← CNBC's "Fast Money"
CNBC's "Fast Money"
Stocks Sell Off As Oil Climbs, Rates Rise… And A “Witch Hunt” In Private Credit 3/5/26
00:43:24
Stocks selling off on Wall Street as crude oil continues to climb, and interest rates tick higher as investors digested the ongoing conflict in the Middle East. How the traders are navigating the whipsaw moves in stocks this week, and where they’re finding opportunity in the drop. Plus concerns still lingering over the private credit crunch, but could the fears be overblown? Why the CEO of an investment management firm says there’s a “witch hunt” happening in the space. Fast Money Disclaimer
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- [00:00]
Melissa Lee
What does it mean to live a rich life? It means brave first leaps, tearful goodbyes and everything in between. With over 100 years experience navigating the ups and downs of the market and of life, your Edward Jones financial advisor will be there to help you move ahead with confidence. Because with all you've done to find your rich, we'll do all we can to help you keep enjoying it. Edward Jones Member, SIPC before we had
- [00:31]
Carter Braxton Worth
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- [00:35]
Guy Adami
wasn't the most reliable.
- [00:36]
Carter Braxton Worth
Once our driver had to do a 14 point turn to get back on route. A 14 point turn, an influencer even livestream the whole thing. Not good for business. Now with AT&T business Wireless routes are updating on the fly and deliveries are on time. And the influencer did get us 53 new followers though.
- [00:55]
Tim Seymour
AT&T business Wireless connecting changes everything.
- [01:02]
Melissa Lee
Live from the NASDAQ markets out in the heart of New York City's Times Square, this is fast money. Here's what's on tap tonight. Crude cruises higher black gold hitting levels not seen in nearly two years as the conflict in Iran disrupts global oil supply as we debate the impact it is having on equity markets and how to trade all the moves plus a private credit witch hunt. Why the co CEO one top player in the space says concerns are overblown and software stocks bucking today downtrend in a big way. What is weighing on homebuilders and homebuyers and health care stocks under the weather, the moves in big pharma names and how to trade the space right now. I'm Melissa Lee. Come to you live from Studio B at the nasdaq. On the desk tonight, Tim Seymour, Carter Braxton Worth, Gai Adami and Julie Beal. We start off with the washout on Wall Street. Stocks more than wiping out yesterday's gains though did closing well off the lows of the day. The Dow shedding over a thousand points earlier in the session. The surge in energy prices playing a major role. WTI crude topping $82 for the July 2024 now up nearly 20% this week. And gas buddy data showing the average price of a gallon in the United States has risen more than 12% over the last month. Rising fuel costs slamming parts of the market with heavy energy exposure. The nicety airline index down more than 6% today while the industrials and metals each lost more than 2%. Meanwhile, interest rates back in the spotlight. The 10 year yield hitting its highest levels in in three weeks. So today's action a sign that investors are waking up to just how much disruption the war in Iran could cause. What do you think, Tim?
- [02:35]
Tim Seymour
I think that's right. I mean, we talked about geopolitics for a year and a half, but we didn't really talk about what it meant. And I know that seems crazy, but the fact that energy is at the center and you know, you talk about also aluminum prices are soaring because 15 to 20% of the world smelting capacities in the Middle east. You have coal prices rising because there's other forms of energy that are needed. You have a dynamic where there are so many different pieces that follow through on what this, what this is. And I think, you know, talking about the bond market is really important. Look at European bond yields in Germany where we know when, when Russia invades Ukraine, what that meant, higher energy prices meant to Germany, the largest economy in Europe, what it meant for Europe. What we know today is, you know, we talked about this a couple of days ago. We had a very kind of, you know, call it benign, at least response from the market on the first couple of days. But we all, I think said it's just a matter of time before that headline, the VIX continues to make lower, higher lows. And this is an uptrend that started well before Iran guys talked about this. So to me, the duration of this, especially when we start hearing about other parts of the world that we're licking our chops on, I mean, you know, the market does not like this and the longer energy is, is in a prolonged uptrend. I will say this crude was at 85 bucks a barrel for two years. It meant nothing. It was actually good news. It was a great level for markets. So if oil prices can stay in this range, we're still at a range even after that 24% move in about five days.
- [04:01]
Melissa Lee
We are slowly pricing out Fed cuts. I mean at this point it's 35 basis points by the end of the year versus 65 a week earlier. I mean, so we are coming to this notion that inflation is here to stay and that we're not going to get any, any relief.
- [04:17]
Guy Adami
Some of the numbers that we got prior to this happening on Saturday suggested. Exactly. And you know, Tim talked about the prices paid component from Monday's number. I thought Friday's number last week was hot for sure regardless what the bond market did. And he's right to point out that in Europe yields are going higher. I mean, I've been a bond bear for a while. It's been right some days it's Been wrong some days today it feels like it's right. We'll see how long that lasts. But the market, in my opinion, is not prepared for a bond market to wash out. And by the way, here we are in early March, before you know it, Kevin Walsh is going to be in the seat. I believe it's going to be Kevin Wash. And the market will challenge him. Why? Because that's what happens with every new Fed chair.
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Melissa Lee
Carter.
- [04:56]
Carter Braxton Worth
I mean it was a very. Let's just talk about the tape today. It's a very mixed and unusual tape. The worst performing sector is the safest of all. Consumer staples down 2%. Gold no haven. They're down in gold. Miners getting crushed, the only thing. And even this oil surging in that energy unchanged, Oil services down. So, you know, relationships exist until they don't. I think the message overall is that is there a place to go? It's one thing if you have to be long, but that is a rare thing. You're mandated as, as an institutional investor with assets given to you and trusted you. You must be fully invested. Okay, you're de risking here, but you put it on. But the individual doesn't have that conundrum. Money is actually coming out of the market. You can feel that, right? It's not saying it's, it's always been a rotation game, but this kind of behavior, not going into gold, not going into staples, not even going to energy when oil is spiking is, is a backing away from the equity.
- [05:54]
Melissa Lee
Is this an observation on your part or is this what you tell investors? Like you take a look at the charts and you say now's the time to go to cash.
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Carter Braxton Worth
No, I'm saying that's what is happening, I think over the last year. And, and here's what we know. If the, if the equity market is unchanged, that's the odd part, right? The SB just punch for four or five months as the parts go wildly and think about what was the worst IGV and now it's the best. It's all, that's all a bit hysterical and it's all a bit knee jerk. It's all a bit impetuous and it doesn't lend itself to making the decision on someone who's. Let me put some more into that. It makes you say let me just back away from that game.
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Melissa Lee
I mean the swings and the pendulums, Julie, they've been ferocious.
- [06:34]
Julie Beal
Yeah, it's been, it's been pretty wild. I think it's very. Emotional is really the word that I think of it and I think it's being driven by a lot of fear that many investors have that they're going to wake up one day and AI is going to be disrupting them whatever sector that they own. And you also have this much geopolitical risk. I mean, to me, the thing that is making me nervous about this is that the last time we had inflation, when it really started to pick up in 2021, it was transports that was really leading the the charge. And that's what's been happening recently. And there's more legislation in place now to remove drivers who are immigrants. So you could see even more price pressure in the transport sector, which I think could really drive inflation throughout the rest of the economy. So I think the entirety of these moves are really concerning because inflation going away is pretty central to any thesis around, you know, rates improving and growth improving.
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Melissa Lee
Yeah, I mean obviously higher transports, costs get directly passed down to the consumer. I mean that's what grocery stores typically do, for instance.
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Tim Seymour
There's. Look, there's no question that the transports react in a certain way. By the way, this isn't bad for rails, this isn't bad for certain parts. We've talked about this, which sectors within transports. But you have to understand that transports were on fire going into this. You have to understand that Staples were on fire going in Wal Mart specifically and Wal Mart specifically. So you know, some of this me is also just that part we we've had. I wouldn't call this dislocated bearishness, but even before Iran we had a market that was the least liked bull market. I know that's probably the most overused term, but least liked bull market. And I think that's ultimately pretty bullish here. I mean, you know, you throw a fears, you throw a credit bubble that comes out of AI fears, you throw a war, you throw inflation. And yet the market is within 2% of all time highs. With this sentiment that's been so poor, Carter can probably speak to the fact that these charts are breaking down underneath the surface. And I don't like what's happening with the 50 day and the 200 day. Things are starting to converge and come down that sideways isn't ultimately that constructive. But I have to point out that you've had a lot thrown at this market. It's hung in there very well. Earnings have been fantastic, margin profiles have been excellent. A lot of parts of the US economy are still very defensive against higher oil prices. So that's my glass up full.
- [08:58]
Melissa Lee
I mean de risking this time around. Looks very different because of what had run up so hard. To your point, I mean consumer staples, you take a look at Wal Mart, we've said many times here, why does Wal Mart trade at a higher valuation than in video? You know, why is it being treated like a growth stock? And here we are. The de risking happened in consumer staples, which Wal Mart is a huge part. I mean the risk was perceived in other places, not the typical places. The run up in those places, or
- [09:23]
Carter Braxton Worth
let's take defense contractors, every single one of them is down today. The missiles are flying. Right. It's the price action is always ahead of the facts. That's the point. It discounts as we know. This is elemental and so a lot of this stuff has already priced in. The missiles are going to fly, the oil is going to spike and it's time to be safe. Staples went like two standard deviations above trend. It was all priced in.
- [09:42]
Guy Adami
You look for reasons for things happening and sometimes you just can't figure it out. But in terms of Wal Mart, I think there might be a straight line of the fact that they're not going to be able to push out whatever costs are going to incur on the back of this. So their margins are going to deteriorate. And people want to say, you know what, maybe the valuation that's been okay in my book has been in a benign environment is no longer. That's probably what's going on there. But there's also, to Tim's point, there's a rug pull coming at some point in crude oil because I'm sure the administration watches every single tick. And when you see an 80 handle in crude, that's going to set off some alarm bells. It happened today, by the way. So you, you know that's coming. And what I'll tell you is all the tourists in these energy stocks, and there are a lot of them over the last couple of weeks will get out as quickly as they got in.
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Melissa Lee
Well, maybe that's one reason why the markets on an index level are remaining fairly level. I mean, because at any moment in time the Trump administration, which whose mandate basically is lower rates, lower energy prices, etc. I mean they can do anything they want. I mean they can try and that'll be it might be enough. Maybe they're perceived as a backstop, Julie, to this whole thing.
- [10:49]
Julie Beal
Yeah, I think that's the real tricky thing of where we're at right now and I think that's why the market is moving as much as it is, is because we've moved beyond the traditional normal framework of asking Congress to have these war actions. And so knowing that the President can move this quickly, this unilaterally, it really destabilizes a lot of comfort that people have that there is going to have visibility on changes that can be this material. The price of oil moving this much, despite the pressure that the President is under to lower pricing, it's, it's pretty remarkable, right? You have to think that that's kind of unique and spectacular. So I think that everyone needs to continue to pay attention to how this filters into pricing. To me, the place where it really matters is if we have any fragility in the labor markets to suddenly pick up an increase in inflation as well. That's a very big problem for our economy.
- [11:42]
Melissa Lee
Well, higher energy prices playing a role in China cutting its GDP forecast. Beijing officials expect the economy to grow at its slowest pace since the early 1990s. That news comes as the country's National People's Congress kicks off. Let's bring in CNBC contributor to Wardrick McNeil of Longview Global. Duodrick, always good to see you.
- [12:01]
Dwarick Michal
I'm Melissa. Great to see you.
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Melissa Lee
I mean, China has a lot of reserves. I mean, how do you think this impacts China ultimately?
- [12:09]
Dwarick Michal
Yeah, look, I think it's fair, Melissa, to suggest that energy shocks may cause some caution in terms of China hitting its GDP growth target, that 4.5 to 5%. But I think where we are is more likely that target was set because China is serious about doing what I'm calling structural housekeeping in its economy. But with respect to energy, I think China will be fine in the short term and in the long term, what worries me, Melissa, is the medium term. We're talking about three to six months out from today. And as you hinted, China spent a lot of 2025 stockpiling. So when you look at the Strategic Petroleum Reserve and their commercial inventories, if you believe the numbers, we're talking about 1.2 billion barrels. That buys them about 100 days, Melissa, beyond that 100 days, all bets are off. The duration risk really spike. But I think, you know, this is a real issue that everyone is watching. I think in the near term, China can really guard against some of these shocks. They're better placed than most. But beyond three months, I think they are worried.
- [13:29]
Tim Seymour
Rick, it's Tim. So, so what are you watching? Because, you know, you've highlighted and I like the point you're making, which is that China is at least the good news in a downgraded growth forecast is they've also kind of reset expectations, but also they're focusing on more stable long term growth. What is it you want to see see out of China, out of the People's Congress? What would be bullish for their markets at a time when, you know, frankly, Chinese stocks, Chinese Internet stocks, from a trader's perspective, Alibaba's at the most oversold. It's been back four or five years. And that's saying something because I feel like that's all we ever talked about for a long time. China equities right now, no bueno.
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Dwarick Michal
Yeah, look, I think this is a great point and let's go back to this structural housekeeping that I talked about. You know, the biggest thing that I think people want to see is that China comes up with some type of answer for the rat race that we've seen. And pricing, the involution, as they call it, it is killing a lot of Chinese companies. Some of the names that we talk about here, JD.com down and, and so you have to really try and get a handle on pricing. I think this will be no surprise to you, Tim, in terms of the housekeeping. But, you know, local government budgets are still in bad shape and that's largely because of all of the overspending on zero COVID policies, but also the loss of the property sector as an economic driver for those, for those budgets and then overcapacity. So coming out of this npc, we really need to see some solid answers and then some implementation to try and do that structural housekeeping that we've been talking about so much here on air
- [15:10]
Guy Adami
toward connect some geopolitical dots. Trump's meeting with President Xi in April and China, for now, we'll see how that plays out. But does what's happening first Venezuela and now what we're seeing in the Middle east is you think that that emboldened China in terms of what they're looking to do potentially with Taiwan.
- [15:28]
Dwarick Michal
Yeah, you know, this is the question that we're getting. And I will say that I don't believe that this as an operational matter changes China's calculation. What it does do, however, is it gives China a lot of rhetorical power under the might makes right doctrine. You know, we heard Carney talk a lot about this in Davos. You know, it's the old Thucydides saying that the, you know, the strong do what they can and the weak do what they must. And I think we are seeing that right now play out. I don't think it changes China's operational calibrations but it certainly empowers them rhetorically with what they are hoping to do in Taiwan.
- [16:11]
Melissa Lee
Dwarak, it's always great to speak with you. Thank you.
- [16:14]
Dwarick Michal
Thank you, Melissa.
- [16:15]
Melissa Lee
To Wardrick McNeil Longview Global Ambassador, what do you think about China's forecast?
- [16:21]
Tim Seymour
Well, I think it's no surprise. I think ultimately we are, you know, we've put down a zero almost in terms of China giving global support to stimulus and some sense. And that's why I think there is a sense of surprise here. I, I worry more that U.S. china relations, because of what's going on in the Middle east, because this is very difficult for China right now, aren't getting better, they're getting worse. On top of the time, you know, excuse me, on top of the fact that we're continuing to get all kinds of data, data that says, you know, China and the US on the tech front, again, not really playing well.
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Melissa Lee
All right, We've got a news alert in the crypto space. Mackenzie Segalis got the details. Mack.
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Julie Beal
Hey, Mel.
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Melissa Lee
The SEC is closing its civil fraud case against crypto entrepreneur Justin sun, one of the last such cases left over
- [17:07]
Julie Beal
from when Gary Gensler was in charge of the agency.
- [17:10]
Melissa Lee
Now, under the agreement, one of Sons
- [17:12]
Julie Beal
companies will pay a $10 million penalty.
- [17:14]
Melissa Lee
The SEC first sued sun and several of his crypto entities in March of
- [17:18]
Julie Beal
2023, accusing them of of unlawfully distributing tokens and failing to properly disclose payments tied to celebrity promotions.
- [17:26]
Melissa Lee
And Son, you might remember, also emerged
- [17:28]
Julie Beal
as a top buyer of the president's crypto token on X.
- [17:31]
Melissa Lee
He posted that he was honored to attend President Trump's gala dinner after winning
- [17:35]
Julie Beal
a contest tied to the Trump meme coin last spring. We're going out to the SEC and
- [17:40]
Melissa Lee
a Sun on this, but no word back just yet.
- [17:42]
Julie Beal
Mel.
- [17:42]
Melissa Lee
All right, Mack. Thank you. Mackenzie Sagalos. Meanwhile, software companies rising above the sea of red today. Again, the trade desk surging reports we brought you last night about being in talks to supply chat GPT with ads Klaviyo at Atlassian, Intuit, ServiceNow all seeing outsized gains. The IGB software ETF now up four days in a row and seven of the last eight, it is up over 7% just this week. So are the AI fears fully washed out of this group and we got to go to Carter for this one. What do you think?
- [18:12]
Carter Braxton Worth
Well, we've covered this quite a bit because it's the most sort of dynamic part of the market. The tech sector, which is the worst performer, could have such winners and such losers software. And yet that divergence is now you've got convergence. The question is how much more to go. I think you fade the IG move here, go flat that, and I think you stay short semis.
- [18:36]
Melissa Lee
Julie Beal, have you been looking at the software sector, thinking, oh, summer values now?
- [18:41]
Julie Beal
Yeah, absolutely. Because I think a lot of these businesses, they can create real barriers around them if they have proprietary information, if they're embedded in transactions or if there's any kind of regulatory. So I think that there really are some wonderful software names that it's just they've been indiscriminately sold off. The question is just being able to find which ones are the right ones, you know, and a lot of that happened and got shaken out, I think during earnings. Companies that are just software that's used to optimize a process, I think they're much more at risk. And you can see that there's more hesitation in their bookings. Growth and companies that actually provide something really differentiated that would be hard to replicate with vibe coding.
- [19:21]
Guy Adami
Historically, it's foolish to take the other side of anything. Carter Braxton Wirth said.
- [19:25]
Melissa Lee
Oh, but you are. Okay, okay, so we have to mark the date. Yeah, mark the date because. Okay, what are you going to do?
- [19:32]
Tim Seymour
That's kind of a 2026 label me foolish.
- [19:36]
Guy Adami
I think. I think IGV has some legs here now. I think at certain point he's going to be right again because I don't think the fundamental problems have gone at all. But we actually talked about this last week. We said there was a day where it felt like it bottomed out. Big volume days and a lot of these names. It felt like it could turn 97 if you go back into January. That was the first leg down where we held and that's where we sort of cascaded lower from in the igv. I think that's where we get to in the short term.
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Melissa Lee
Coming up, after hours action in shares of Gap, Costco and Marvell Technology. The latest numbers and details from those quarters ahead, plus the health care sector not immune from today's market sell off. The stocks getting hit the hardest and whether there's more pain ahead. Don't go anywhere. More fast money into. My uncontrollable movements called TD Tardive Dyskinesia felt embarrassing. I felt like disconnecting.
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Julie Beal
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Melissa Lee
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Melissa Lee
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Carter Braxton Worth
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Julie Beal
Take control by asking your doctor about Ingrezza.
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Carter Braxton Worth
Learn more@ingrezza.com that's I n g r e z z a.com Ingresa before we had AT&T business Wireless coverage, our delivery
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GPS wasn't the most reliable.
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Carter Braxton Worth
Once our driver had to do a 14 point turn to get back on route. A 14 point turn. An influencer even livestream the whole thing. Not good for business. Now with AT&T business Wireless, routes are updating on the fly and deliveries are on time.
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Guy Adami
And the influencer did get us 53
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Tim Seymour
new followers though at&t business Wireless connecting changes everything.
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Julie Beal
What do the steam engine, electricity and
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Melissa Lee
AI have in common? These technologies not only change how we work, they can transform entire economies.
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Julie Beal
I'm Stephanie Huang, host of where the
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Melissa Lee
Internet Lives, a podcast from Google and Latitude Studios about the unseen world of data centers. Explore how data centers are unlocking growth in every sector of the economy. From agriculture to medicine to manufacturing, data centers are powering a new era of AI innovation. Listen to where the Internet Lives wherever you get your podcasts. Welcome back to Fast Money, an earnings alert on Gap shares tumbling in extended hours after the retailer posted earnings that came in below expectations. CNBC's Gabrielle Fonrouge has got the details. Gabby yeah, hey Melissa, it's good to be here. So bad weather is often thrown around in retail as an excuse for poor results, but we are seeing a real impact this earnings season. So Gap partially blamed amiss at Old Navy and a miss on EPS on historic winter storms in January, which led to around 800 temporary store closures. That represents about 35% of the North American fleet. There's also questions about what's next for Gap now that it's returned to growth, improved profitability and amassed a $3 billion cash pile. I talked to CEO Richard Dickson and he said he's ready to move on to the next phase of his turnaround plan, which is building momentum. That means doubling down on better product, better marketing and better execution. And then in the meantime, Gap is also starting to focus on bigger and higher margin growth opportunities in both beauty and accessories. Dixon said those ventures will begin to scale next year. Gabby. Thanks Gabrielle Fon Rouge what do you make of shares of Gap had a
- [23:29]
Guy Adami
huge run up in the earnings if Carter Carter goes back to his charts and look this is where we stopped in the spring of 2024, this 29.5 30ish level. So it makes sense. I mean it wasn't a horrible course quarter but you know, given the run the stocks had over the last six months, I think people are looking for more and I think taking profits at this level actually makes sense in retrospect.
- [23:47]
Carter Braxton Worth
It's sort of a dollar here. I mean Gap was when it came out of the gate, it was a great winner, right all the way. On a split adjusted basis it went from 1984 cents to 40 bucks in 99 and it's been flat since. It's been flat for 25 years. Not interesting. A catch a trade here, catch trade there. But you know it's talk about it's not even a mature business, mature growth. It's just a. It's nothing. It's an operator that closes a few stores, get some new ones, changes the color T shirts. So what? Who cares?
- [24:15]
Melissa Lee
Well, I mean but quite an indictment.
- [24:17]
Guy Adami
I don't even. I know what you're going to say. Just forget Levi because you screwed it up already and you are Lulu's.
- [24:23]
Tim Seymour
Yeah, that's fine. The guys feeling a little. A little self conscious because again what we. The weather thing that has people not out shopping. I don't know guys have been stormy in your neighborhood for 16 years because I mean that's the same outfit you showed up on this show coming. I'm so sorry.
- [24:39]
Guy Adami
Does anybody have anything intelligent here to say? I actually do know.
- [24:42]
Tim Seymour
Listen. 10 billion.
- [24:43]
Guy Adami
I'll say this the flip side of the coin. They split us up.
- [24:46]
Tim Seymour
Yeah, that was nice. Sort of been jousting a little billion
- [24:49]
Guy Adami
dollar buyback from Gap is not insignificant $10 billion company. So that should put a little bit of a floor. I don't think. Look, I think the seller probably continues down to 2026 and then we'll have another conversation.
- [24:59]
Melissa Lee
All right. Coming up. Hopefully an intelligent one. Coming up, the hard hit stocks in health care. The group seeing outsized losses in today's market drop. Can we expect a recovery or is there more downside ahead? We'll debate that. You're watching Fast Money last of the Nasdaq marketsite in Times Square. Back right after this.
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Melissa Lee
welcome back to Fast Money. Health care stocks getting hit today with the S and P Health Care ETF dropping 2% for its worst day since July. Biopharma stocks taking it especially hard. Biggest laggards include Moderna sinking almost 7%, Amgen, Merck Lilly, Vertex, among the other names down sharply. You had flagged this on our call
- [26:49]
Tim Seymour
because this, this falls under the category of price action that you really wouldn't have expected. I mean, a lot of this stuff should be defensive in the tape we're in. And it was coming from some of the leaders and from the stalwarts and some of the, the, I would just say the lower volume names like A, J and J you're not expecting to give you, you know, that kind of a move on the way down. Although some of these names have outperformed in the case of jj, I just think this is a case and this speaks to what Carter was saying about there is some sense of taking the gross down, simplifying. And I think even with some of These big pharma names, there are some moving pieces that have been trouble. It's not like it's been an easy trade for a year and a half, but nonetheless, I think your opportunities here are strong. I continue to like change, Jay. I continue to like pharma and I think there are opportunities to play any of this weakness here.
- [27:33]
Melissa Lee
And continuing with the theme of what has gone up has been taken down. Look at Novo, for instance, it's up 4% this week. So I mean, the things that were sort of left for dead that have really struggled are finding some bids in this strange tape. Julie.
- [27:46]
Julie Beal
I think part of it is, is if you recognize that interest rates are going up, there is an opportunity to buy things that are beaten down on the theory that, you know you are going to be really paid off if you're focusing on valuation. And we hadn't been talking about valuation really very much at all last year. And so suddenly, maybe if interest rates again trend higher, does that be the case for, you know, maybe you need to have more quality and maybe you need to have a sharper pencil when it comes to valuation. I don't know. It's weird. I think like as someone who, you know, as Carter started an institutional investor that has to stay invested, this has been a really unusual trading pattern and it's very hard to have any sense of where the leadership is. So for us, we're just focusing on quality because that's all we really know anyway.
- [28:28]
Guy Adami
Seems somewhat indiscriminate to me across the board. Just selling pharma hand over fist today. So maybe that lasts a couple more days. But the fundamental story has not gone away. But before we go to break and we've done this show together a long time, but we're constantly learning about one another. Like I've learned thing about learn things about Tim Carter.
- [28:46]
Tim Seymour
It's special. It brings us all closer together and I think, I think the audience feels that way.
- [28:51]
Guy Adami
The audience might want to know this. This is exciting, magical for me, it's very exciting.
- [28:55]
Tim Seymour
Well, we learned about music tape. Music's very important to us and we learned something Guy get there.
- [29:00]
Guy Adami
Well, Julie is a huge fan of Stevie Ray Vaughan, which I knew, but Tim did not.
- [29:05]
Melissa Lee
It is something we learned about Julie today and we are better for it as a fast money family.
- [29:11]
Julie Beal
I just, I love the fashion sense. Start there, you know, and then the music's great too.
- [29:15]
Melissa Lee
All right, fair enough. Coming up, witch hunt in private credit, where our next guest says the credit concerns are overblown and where he sees the space heading next. Fast Money's back in two.
- [29:28]
Dwarick Michal
Missed a moment of fast. Catch us anytime on the go follow the Fast Money podcast.
- [29:33]
Tim Seymour
We're back right after this.
- [29:39]
Melissa Lee
Welcome back to FAST money. Stocks dropping today but finishing off the lows of the session. The Dow falling more than 1,000 points early in the day, but paring those losses to end about 800 points lower. The S and P shedding more than half a percent. The Nasdaq down a quarter of a percent of some tech stocks caught a bit. Airline stocks lower today as the conflict in the Middle east continues and fuel prices surge. American Southwest, JetBlue leading the group lower. And some more after hours action. Marvell Technology topping earnings and revenue expectations, posting better than expected. Q1 guidance that stock is up 13%. Meantime, alternative asset managers mostly in the green today after a rocky week. Our next guest says investor concern in the wake of Blue Owl is massively overblown, that institutional investors will not be leaving the space anytime soon. Hamilton Lane Co CEO Eric Hirsch joins us now. Eric, great to have you with us.
- [30:26]
Eric Hirsch
Melissa, nice to be back.
- [30:28]
Melissa Lee
So UBS had a pretty eye popping forecast I think in the past week or so, saying that they see 15% defaults. Where do you stand on that? How is that very wrong? Is that close to right? What do you think?
- [30:42]
Eric Hirsch
Just don't see it. And I think part of the issue here is the private credit market is big, really big. And so saying there's a private credit issue is like saying there's a stock market issue. We're going to have to get a little bit more granular on what managers have been doing and recognize that huge sector diversification and big size diversification. And so I think we had to get a little bit deeper to figure out what's actually happening. But I'm not seeing default rates getting anywhere near that level.
- [31:08]
Melissa Lee
Software had become though, a favorite sector amongst private credit managers just because of the, the recurring revenues that the business model, software was very reliable in the, in the private credit sort of model. And so a lot of sectors sort of went a little bit heavier than they would have. So we're talking about what level concerns you, Eric. We do you take a look at portfolios and we do agree that there should be a markdown to say software credit based on what we're seeing elsewhere in the sales that we're seeing in private credit of software assets.
- [31:38]
Eric Hirsch
I do agree with that. But I think it's important to recognize that the number of private credit managers that were actually deploying dollars into software and lending to that is a tiny, tiny fraction of the number of private credit managers. So again, it's back to a universe of hundreds of private credit managers, most of them very small. The ones that get all the airtime are the ones that are very, very big. And they were deploying capital into a very different part of the market than the rest of the private credit managers. And so I think what you're going to continue to see is dispersion of returns, be wide. That's what we saw through the gfc. That's what we're going to see here because again, the books look really different and from our vantage point we can see them all and they don't look the same.
- [32:22]
Julie Beal
Hi Eric, this is Julie. I had a question about as we see credit maturities occur in a lot of these sponsor backed private equity companies, what are going to be their options to refinance going forward?
- [32:35]
Eric Hirsch
So one, there's a huge amount of dry powder out there in the private credit space. And so there's going to be no shortage of lenders if it's a good credit. So we're not seeing any capital shortage. And the fundraising actually continues. Yes, you've seen a small number of managers actually have some outflows, but you also see a lot of us with continued, very strong positive inflows. And so money continues to come into the sector, both institutional as well as in the broader wealth channel here.
- [33:05]
Tim Seymour
Tim, great vantage point you do have. And so if you look at a Blackstone and a KKR and I know I'm not asking you to play financial analyst here, but these are stocks that are down 40, 50% and some of this is related to the stuff we're talking about. Some of this is just related to market exposures right now. And again, people concerned about taking the gross down and whatnot. Just any thoughts on really these types of moves? Because I would agree with you, these, these are the smartest guys in the room. I'm not necessarily worried that those portfolios are going to zero. In fact, not even close to that. But the stage stocks have taken a big hit.
- [33:39]
Eric Hirsch
Stocks have taken a big hit across the sector, including ours. I would step back and look at this through a very simple lens. Where is the customer going? Because what the stock market is saying to us with this pricing is that they believe that people are rotating out of the private sector, both institutional as well as wealth. I do not see that because in saying that, what we're really saying is they're just going to go back and put all their money in the public equity markets, that's not happening. Public equity markets also expensive, although coming down near term, hugely concentrated all the things that we talk about. And so the investor rotation has been much more fundamental. They want diversification, they want a broader swath of the economy and they want access to a much bigger variety of sized businesses. The customer is not going to rotate out and put everything back in The S&P 500.
- [34:31]
Guy Adami
Eric Co. Like Blackstone. I'm not picking on Blackstone, I'm just using this anecdotally. If this was just a recent phenomenon, to Tim's point, the stocks will be trading but Blackstone made its all time high in the fall of 2024 and obviously now we're in March 26th. So there's been something going on along the way that have concerned traders, investors, the retail sector. Can you speak to that?
- [34:54]
Eric Hirsch
Well, I think if you go back and look at earnings of whether it's Blackstone or us or Apollo or whoever you want to look at, most of us have been putting up record earnings quarter after quarter after quarter. So if we look at the fundamentals of our business, whether it's revenue growth, earnings growth, margin expansion, all of a, um, growth, all of that has continued to be up and to the right. And yet the market reaction is sort of forecasting, I believe, looking forward and saying yes, but yes, I see the record earnings, yes, I see the record inflows in the record a. But something's going to happen in the future and the clients are going to rotate out. And again that's where I go back to. I don't see it.
- [35:35]
Melissa Lee
Eric, thank you so much. Great to get your perspective on this.
- [35:39]
Eric Hirsch
Pleasure. Thank you.
- [35:40]
Melissa Lee
Eric Hersh of Hamilton Lane. What do you think of the washouts? Carter?
- [35:43]
Carter Braxton Worth
Well, I think this is refreshing. Unless I'm wrong, hasn't a couple of heads of these things come out recently? Said there's trouble brewing and things are not so good.
- [35:51]
Melissa Lee
Like a Jamie Dimon the cockroach that
- [35:54]
Carter Braxton Worth
the horse is way. Is that a horse leaving the bar? That's after the fact. These stocks are all down 50%. They all peaked more than a year ago. Worrying about it or talking about it now this is right. What Eric saying is right. That's. That's. Yes, that's pass. It's. I'd play these for bounces across the board.
- [36:10]
Guy Adami
Horses out of the barn.
- [36:11]
Tim Seymour
Yeah.
- [36:12]
Guy Adami
It's old school.
- [36:13]
Melissa Lee
Is it?
- [36:13]
Tim Seymour
Oh, well, something I want. First of all, I thought Eric's comments were very suspicious. Sinked and I think he, he captured someone that certainly got some visibility here and there is a lot of sensationalism. And you can read, I think was the FTSE today, maybe it was the Journal, I don't know. But they talk about how BlackRock had a credit for $25 million that was 103 days ago, got marked down to zero. Now this does happen, but it was a $25 million loan. It doesn't necessarily impede and certainly start to bleed into the rest of that portfolio. It does tell you, Mark, to markets can change. One of the things that I know Eric and his team are seeing is a look into infrastructure and energy in the private credit markets and in the private equity. I mean those are areas that I think have come a long way from 2015, 16 when that whole sector got blown up. In fact, that's a, that's a place I like putting clients. It's a place where I think you get excellent returns and I think these companies are run differently.
- [37:06]
Melissa Lee
Coming up, buying power on the rise. The latest data from Zillow pointing to a rise in housing, housing affordability and why. Our next guest says a spring rebound is on the horizon. Don't go anywhere. Fast money's back into. Welcome back to FAST money. Rate sensitive housing stocks under pressure today. The ITV Home Construction ETF down 2 and a half percent. Closing your session lows. Meanwhile, the 30 year fixed rate mortgage ticking back above 6% after dipping below that level last week. But the latest data from Zillow suggesting that the housing market could perk up this spring as household buying power increases. For more, let's bring in Zillow chief economist Misha Fisher. Misha, great to have you with us.
- [37:50]
Misha Fisher
Great to be with you. Thanks for having me.
- [37:52]
Melissa Lee
The data that shows that affordability is climbing, is that dated? I'm just trying to figure out if that incorporates what has gone on recently. What has gone on in terms of the tick higher in housing, in mortgage rates.
- [38:04]
Misha Fisher
It's largely a long term trend over the last year. So I think you're alluding to what's happened with the overall bond markets of the last three or four days. What we're reflecting on is over the last year and you know, that's a 70, 80 basis point reduction in overall rates, which is meaningful. And I think it's important to keep that in mind how much buying power that has unlocked for people. So the recent numbers that we have are 30k in additional buying power for the, the typical homebuyer. And you know, obviously the market's given up a little bit of that over the last couple of days. But, you know, we haven't revised our forecasts.
- [38:37]
Melissa Lee
How do you overlay, though, what is going on? The conflict in Iraq with, excuse me, Iran, with, with what's going on in the housing market in terms of people's willingness to make a large purchase when there's sort of uncertainty in the world?
- [38:51]
Misha Fisher
Well, you know, we've seen uncertainty have an impact in the past in terms of what people are willing to rush out and buy. But, you know, right now I think it's still pretty early. I think, like everybody, we're monitoring what's happening with energy futures and seeing what downstream impacts are possible there. But like I said, we're not revising anything yet. And I think there's a big difference for the consumer and the bond markets whether or not this goes out for weeks or if it goes on for months.
- [39:14]
Tim Seymour
Right.
- [39:14]
Misha Fisher
It's sort of up in the air at the moment. We're taking a wait and see approach.
- [39:19]
Tim Seymour
Misha, if we take away some structural dynamics that the affordability factor and interest rates, what else is going to change is. I feel like this is the housing conversation we've had and, and you're providing great insight tonight, but it's the conversation we've had for probably two or three years, which is that it's really been a sideways trade. They've been disappointing numbers, buyers and sellers. First of all, obviously not enough inventory, some, you know, two or three of the obvious structural stuff. What could unlock this? Or is it simply rate sensitivity?
- [39:48]
Misha Fisher
I mean, rate sensitivity is probably the biggest component. I think if you see the labor market continue to improve, we'll get a new print on that to and see what's trending there. The January number was a nice surprise for labor markets, you know, and I think there has been a lot of concern in the market. Based off of the January existing home sales print, our numbers had January down seven and a half percent. I think NARS were down about 8.4%. But our February numbers, which is what we just released earlier this week, show a 1.8% rise. So we'll see if other indicators trend along with that. Certainly, you know, I think everybody was a little disappointed by the home season last year. We were. We had two years of bouncing along the bottom and it turned into three years of bouncing along the bottom. But, you know, our overall forecast is for a modest improvement this year. Certainly not a gangbuster market, but we're expecting, you know, roughly a 4% lift this year. So, you know, I won't pontificate what that might do to equities. But in terms of the market, it does seem like it's a very gradual uncooling of the overall trend.
- [40:47]
Melissa Lee
All right, great. Misha, thank you so much for joining us. Appreciate it.
- [40:51]
Tim Seymour
Thanks for having me.
- [40:51]
Melissa Lee
Fisher. Uncooling is a very. Yeah, it's a nice term, but it's that, that implies that it's sort of a slow.
- [40:59]
Tim Seymour
Well, it takes me some time, you know, to uncool.
- [41:02]
Melissa Lee
Cool. To uncool.
- [41:03]
Tim Seymour
Yeah.
- [41:04]
Guy Adami
Last night in the course of about a five minute span. Right.
- [41:07]
Melissa Lee
Okay.
- [41:07]
Guy Adami
Remember Sarah Eisen had an interview last night.
- [41:09]
Melissa Lee
Yeah.
- [41:10]
Guy Adami
Mark Benioff and Mark talked about he wasn't seeing white college, everything was fine. And then more minutes later, Gene Muntz and Morgan Stanley made that announcement. Gene Munster at a conference saying that I could disrupt 30, 40% of white collar jobs. So the truth is somewhere in the middle, clearly. But that is not being priced in the housing market at all.
- [41:30]
Carter Braxton Worth
What do you play home builders for? Bounce. I like ITB here.
- [41:33]
Melissa Lee
Julie, how are you feeling about homebuilders? The housing sector in general?
- [41:38]
Julie Beal
Yeah, I mean I think there's something very structural in place in terms of the houses that we need to build. The problem is we don't have very good policy around that to actually address the supply side issue. I think that generally speaking, I'm always a little bit squeamish about buying individual homebuilders because you're really reliant on their getting the geographic exposure. So if I were looking for exposure, for sure I'd do it through the etf.
- [42:00]
Melissa Lee
Coming up, the surge in crude oil prices making headlines this week. But it's the energy action in stocks that's pouring, peaking. Excuse me, the Chartmasters interest. Where he these names heading next? And here's a sneak peek at the Kramer camp. Jim is chatting exclusively with the CEO of Tapestry. Catch a full interview. Top of the hour on Mad Money. More fast money to. Welcome back to Fast Money. The surge in oil boosting energy stocks over the past few months. The XLE jumping more than 25% this year while the S and P is negative. But the chartmaster says it might be time to fade the high energy move. Carter, what do you see in the chart?
- [42:39]
Carter Braxton Worth
Prices are always ahead of facts and we see that once again on a six month basis. Of course energy is killing the market itself but you know, OH is about 40% and those were the first to move about seven months ago. The most beta within energy. So the question is, is this discounting already? What's happening. I think it is. I think you fade the move. So let's look at the XLE itself. Remember the s and P500 energy sector. You'll see in the next chart. It represents only 3.5% of the S and P but the sector accounts for about 5.5% of S& P profits. But what you've got here, and it's pretty straightforward is we are as far above the 150 day. Let's actually get rid of that and go with an arrow. So if you were to see every other instance when we've been this far above the 150 day, we have corrected now I think we're in that position right here again. That one needs to come back anyway. So let's go to the next chart and we'll clear all these and what you'll see also is the breakout. It's definitive. That's the exact same chart. We know the breakout occurred, right. Well defined, tops at a common level and then the breakout. But it's already happened. And I think you take a contrarian view. People are rushing into something that is discounting a lot. Again, it's notable. XLE on changeday oih down. I think that says a lot. Even as oil surge fade the move in energy stocks.
- [43:59]
Melissa Lee
All right, Carter's going to come back over to the desk. Would you fade?
- [44:05]
Tim Seymour
So this, this maybe mark your, your, your calendar here. This might be the second, you know, pushback a little bit on the world famous. Well here are the fundamentals around it. And I'm not going to tell you that oil integrated oils are like gold miners. But what I will say is for every $10 higher in the price price of oil, especially the European integrators like Shell, this is a tease for my final trade. They actually grow EPS by 20%. They grow their free cash flow by 200 basis points for every $10 in oil. They will re rate with higher oil. The question is can oil stay higher? 2 years ago again with no wars, no nothing, we had 85.
- [44:41]
Eric Hirsch
Brent.
- [44:41]
Tim Seymour
I think oil prices are trending higher because they should be higher. And I think they're going to stay higher even if we get a relief. And we will get a relief out of Iran hopefully soon. So I kind of like the integrated the breakout that Carter says already happened. I kind of feel like we've got some more room to run because the stocks are going to get rerated.
- [44:58]
Melissa Lee
Is this going to be the second time in one evening, in one hour? You disagree with Carter Braxton?
- [45:04]
Guy Adami
Because it makes me Wishy washy, which my grandmother said used to say, little guy, you don't want to be wishy washy.
- [45:10]
Tim Seymour
Were you little guy because you were diminutive or.
- [45:12]
Guy Adami
My father was Guy Junior. I'm a junior. My family. So anyway, nobody cares. I agree with everything Tim said. Okay, so I'm on Tim Seymour side. But as I said earlier, you could absolutely see the rug pull coming and it'll get all these energy tourists out, which suggests an excellent move. Maybe back to 49 and a half or 50. But I am not suggesting the energy move is over by any stretch of the imagination.
- [45:39]
Tim Seymour
Okay, little guy?
- [45:39]
Carter Braxton Worth
No.
- [45:40]
Guy Adami
Okay, so I knew who you are
- [45:41]
Tim Seymour
in the markets, right.
- [45:43]
Carter Braxton Worth
If you're a short term trader, you know, this is so extended, you make a bet, one could say you made your own point. It's only 3% of the S and P card. It's just going to go to 6%. It's going to double from here, meaning it's what your timeframes are, who you are. But this part's incontestable on a day to day basis. It is quite extended and it is notable that these stocks were down when oil was flipping out to the upside.
- [46:06]
Melissa Lee
All right, up next, final trade. Final trade time. Julie Beal.
- [46:20]
Julie Beal
One of those good software names I like is Bentley. It gives you exposure to infrastructure which I think is a good thing right now.
- [46:26]
Tim Seymour
Yes, these European integrated shell S H E L you can buy it here at the pays a very handsome div and I do think the free cash flow generation right now means it will be rerated.
- [46:36]
Carter Braxton Worth
Carter Braxton North Vertex Large cap Pharma that's poised to break out.
- [46:42]
Guy Adami
Guy, we didn't comment on Carter's walk to and from the smart swagger.
- [46:46]
Tim Seymour
It's more like a swagger and he was a maestro and it should have been.
- [46:49]
Melissa Lee
By the way, he deserves in circles.
- [46:52]
Guy Adami
Czar of the telestrator, Mike Fratello. But he's wow.
- [46:56]
Tim Seymour
Mike Patel has not been mentioned ever on Fast Money.
- [47:00]
Melissa Lee
Thank you for watching Fast Money Mad Money Jim Cramer starts right now. All opinions expressed by the Fast Money participants are solely their opinions and do not reflect the opinions of CNBC or its parent company or affiliates and may have been previously disseminated by them on television, radio, Internet or another medium. You should not treat any opinion expressed on this podcast as a specific inducement to make a particular investment or follow a particular strategy, but only as an expression of an opinion. Such opinions are based upon information the Fast Money participants consider reliable. But neither CNBC nor its affiliates and or subsidiaries warrant its completeness or accuracy, and it should not be relied upon as such. To view the full Fast Money disclaimer, please visit cnbc.com fastmoneydisclaimer Meet Tucker Tucker's got specific taste.
- [47:42]
Julie Beal
No jazz music after sunset.
- [47:44]
Melissa Lee
Also, be sure to always stop at that one corner where he found a
- [47:47]
Julie Beal
cheeseburger three months ago. And most importantly, clockwise walks only.
- [47:53]
Melissa Lee
Luckily for Tucker, his dog, sitter from Rover, just gets him. So even when Tucker's parents are at a wedding in Phoenix, he can still do everything exactly the way he wants to. Find a sitter who's a perfect match for your pet Rover, we get your pet.