Stock Selloff Gains Speed on Ceasefire Doubts | Bloomberg Businessweek Daily 3/26/2026
Speakers
David Sacks -- Co-Chair, President's Council of Advisors on Science and Technology
— White House AI/crypto czar
Summary
- Geopolitical: US-Iran ceasefire prospects are low, with public demands "very far apart." Military assets are being deployed, but the next steps (e.g., potential ground operations) are unclear. The conflict creates uncertainty for regional allies.
- Market Impact: The primary economic channel of the war is inflation (via energy prices). If prolonged, it risks morphing from an inflation scare into a broader growth scare for the market.
- Corporate Costs: Rapid spikes in energy prices create an immediate negative impact on corporate costs (e.g., transport) and earnings, as companies cannot adjust their supply chains or pricing quickly enough.
- Equity Outlook: The potential upside for equities from policies like deregulation and tax benefits has been overshadowed by the war, removing previous tailwinds and introducing downside risk.
- Private Credit Cycle: An industry "bubble" is currently "bursting," characterized by a liquidity drain, excessive leverage (~7x EBITDA), and a deterioration in terms (e.g., lack of covenants, payment-in-kind structures).
- Private Credit Opportunity: The dislocation creates an opportunity to invest in the lower middle market, where yields are ~400 bps higher than a year ago and underwriting can be more disciplined.
- Private Credit Focus: It is prudent to avoid software/technology lending within private credit unless one has specific expertise, as ~50% of companies in the space may be in trouble.
- Women's Health Tech: Heart disease is the leading killer of women but is historically under-diagnosed due to data gaps (clinical trials historically male-dominated) and physiological differences (e.g., disease in smaller vessels).
- Tech Solution: Bloomer Tech is developing a medical-grade, wearable smart bra to continuously collect cardiac data from women, aiming to identify digital biomarkers for earlier detection and better care.
Trade Ideas
The speaker stated the private credit industry experienced a "bubble" that is now "bursting." He cited excessive leverage (~7x EBITDA vs. ~0.7x historically), a deterioration in loan structures (lack of covenants, PIK payments), and a general inflow of assets during frothy times. This combination of high leverage, poor creditor protections, and a liquidity drain from investor redemptions creates systemic risk and will lead to poor outcomes for many industry participants. The industry "is just not going to be quite as big," implying widespread underperformance and consolidation. Investors should avoid broad exposure to the space. A significant, rapid decline in interest rates could bail out over-leveraged portfolios, but the speaker views this as unlikely ("probably not").
The speaker stated that within the technology sector, particularly software, he believes "50% have trouble" and "50% may do very well." He explicitly avoids this area within his private credit investing. The high degree of binary outcomes and required specialization makes it difficult to underwrite risk effectively in this sector without deep, specific expertise. For a non-expert investor or lender, the risk of selecting a failing company is high, making the sector unattractive and best avoided. A generalist investor with strong software sector insight could potentially identify the winning half of companies.
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This Bloomberg Markets video, published March 26, 2026, features Len Tannenbaum discussing XLF, XLK. 2 trade ideas extracted by AI with direction and confidence scoring.
Speakers: Len Tannenbaum · Tickers: XLF, XLK