eBay rejected the takeover offer from GameStop. This was not a surprise. Toast, Bill, and Block reported and showed that investing in the space is like rolling dice. The market is now up 9% and NASDAQ is up 15%. It's feeling frothy. Part of the rally is an assumption by the market that the war is over, and I'm just not sure that is right. I have to admit I am nervous about the sustainability of this meltup because this market is feeling bubbly, and that makes me nervous.
Hi, this is Steve Eisman, and this is another edition of the weekly wrap. This is for the week ending Friday, May 15th, but recorded Thursday night, May 14th. I am excited to share that today The Real Eisman Playbook Premium goes live. I have been working behind the scenes for a while, and I want to spend a few minutes telling you exactly what it is, who it's for, and what you're going to get. Let's start with what's not changing. The free podcasts stay exactly the same. If you've been listening for a while, nothing about that changes. Same episodes on Monday and Friday, same format, same conversations at no charge, and that's not going to change. This is something new, something additional. This is for the listeners and viewers who want more. So, what is premium? It's digging deeper. First, a weekly bonus episode. Something different and new dropping each week on the premium site at premium.realeismanplaybook.com.
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Starting right now, the first two parts of our three-part master class called A Conspiracy of Credit are ready and available. In this master class, we took a deep dive into the world of fixed income. In part one, we look at the world of private credit and the beginnings of a new credit cycle. In part two, we provide a fixed income primer of the basics of the fixed income world so that all of the premium subscribers can be on the same page. And in part three, which drops Wednesday, May 20th, we discuss the toxic mortgage bonds that Wall Street created in the years before the financial crisis, how they were built, who bought them, why the people building them thought they could get away with it, and exactly how and why it all collapsed. And we then draw parallels to what's going on in private credit and what lessons can be learned from the GFC that provide insight into the world of private credit. Here are the first two minutes of A Conspiracy of Credit.
Today I'm giving a masterclass lecture on private credit, a fixed income primer, and how the current credit cycle relates to the Great Financial Crisis, which I will call the GFC mostly from now on. We have not had a credit cycle since the Great Financial Crisis. Almost all the growth in lending since 2008 has been in private credit behind a veil of privacy, which means secrecy. My goal is to explain the world of lending so that my viewers and listeners will feel comfortable understanding both the GFC and the current credit cycle. Because of the length of this lecture, I'm dividing it into three parts. In part one, I will discuss the current private credit situation and compare it to the GFC and then move into a general primer on the basics of fixed income. In part two, we learn the basics of the fixed income world. I will teach you the lingo and the basic math of this world so that when we get to part three, everyone is on the same page. And in part three, we will take those basics and show how during the Great Financial Crisis, the fixed income world created toxic bond products that almost blew up the entire world. History seems to be repeating itself. We'll end with an analysis of the current controversy swirling around private credit, lessons that can be drawn from the GFC, and why this is a difficult situation but will probably not cause the same level of chaos because the banks are in fact well capitalized. There will be losses and perhaps a recession, but not a total disaster.
If you want to hear the full two hours and get every premium episode going forward, here's what you need to do right now. Go to premium.realeismanplaybook.com or click the link in the show notes. You'll get immediate access to A Conspiracy of Credit, the community board, every bonus episode going forward, and the whole catalog ad-free. One last thing, my goal is to bring institutional knowledge and access to retail investors. I've spent my career watching Wall Street manufacture complexity and block transparency. The whole reason I started this podcast was to cut through that, to say here's what's really going on, here's how it actually works, here's what you should know. I hope you'll join me. premium.realeismanplaybook.com. Check it out.
Now, on to the wrap. This is going to be a relatively short wrap. After tons of companies reporting over the past few weeks, this week was mercifully a light week. So, let's get started. In war news, President Trump rejected Iran's peace proposal. Details were sparse. The possibility that the war will resume has increased. I note that the market has staged an enormous rally in a little over a month. At its bottom, at the end of March, the S&P was down 4% and NASDAQ was down 7% for the year. The market is now up 9% and NASDAQ is up 15%. It's feeling frothy. Some signs of frothiness. The semiconductor sector is now over 18% of the S&P. It was 14% at the start of 2026. Nvidia is now larger than the entire healthcare sector. Micron, the memory company, is now in the top 10 of the S&P. The sum of the four defensive sectors, healthcare, consumer staples, energy, and utilities, represents only 19% of the S&P 500. That number was 31% at the end of 2022. Defensive sectors seem to be disappearing before our eyes. One more sign: retail traders haven't been this aggressively bullish since we were stuck at home with stimulus checks, betting on a bounce back in the global economy. Retail traders are buying calls in CBOE's MAG 10 stocks, which are the Big Seven plus AMD, Palantir, and Broadcom, at the heaviest 10-day clip since 2021, according to a report from the exchange. Of new positions opened, 52% were call buying and 17% were call selling. Also, part of the rally is an assumption by the market that the war is over, and I'm just not sure that is right. Now, making market calls is notoriously difficult, and I am not calling for a recession because there is no evidence that there is one on the horizon. But I have to admit, I am nervous about the sustainability of this meltup. I'm not here to tell you what to do. However, I can tell you what I do. This week, I lightened up, especially on my high-flyers, because this market is feeling bubbly, and that makes me nervous.
Moving on, there are signs that inflation is rearing its ugly head. On Wednesday, the producer price index rose a seasonally adjusted 1.4% for the month, much higher than the 0.5% consensus forecast and the upwardly revised 0.7% March increase the Bureau of Labor Statistics reported Wednesday. On an annual basis, the index was up 6%, the biggest gain since December 2022. The 10-year yield is now flirting with 4.5%, which in the past has been a Rubicon for markets. Moving on, eBay rejected the takeover offer from GameStop. This was not a surprise. eBay questioned the financing for GameStop's offer. By the way, last week Ryan Cohen was on CNBC to discuss his offer to buy eBay. When questioned, he acted, I thought, bizarrely, and that did not help his cause.
In private equity, there was, as usual, more bad news. FSK KKR Capital, symbol FSK, is a public BDC that is a private credit fund. Now, it's not big. It only has a market cap of $3 billion, but it's been a problematic fund with rising loan losses, and the stock is down 27% this year. Moody's downgraded FSK to junk in March. On Monday, there were two pieces of news. KKR announced that it will inject $150 million in the fund as equity and spend another $150 million to buy shares from investors who want to sell. Now, that's not bad news. The bad news was that JPMorgan and a group of banks that JPMorgan leads cut their lending exposure to FSK. They slashed the credit line to FSK by $650 million, or 14% of the total. And on the remaining credit facility, JPMorgan and the other banks raised interest rates. When a financial services company has its credit lines cut, that is always really, really bad. And other private credit news: according to MSCI, private credit funds have marked down more than one-tenth of their loans by at least 50%. There were so many companies reporting last week that the wrap got really long before the week was even over. This is a slightly quieter week, as I said, so let's catch up on some of the companies that reported late last week.
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Last week, we discussed two companies in the payment space, PayPal and Fiserv. Both companies performed poorly and showed how difficult it is to make a long-term investment in the payment space outside of Visa and Mastercard. Late last week, Toast, Bill, and Block reported and showed that investing in the space is like rolling dice. Toast is a payment company devoted to the restaurant space. It provides a solid product and has been a good stock for years. No longer. Investors have liked Toast because it seemed to have conquered the restaurant vertical. But the problem with the space is that it's so competitive that companies are creeping into each other's businesses. Toast was a pretty good stock through last summer when it got as high as 49. It's now cut in half because of increased competition and AI fears. Toast results were okay with EPS of 20 cents versus 9. However, it gave a projection for second-quarter EBITDA that was weaker than expected. The stock was down 17% on Friday on that print.
Now, Bill is a B2B payment company. The company had decent results with earnings per share of 68 cents versus 50 cents. It raised its full-year guidance and announced that it would reduce its workforce by up to 30% as it focuses on AI. The stock was up 7% on Friday, but don't get too carried away. It's still down 26% for the year. Block, another payment company. Nice numbers. The company reported earnings per share of 85 cents versus 56. It also offered a rosier outlook for profits and growth after firing over 40% of its workforce. Block is actually up this year 13%. But don't get too carried away here either. The stock has been in roughly this range since mid-2022.
Expedia. Travel-related companies have been having a hard earnings season. Airlines and bookings have all cut guidance, and unfortunately, Expedia is no exception. The actual results were okay with earnings per share of $1.96 versus 40. However, the company forecast weak bookings for the second quarter because of geopolitical uncertainty. It left full-year guidance unchanged but admitted there is risk of downward revisions if macro conditions remain unstable, and the stock was down 9% on Friday. Trade Desk. Haven't spoken about this company before. This is an advertising technology company. Once a high-flyer, it has fallen on hard times as Amazon has crept into its business and growth has slowed. Two years ago, the company was growing revenue by 20%, and it is now guiding to revenue growth of 8%, which is a disappointment. The problem with this stock is that growth investors are leaving and value investors are not prepared to step in. The stock was down 8% Friday and is down, get this, 46% this year.
CoreWeave builds and manages AI data centers. The stock is up over 60% this year, but this quarter was a disappointment. The stock dropped after the company gave a disappointing forecast for the June quarter. It is estimating revenue for the next quarter of 2.45 to 2.6 billion, which is short of the 2.7 billion expected. By the way, CoreWeave does not make money. Its revenue growth, though, is explosive. Revenue more than doubled in the quarter. But when you are losing money, you can't disappoint on any metric, especially forward revenue guidance, and the stock was down 8% on Friday.
Coinbase reported a surprising loss of 17 cents versus positive 24 cents last year. The company missed on revenue, and the first-quarter decline in crypto prices hurt the company badly. The estimate for this year is now for a decline of 49% versus last year's earnings, and the stock is down 18% this year. However, given the increase in crypto prices of late, I would expect the company to be profitable in the second quarter.
Constellation Energy. This is a company that competes in the utility space, but it is not a regulated utility, but an independent power producer. CEG is the largest producer of clean, carbon-free energy in the United States. It operates the United States' largest nuclear fleet plus wind, solar, and hydro assets. It's been a big beneficiary of the AI data center story. Although the stock has not done much in the last year, the company had a good quarter, reporting $2.74 versus 2.14 last year, which is 28% growth, and versus 2.54 expected. So a beat. However, the stock reaction was down as management kept its 11 to 12 EPS guidance unchanged. We have not spoken much about the utility and independent power producer sector before. That will change in a little over a month. We will drop an interview with an analyst who covers the space.
Now, this was definitely a much quieter earnings week. And the most important company to report was Cisco. And last year, I interviewed Sam Badri, the head of investor relations at Cisco. And during that interview, he said that Cisco was definitely benefiting from AI. Cisco reported, and boy, was he right. The company reported EPS of $1.16 versus $1.14 expected and versus 96 cents last year, or 10% growth, which for Cisco is quite good. Revenue beat as well and was up 12% versus last year, which again is very strong for Cisco relative to its recent past. The company provided guidance for EPS and revenue for the June quarter that was better than expected because AI orders were very strong. The stock was up double digits on Thursday.
AveX, spelled A-V-E-X. This is a drone manufacturer in the defense sector. It went public only a month ago, and since 30 days have now elapsed, a bunch of sell-side analysts came out with reports in which they recommended it. I flagged this stock because in a few weeks we will post an interview with the defense analyst, and AveX will come up.
Two mailbags this week. The first one was in the comments section of YouTube. This comment was from the interview I did with Kelsey Zhu about FICO, a stock I am short. One viewer asked, "How does Steve reconcile a bearish position on the mortgage market with a bullish position on Meritage, the home builder?" I have to say, I'm not bearish on the mortgage sector. The point of the Kelsey Zhu interview was to explore FICO's scoring monopoly. And if FICO loses that monopoly, which I think is quite possible, the cost of getting a mortgage should come down. I'm bullish on Meritage long-term because buying a home builder below tangible book value, which is where the stock is now, when the builder is growing book value usually works out. It's just a question of time. But right now, with long-term rates going up, I will have to continue to wait. I'm realistic.
Another comment in the YouTube comment section from the same Kelsey Zhu interview suggested that I start the podcast with the statement saying that I am short FICO because I am extremely biased. Now, I stated that I was short FICO because I don't like secrets. But I reject the premise that someone who is short is biased. I am negative on FICO because of the research I've done on the company, and I express that via being short. That does not mean I am biased. That means that I have an opinion, and I'm not trying to convince anyone to short FICO. That's up to you. I interviewed Kelsey Zhu so everyone could understand the issues involved. Of course, I could be wrong, and we shall see.
This last Monday, May 11th, we hosted an interview with Kelsey Zhu, as I mentioned, the financial information services analyst at Autonomous. This interview is about a company behaving badly, FICO, and the issue is, will they be allowed to continue? There is now a pricing war over FICO, a consumer credit scoring service we all use. FICO has raised prices 1,500% over the last five years, and they are losing their monopoly status. It's a great story, so check it out. And this coming Monday, we will post an interview with Bob Brackett, the energy and mining analyst at Bernstein. Partially because of the war and the resulting increase in the price of oil, there is so much going on in Bob's sector, and we explored it all. So, please tune in.
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This podcast is for informational purposes only and does not constitute investment advice. The hosts and guests may hold positions in stocks discussed. Opinions expressed are their own and not recommendations. Please do your own due diligence and consult a licensed financial adviser before making any investment decisions.
