Rubio says US Investigating Cuba Incident, Nvidia Earnings Lukewarm | The Opening Trade 2/26/2026
Speakers
Summary
- Nvidia's "Tepid" Beat: Despite beating estimates and showing strong growth, NVDA's stock reaction was muted. Analysts suggest this is due to supply constraints (HBM memory) rather than demand issues, with the AI infrastructure build-out safe through 2026.
- The Private Credit "Apocalypse": Bruce Richards warns of a coming crisis in private credit specifically tied to the software sector. He notes that private credit has ~23% exposure to software (vs. 3% in public high yield) and predicts a 50% default rate in that specific pocket due to AI disruption and excessive leverage.
- European Rotation: A strong contrarian call for European equities over US Tech. The thesis relies on a shift from monetary focus to fiscal stimulus (particularly in Germany) and attractive valuations compared to the "priced for perfection" US market.
- Asset-Based Renaissance: A recurring theme is the shift from "digital/software" lending to "physical/asset-based" lending (aircraft, power grids, industrials) as investors seek collateral in the age of AI disruption.
Trade Ideas
Nvidia beat earnings, but the stock reaction was flat. Windsor notes that memory chips (HBM) are sold out until 2027 (citing Micron and SK Hynix). The market interprets the lack of massive upside guidance as a demand issue, but it is actually a supply constraint. The infrastructure spend is "safe" through 2026. If supply is the bottleneck, the "AI bubble" hasn't popped; it's just physically constrained. LONG. NVDA becomes more defensive as multiples compress while growth remains locked in by supply constraints. Memory providers (MU, SK Hynix) have pricing power. A sudden cut in Hyperscaler Capex for 2027.
Private credit markets have approximately 23% exposure to software companies, compared to only 3% in the public high-yield market. These private companies often have 10x leverage. "Annual Recurring Revenue" (ARR) allowed for inflated multiples, but AI is disrupting the "moat" of legacy SaaS. High leverage + AI disruption + valuation contraction = inability to service debt. Richards predicts a 50% default rate in this specific segment. SHORT/AVOID. Avoid private credit funds with heavy software exposure. AI adoption is slower than expected, allowing legacy software companies to pivot and pay down debt.
LSEG announced a £3B buyback and noted that AI models are only as good as the data they are trained on. They are partnering with Microsoft and OpenAI. In the AI era, proprietary, high-quality financial data is a scarce resource. LSEG owns the data moat. AI agents accessing data creates a "natural cross-selling machine" across their datasets. LONG. Data ownership is the play on AI application utility. Regulatory crackdowns on data usage or AI integration failing to drive revenue growth.
Rolls-Royce announced a buyback and strong engine demand. Engie is acquiring UK Power Networks. Both companies are plays on physical constraints. Rolls-Royce on travel/defense demand, and Engie on the power grid constraints caused by AI data centers and renewables. LONG. Power and Propulsion are scarce resources. Regulatory blocks on acquisitions or supply chain failures in manufacturing.
Bruce Richards
CEO, Chairman, and Founder, Marathon Asset Management
Marathon Asset Management is pivoting toward "Asset-Based Lending" (physical assets like aircraft, transformers, turbines) and away from cash-flow lending to software. In a world where AI disrupts intellectual property and software moats, physical assets (Real World Assets) retain value and provide collateral. The "re-industrialization" of the US requires massive capital for physical equipment. LONG. Focus on credit secured by hard assets. Global recession reducing demand for physical capital goods (e.g., travel downturn hurting aircraft leasing).
Mark Cudmore
Executive Editor, Bloomberg Live / Macro Strategist
The BOJ is normalizing policy very slowly ("gradually"). Japan remains a low-growth economy with a massive debt load and negative real yields. Despite hawkish headlines, the structural reality (debt + low growth) prevents the BOJ from hiking rates aggressively enough to strengthen the currency significantly. SHORT. Structural bear on the Yen. A rapid unwind of the carry trade driven by external shocks (e.g., US recession).
Karen Ward
Chief Market Strategist, J.P. Morgan Asset Management
US Tech is "priced for perfection," while Europe is trading at historic discounts. Germany is shifting its fiscal stance, moving away from strict austerity ("Black Zero") to stimulus (1-2% of GDP). Markets are obsessed with Monetary Policy, but Fiscal Policy is the new driver. A fiscal unleash in Germany changes the structural growth narrative for Europe. Beaten-down sectors like Autos may benefit from government support to compete with China. LONG. Rotate out of US Mega Cap Tech into European Cyclicals and Germany. Fiscal stimulus gets bogged down in bureaucracy; trade tariffs from the US hurt European exporters.
Up Next
This Bloomberg Markets video, published February 26, 2026, features Richard Windsor, Bruce Richards, David Schwimmer, Charlie Wells, Mark Cudmore, Karen Ward discussing NVDA, MU, IGV, BKLN, LSEG, ENGIE, XLI, JPY, EWG. 7 trade ideas extracted by AI with direction and confidence scoring.
Speakers: Richard Windsor, Bruce Richards, David Schwimmer, Charlie Wells, Mark Cudmore, Karen Ward · Tickers: NVDA, MU, IGV, BKLN, LSEG, ENGIE, XLI, JPY, EWG