LIVE MARKETS-Software, BD companies, crypto in sync to the downside
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SOFTWARE, BD COMPANIES, CRYPTO IN SYNC TO THE DOWNSIDE
Trends become clear when momentum is evident, and such is now the case between software and business development companies.
The expanded software ETF IGV.P is in lockstep with the BDC ETF BIZD.P to the downside.
Meanwhile, according to Ben Emons, founder of Fed Watch Advisors, none of the major companies in IGV (Microsoft, Oracle, Salesforce, Adobe, Palo Alto Networks, CrowdStrike, ServiceNow, etc.) have received private‑credit financing from the BDCs held in BIZD.
He adds that BDCs in BIZD (Ares, Blue Owl, Blackstone Secured Lending, FS KKR, Golub, Hercules, etc.) lend almost exclusively to middle-market, sponsor-backed private companies, not to the large-cap public software firms that dominate IGV.
Therefore, as Emons sees it, much of the current selloff is about “software” that is affected by AI disruption rather than by the risk of default on private credit loans to software companies.
For the broader market, does this mean that multiples will begin to normalize now that investors are rebalancing their AI/tech exposure?
For the time being, Emons says that AI still commands a premium over Tech and software, and the divergence is widening, creating a selloff in sync with crypto, BDCs, and software.
"There are pent-up orders to sell into the close, and the Nasdaq is edging toward oversold territory, with Microsoft already oversold. As small-caps, energy, materials, banks, and industrials held up, this software angst had little spillover, especially since there is a disconnect: large-cap software companies are not as exposed to private credit as thought," writes Emons in a note out after Tuesday's close.
(Terence Gabriel)
EARLIER ON LIVE MARKETS:
US STOCKS MIXED AS TECH WEAKNESS CONTINUES CLICK HERE
WHY BITCOIN’S LATEST ROUT FEELS DIFFERENT CLICK HERE
S&P 500: BREAKOUT OR FAKEOUT? CLICK HERE
UBS SEES 10-20% UPSIDE FOR EUROPEAN RENEWABLES CLICK HERE
EU CARMAKERS FACE 'SCARY' CHINA EXPORT ACCELERATION CLICK HERE
TELECOMS SHINE AS SOFTWARE STRUGGLES, FTSE AT NEW RECORD CLICK HERE
EUROPE BEFORE THE BELL: SOFTWARE WATCHED, BIG HIT FOR NOVO CLICK HERE
EURO ZONE FACES INFLATION HURDLE BEFORE ECB CLICK HERE
IGVBIZDIBITinsynctodownside02042026 
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