigger deal for Anthropic. As this company looks to go public, obviously in private markets, you don't see the same tick by tick stock price moving. But the big threat from what I'm told, is when this company goes public, this is likely going to come up in their prospectus and it's gotten quite political. You're seeing this company now getting really criticized by the administration and you wonder what that means as this company looks to IPO potentially as soon as this year. Sam Altman's comments though, indicate that it would be aligned with Anthropic. And so therefore maybe the ding to the valuation would be across the board for these guys. True. Although Sam Altman also put out a memo to employees that we saw it was late last night, saying essentially they had the same red lines, they had the same issues with working on classified contracts. But he was saying that they were looking for solutions, they were trying to de escalate. So it's possible that they are able to fill that void and somehow get around this in a way that anthropic was not. So some of the details are unclear, but Altman is positioning as you know, we don't agree with with those two main things, autonomous weapons and surveillance. But we will try to come to some sort of solution and outline sort of what they're looking at. The other one I would mention is X and Elon Musk are seen as the front runner for getting this contract. Kate, thank you. Kate Rooney, Thanks, Bill. Coming up, stormy skies for solar stocks sun run falling off a cliff as Europe's biggest economy considers pulling the plug on solar power subsidies. What it means for the stock sun here in the States. But first, Netflix investors breathing a sigh of relief after the company walked away from Warner Brothers discovery. What comes next as one streaming saga ends? Do not go anywhere. Fast Money's back in two.

A (25:23)

Yeah, I mean, I think it's got a long way to go and I think the options market actually would agree with this. It was one of the busiest single stock options that we saw today. It was second only to Nvidia, traded about 3 million contracts. And the most active contracts were the par calls that expire next week. I mean, to your point, this has a lot of ground to make up from its highs that we saw early last year. And one of the other things that we saw in Netflix was a big decline in the two month implied volatility. So essentially that's the uncertainty that the options market is attributing to the stock. Looking forward, it was essentially at six month highs earlier this week. This has calmed investors down quite considerably. Yeah, I think it's going higher. I mean, let's not forget a 2.8 billion breakup fee they receive. Let's. It's interesting they. The comments. It goes from, you know, a must have, or was it a must have to really be nice to have, but not at the additional price. The fact that that was the breaking point for the deal, I find that hard to believe. I do think there was much more afoot here, but as a Netflix shareholder, I'm pretty happy about this. And there's been an opportunity. I still think that Netflix needs a catalyst or two to really break out, certainly past 110. And I think it's not wildly cheap here, but this is great news. Yeah, I tend to agree. I mean, the stock price tells you everything you really need to know. Clearly investors didn't like the deal at, at any price, essentially the stock, and essentially paid the price for that. I do think there is somewhat an implicit admission of guilt that this is becoming a more mature company and some of the easy money leading up to this point has been made ad tier, cutting back on password sharing, et cetera, et cetera. So listen, I do think that on one hand they do need to find some catalysts for growth. On the other hand, I think they now have the cash in hand that will make it available for them to do so. And it seems like the real focus is going to be into live sports and live events and it's probably going to be where their area of focus is. And who knows, all it takes is one AI story in terms of being able to produce some massive hit show and you might see a completely different re engagement with the volatility in the stock. So listen, I think clearly investors like to see a more capital light path going forward and I think their stock reaction is a reflection of that.

B (31:43)

Welcome back to Fast money. Markets down today after the January producer price index came in hotter than expected. But our guest next guest sees a bounce back coming. Let's bring in Morgan Stanley Private Wealth Management's Katerina Simonetti. Katerina, great to have you with us. So what, what exactly did we overshoot? Is it just sort of the assumption that is going to kill everything. I mean, what part of the narrative do you dispute? Well, I think that it's a very interesting narrative and no one can dispute the fact that AI is absolutely transformative. That is going to change the way we're going to do things and the way the companies are going to operate, change the margins, change the profit potential, but the at what speed and which companies. So we are extremely excited about the AI adopters across the industries. As a matter of fact, we see the biggest adoption, the biggest disruption happening outside of tech, specifically in health care, in financials, in industrials and in materials. You know, we see just this great move at the same time with the excitement, but also skepticism about generative AI. The really the jury is still out which companies are going to be affected negatively, where their businesses are going to be disrupted by AI because they're not going to be able to just really kind of move with the times. And the markets seem to have voted on which sectors are going to be decimated by AI. And they're mostly services, mostly ones that have data as their asset as opposed to hard assets. And I'm wondering how you think about those opportunities because I'm sure there are a lot of people at home thinking there's got to be an opportunity here. But how do you think about the business model in a world that you can't predict the impact on? Well, that's how, that's what we try to manage, the unpredictable. And let's just take software for example. There are going to be companies that of course just experienced a major sell off. But if there are giant companies with proprietary technology, strong customer relationships, competitive advantage, they are going to be able to adopt and they're going to be able, in their own accord, actually use AI for their model expansion. But it is very much an extremely competitive environment in a little bit of a wild wild west and a race to who is going to have technology that is going to be the most efficient.