A few charts worth discussing
“Big beat in the U.S. payroll numbers…
…but looking under the hood, it’s almost entirely from Healthcare and Social Services”
“The EU is trying to get its citizens to move more household savings from cash/bank deposits to the European equity markets, encouraging the use of TFSA-style accounts by EU households. It has a long way to go.”
Other charts worth pointing out
U.S. dollar since 1967
Tradable debt outstanding by region
Emerging market equity and debt ownership
Emerging markets vs. U.S. equities
U.S. large-cap growth vs. U.S. small-cap value
Historical 10-year U.S. Treasury yields
Capex-to-Sales ratio across developed markets – by sector
Total return performance by asset class – 2009 to 2020
Total return performance by asset class – 2025 to today
Annual asset class performance – 2007 to 2026 (YTD)
Private Credit’s Software Bet Is Even Bigger Than It Appears
A quick scan of Pricefx’s website leaves little doubt how the company sees itself. “The #1 Leading Pricing Software” is splashed across its homepage. As is “Great Pricing Software Makes Dreams Reality.” In all, “software” appears more than a dozen times on that first screen alone.
One of Pricefx’s biggest financial backers prefers a different label, though. Sixth Street Partners, a top direct lender to the firm, classifies Pricefx not as software but as a “business services” company.
And so it goes in the world of private credit. Time and again, companies widely regarded as software firms are frequently labeled otherwise by lenders, a practice that raises fresh questions over the full extent of their exposure as the threat from artificial intelligence upends markets and rattles investors. Bloomberg News reviewed thousands of holdings across seven major business development companies — funds that pool direct loans — and found wide variation in how investments tied to the sector are categorized.
At least 250 investments, worth more than $9 billion, weren’t labeled as loans to software firms by one or more of the BDCs, even though the companies borrowing the cash are described that way by other lenders, their private equity sponsors, or the firms themselves. The discrepancies, market watchers say, underscore broader concerns about private credit, a famously opaque industry marked by inconsistent reporting standards, complex fee structures and significant discretion over valuation practices.
‘More Responsibility’
While questions over how companies are categorized aren’t unique to private credit, the issue takes on added weight in a market already known for its limited transparency.
Because these loans are privately negotiated and thinly traded, there’s little independent price discovery or commonly referenced benchmarks to fall back on. The labels managers assign can therefore carry outsized importance, shaping how investors gauge sector exposure, concentration risk and vulnerability to shifts such as the rapid advance of AI.
Drawn by predictable revenue streams, alternative asset managers piled into software for more than a decade. Industry executives have been forced to address investors’ questions about this concentration on recent earnings calls. Apollo President Jim Zelter.
Blurry Lines
Angst about the future of the software business has escalated rapidly — and hit the stock and credit markets hard — after the AI startup Anthropic PBC released a series of new tools that threaten everything from financial research to real estate services. The S&P North American software index has posted daily declines of more than 4% three times in the past few weeks, and is down more than 20% this year.
What even qualifies as “software” isn’t always clear-cut.
Apollo, for example, categorizes Kaseya, a self-described “IT management software” company, as “specialty retail” in filings. Other lenders, including Blackstone and Golub, place it in the software bucket.
Restaurant365, which calls itself a “back-office restaurant system software” provider, is labeled as “food products” by Golub. That puts it alongside companies such as Louisiana Fish Fry and the maker of Bazooka Bubble Gum. Ares groups the company with its software and services holdings instead.
Some say private credit managers may face increasing scrutiny over how they define and disclose their holdings as AI reshapes the software industry.
This week’s fun finds
Howard, from the Business Development Team, brought a little luck and a lot of flavour by hosting this year’s Lunar New Year moai. No better way to kick off the long weekend than celebrating with great partners.
From a whiff of mystique to witty love: over 200 years of Valentine’s cards
In the late 19th century, few things telegraphed yearning like a card adorned with paper lace, gold foil and a couple exchanging a coy glance.
Today, such a card would evoke an eye roll.
The evolution of cards from the treacly confections of Victorian England to the quippy missives of today reflect both shifting design aesthetics and broader cultural customs around romance. As the borders of socially accepted relationships have shifted, so have the cards. Where once there was poetry, now there are drawings of pizzas.
“Greeting cards are a reflection of society,” said Carlos Llansó, executive director of the Greeting Card Association, a trade organization that represents roughly 4,000 independent card makers.
Valentine’s Day cards today are less formal, precious and prescribed, Mr. Llansó said, because our understanding of love has become more expansive.
