The big news of the week, of course, started over the weekend with the United States and Israel bombing Iran. Once again, Bitcoin in a crisis correlates with tech stocks and does not act as a hedge. The news keeps getting worse in private credit land. A fraud was uncovered. This is the third lending fraud that has been exposed during the last 6 months. Block is laying off 4,000 employees, which is 40% of its workforce. Is this the start of massive white collar layoffs or is it company specific? I don't know yet, but it is worrisome.
Hi, this is Steve Eisman and welcome to another edition of the weekly rap. This is for the week ending Friday, March 6, 2026, but recorded Thursday night, March 5th. Before we start, I want to point out that I am on Professor Scott Galloway's podcast called The Professor G Pod that drops today, this Friday. And now for the rap. This week's rap is about the power of a narrative in new and ongoing situations. In an odd way, despite a war, the rest of the week had very little news. So, I will explore the ongoing situations. I'm going to cover the following. One, war in Iran and the investment implications. Two, more bad news in private credit, private equity land. Three, more disaster in the solar sector. Four, more bad news in health insurance and software. And there will be two mailbags. The first deals with private credit. And the second is a followup to our life insurance interview with Tom Gober. So, let's get started.
The big news of the week, of course, started over the weekend with the United States and Israel bombing Iran and killing Ayatollah Khamenei and much of Iran's top leadership. I would just point out that once again, Bitcoin did not act as a hedge for uncertainty. Over the weekend, as the war raged, oil, gold, and silver were all up a lot, and Bitcoin went down. By Monday, the market opened down and then rallied back. NASDAQ ended Monday slightly up and Bitcoin went up with it all day as usual. Once again, Bitcoin in a crisis correlates with tech stocks and does not act as a hedge. In addition, and almost needless to say, all travel stocks in reaction to the news of the crisis went down on Monday from airlines to cruise lines to travel booking companies. And yet, despite futures on Monday being down, the market rallied throughout the day and closed flat, probably because there is a realization that the US will win and perhaps the Mid East will be remade for the better. By the end of the week, the travel stocks rallied with other software stocks as the software narrative looked a little bit better. More on that in a bit. Two things remain true. The correlation between Bitcoin and tech stocks remains very high and retail investors continue to buy every single dip. I'd also point out that on Tuesday, the market corrected again as the realization grew that this war will take more than just a few days. Now, usually in times of uncertainty, yields on US treasuries go down as investors seek safety and buy Treasury bonds. Not this time. Yields are going up because oil prices are up and there is fear that oil price increases could lead to inflation. By the way, one market did freak out. On Wednesday, the Kospi, the Korean stock market, was down 12% and then rallied back 10% on Thursday. That's volatility. On Wednesday, the US market had a nice rally as oil prices went down. And on Thursday, the market went back down. All the volatility is due to investors trying to figure out the implications of the Iran war. And I imagine this volatility will continue for weeks. Moving on.
The news keeps getting worse in private credit land. Four pieces of bad news. First, a fraud was uncovered. A UK-based private lender called Market Financial Solutions with a loan book of 2.4 billion is being liquidated and it looks like there is double pledging of assets. Some major firms are exposed including Barclays, Apollo, Jeff, and Wells Fargo. While MFS is not a big lender, this is the third lending fraud that has been exposed during the last 6 months. The other two being First Brands. Once again, a lack of adequate due diligence allowed fraud to grow unhindered. Double pledging assets is discoverable or it would be if the private asset lenders were more careful. Second piece of news, another relatively small private credit manager in Invico Capital, at least that's how I think it's pronounced, that manages around 3 billion has been receiving large redemption requests for one of its funds from its institutional investors. To deal with these redemption requests, Invico adopted what is called a structured liquidity management plan. Now, what that exactly is was unclear from press reports, but it sounds like some form of gating where Invico restricts redemptions as it tries to wind down the fund. So, now it looks like it is not only retail investors who are getting fearful of private credit, but institutional investors are worrying as well. Because of this, on Friday of last week, the entire financial sector suffered a correction and it continued to act badly this week as people have more and more reason to worry about a credit cycle. These financial stock price declines represent fears that a credit cycle is unfolding for the first time since the great financial crisis. The irony is that the banks just reported a few weeks ago and the conclusion from those results was that credit quality is fine. And here we are less than a month later and it's not fine or at least there are fears that it is not fine. This is an example of how a narrative can change very quickly. Third piece of news occurred this week. Blackstone got hit. Blackstone's 82 billion private credit fund called BCR got hit with redemptions amounting to 7.9% of the fund. But the fund only allows 5% quarterly redemptions. Blackstone paid out the entire redemption partially by increasing the limit of quarterly withdrawals from 5% to 7% and using company and employee capital to cover the remaining 400 million of redemption requests. Now you know things are dicey when Blackstone is afraid of being compared to Blue Owl and chooses self-funding over gating. The fund starts to go out of these high-paying jobs when your own money is lined up to backstop redemptions. And the fourth piece of bad news occurred on Thursday. BlackRock has a small public BDC called BlackRock TCP Capital. The symbol is TCPC. Now BDCs are companies that make loans. And many BDCs make loans that fund acquisitions by private equity companies. The market cap of this BDC is only 350 million, small, and the stock is down 25% this year. On Thursday, here's the news. TCPC changed its valuation of a $25 million loan to a company called Infinite Commerce Holdings, an Amazon aggregator that buys up online sellers of products. It marked that loan from 25 million, which was par, to zero, worthless. Three months ago, TCP valued that same loan at a hundred cents on the dollar. To sum up the narrative about private credit, I'll quote Lakshmi Ganapathy of Unicus Research, a guest on our show many times. Getting in was easy, but getting out is a whole different story. Keep in mind, when it is not just institutional money running for the exit, that's one thing. TCP is public, so shareholders can sell. Now, we discussed a similar lack of liquidity playing out in venture capital in our episode with Stuart Ellman on August 4th, 2025. Is gated private equity turning into venture capital with fewer exits existing to grow assets and collect fees? Check out that interview that we did. So far this year, the private equity group has been obliterated. Year-to-date stock performance, Apollo down 24%, Blackstone down 26, KKR down 26, Ares down 28, Blue Owl down 31%. The private equity, private credit narrative was once all bullish and now it's all bearish. I just want to flag here the power of a narrative and the tendency for people to pile on to the most recent narrative and to lose interest in the other arguments. It's been buy buy and now it's sell. Moving on.
The narrative on solar stocks continues to be bad as the stocks continue to trend down. Last week, I focused on the bad results at First Solar. Last Thursday night, Sunrun reported and it was another solar disaster with the stock down 35%. What is going on in solar? The solar sector is composed of two separate groups, commercial and residential. The commercial side, which supplies large solar panels to utilities, has held up the best, but First Solar's very bad results show that President Trump's anti-renewable policies are having a real impact on the commercial side. Now, residential solar has been bad for years for two reasons. First, consumers borrow to put a $30,000 solar system on their roofs. With rates higher post-COVID, volumes have collapsed. Also, federal subsidies have now been eliminated. There has been a hope for the past year or so that residential solar volumes will bottom and the stocks could then be bought. However, every quarter investors have been disappointed. Bad results last week show that the bottom is not yet in. Needless to say, the sharp decline in Sunrun took the rest of the solar group down with it last Friday and the group has not rallied at all.
There was more bad news in health insurance. Health insurance stocks are viewed as staples. So, in times of uncertainty, they generally do well. I think that is currently not a good investment decision as the group is suffering major problems in every part of its varied businesses and that continued with news about Elevance this week. Elevance is a health insurance company that competes with United Healthcare. And this week it was reported that the Centers for Medicaid and Medicare Services intends to impose sanctions that would suspend enrollment in Elevance's Health Medicare Advantage prescription drug plans starting on March 31st. Now, what does that mean? Well, here's what happened. Elevance got hit with sanctions across all of their Medicare Advantage plans that would stop all Medicare Advantage enrollment and implement member communication restrictions. It's related to risk adjustment data submissions. CMS alleged non-compliance and how Elevance submitted their data from 2015 through 2023. Basically, Elevance was supposed to submit any possible data corrections to CMS's website, but Elevance kept sending them a USB flash drive instead. CMS could not open the flash drive, so it was worthless. And they kept warning Elevance each year. So, CMS had enough and is pinning potential sanctions on Elevance. Also, Elevance never reimbursed any potential overpayment. They just kept all the money during that entire period. There could be a big retro clawback payment and if sanctions happen, there could also be big impacts to membership and star ratings. Star ratings are important for Medicare Advantage plans out of five stars updated once annually. If you score four stars or higher, you get a 5% revenue bonus. Elevance's stock was down 8% on this news this week and is down 17% this year. This reminds me of when Wells Fargo had a scandal in 2017. And in response, the Fed sanctioned the company by preventing it from growing its balance sheet, which was unheard of. In the banking world, this is like excommunication. I think Elevance just got excommunicated.
Monday night, MongoDB reported. I love that name. MongoDB offers a flexible document-based database. The stock was already down 19% this year with the rest of the software group. Earnings did not help. Yes, fourth quarter results beat on earnings and revenue and revenue was up a nice 27%. But first quarter guidance missed on earnings per share and revenue and this is not the time for a software company to give weak guidance. The stock was down 23% after reporting. Software stocks continued under pressure and then the narrative flipped on Thursday. The group rallied Thursday and MongoDB rallied too. Is the sector oversold and do investors have an appetite for a new narrative? That's the question. Last week, Block, the payment company, reported. The company's results are not particularly important to me. I am flagging this because what was important was that Block is laying off 4,000 employees, which is 40% of its workforce. According to the CEO, AI is allowing the company to operate with far fewer employees. Is this the start of massive white collar layoffs or is it company specific? I don't know yet, but it is worrisome.
And now for the mailbag. The first question is from Carrie. Steve, appreciate your podcast. Jamie Dimon kicked this whole panic off by taking the CYA route when he shifted the focus by pointing away towards private credit and perceived cockroaches. He should have taken responsibility for the 175 million in losses by admitting that JP Morgan has work to do regarding improving controls and oversight. Also, as the five largest creditors in Tricolor are banks, not private credit companies, perhaps this is where the focus should reorient back to. That is a fair question. I think the reason for the focus on private credit is that over the past 10 years, its size has exploded so that it's now a 1.8 trillion industry. Private credit is where credit growth has occurred. And historically when there is a credit cycle the problem credits occur where there has been a lot of growth. That was definitely true during the great financial crisis where the biggest lending growth occurred in subprime mortgages. We have not had a credit cycle since the GFC. But people are now worried that a credit cycle is emerging and investors are focused on private credit because that's where the growth has been.
Before I get to the second question, which is about the interview I did about the life insurance sector with Tom Gober, one viewer asked in the YouTube comments section whether I or any of my associates have a short position in this life insurance narrative in any form. And I can answer that very simply and the answer is none. I nor any associate have any position related to the life insurance sector or the Tom Gober narrative neither long nor short. And the second question comes from Michael who asks a question about Monday's life insurance interview with Tom Gober. Michael asks, "Hi Steve, I enjoy your videos and all the content you put out on YouTube. An item that bothered me in the most recent episode with Tom Gober is that there was a lot of fingerpointing at asset managers owning insurance firms. However, the real problems discussed seem to be captive reinsurance laws in certain states and the exploitation of GAAP stat accounting rules arbitrage through the use of offshore special purpose vehicles. Both of these real problems predate and exist independently of the involvement of asset managers like KKR, Apollo, and Brookfield. As an accountant, I sympathize with the related party transaction concerns. However, that seems more pervasive throughout the industry than specific to asset management firm ownership of insurance firms." A good question. Now, my view of the Tom Gober interview is that he raised two very important issues. First, private equity has purchased life insurance companies because life insurance companies have long duration liabilities. Private equity companies want to place their long duration loans into life insurance companies because of the matching duration of assets and liabilities. And that actually makes sense. Tom's worry is that these private credit loans are too risky. Now, he might be right, but thus far there has not been any major credit issues within these life insurance loan books. Problems may emerge, but they have not yet. Tom's other point is that private equity life insurance companies are reinsuring their books through their own captive reinsurance companies that are overseas. Through that convoluted process, their leverage has increased and is also hidden.
This excellent question leads me to remind everyone that this last Monday, we dropped an interview with Tom Gober, a former insurance examiner. Tom discusses how private equity has made massive inroads into the life insurance sector and in the process he believes has increased the risk that the life insurance sector takes with its investments. He also discusses how these same life insurance companies increase their leverage by moving insurance liabilities overseas via sophisticated reinsurance deals. This is an incredibly important story and it has complexities that I hope we explain. So check it out. This coming Monday, we are dropping an interview with Glenn Shore and Dwight Collins about the financial services sector. We spent most of our time discussing the problems in private equity and private credit. Be sure to check out our website realeismanplaybook.com. And if you're enjoying these weekly raps in our podcast, we kindly ask that you support the channel by subscribing to our YouTube channel and to our audio channels, The Real Eisman Playbook. Subscribing is the best way to help us expand this community to more like-minded individuals such as yourselves, and we greatly appreciate your support. And that's the wrap. See you real soon.
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