I am immensely proud that growth portfolios rose on Monday when the plunged 814 points on Monday and when dropped over 291 points, due to the gold stocks I recommend, as well as the continued strength in data center-related stocks.
Most of the market carnage on Monday was in financial stocks, especially the companies impacted by Blue Owl’s private credit redemption freeze. Specifically, Blue Owl recently announced that it permanently restricted investors from exiting one of its retail funds. Namely, Blue Owl Capital Corp II. This news caused the stock prices of , , , and to all sell off.
Complicating matters further is that slashed the value of some of its private credit holdings in the past month. Since private credit is now a $3 trillion per year industry and does a lot of the lending that Dodd-Frank made difficult for banks, the U.S. now has a “shadow banking system.” In the event that there is a private credit “Black Swan” event that disrupts credit markets, then the Fed may have to step in to provide liquidity and/or slash key interest rates to help stabilize the situation.
Speaking of the Fed, influential Fed Governor Christopher Waller said the February payroll report will be the key to whether or not the Fed cuts key at its March . Waller said he was surprised when the Labor Department reported a surprising 172,000 private sector jobs were created in January and added he has some concerns the strong could turn out to be “more noise than signal.” Interestingly, in an apparent insult to current Fed Chairman Jerome Powell, Waller also said, “Traditional central bank wisdom suggests that we should ‘look through’ tariffs. I did this when they went up and will do so if they come down.”
With an accommodative Fed that will be cutting key interest rates due to AI productivity gains, the stock market is expected to gather even more momentum in the upcoming months.
In summary, it is expected to get progressively better as 2026 unfolds. First, investors are expected to cheer up in the Spring as it warms up after a brutally cold and snowy winter for much of the U.S. Second, when the Fed meets in May for their Federal Open Market Committee (FOMC) meeting and Kevin Warsh takes over as the new Fed Chairman, the FOMC is expected to cut key interest rates and provide guidance for additional key interest rates cuts. Finally, earnings have been growing faster than sales for ten straight quarters, which signals that operating margins and productivity are rising. The S&P 500’s forecasted earnings remain in double digits for all of 2026 and are expected to get even stronger later in the year.
Financial Carnage in Shadow Banking as Private Credit Freezes Spread
