Credit Losses Spread | McDonald's Cautions | Diesel Runs Low

The morning looked clean. Iran deal optimism pushed oil below $100 and stocks to fresh intraday all-time highs on both the S&P and Nasdaq.

Then oil bounced. WTI recovered to above $95. Brent crossed back above $101. Iran's foreign ministry said it would not accept an "unrealistic plan" and would not reopen the strait without reparations. The morning gains unwound.

The S&P closed down around 0.25%. The Nasdaq barely clung to a new high. Semiconductors led the losses, Broadcom and Micron both lower. Fortinet (FTNT) was the notable exception, closing up 22% after raising full-year guidance.

Investor Signal

The market can hit all-time highs and close red in the same session when oil is the driver. That is not a stable foundation. The Iran deal is not done. Until it is, every rally on ceasefire optimism carries the same reversal risk it showed today.

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There is a category of software AI cannot kill. It is the software that watches AI run. Datadog (DDOG) just proved that thesis with its strongest quarter ever.

Revenue hit $1 billion, growing 32 percent. Shares surged 35 percent intraday. Snowflake (SNOW) jumped 11 percent in sympathy.

Datadog monitors AI chips, coding agents, and cloud infrastructure. Every AI deployment creates more demand for its tools. The more AI scales, the bigger Datadog's market grows.

What the Numbers Show

This follows Fortinet's 31 percent billing growth on Wednesday. Both companies attributed growth directly to AI driving demand. Two consecutive sessions, two software beats, same explanation.

The pattern is clear. Security and monitoring are the two software categories that grow with AI, not against it.

The Stack

Fortinet protects the perimeter. Datadog monitors what runs inside it. Both growing together means the AI software immune category is confirmed, not coincidental.

Two days ago, Oaktree (OCSL) marked down its private credit fund and cut its dividend. Today, BlackRock TCP Capital (TCPC) did the same thing. Two major asset managers, same week, same category.

BlackRock cut its fund value 5 percent. Six portfolio companies drove most of the decline. The common thread was software loans written in 2021 when valuations were high and rates were near zero. Those same companies now carry higher debt costs and lower revenue as AI replaces their products.

That double pressure was not in any 2021 underwriting model. It is in the 2025 results.

Gundlach warned at Milken this week that private credit investors will lose money and compared the market to dot-com and pre-crisis mortgages. 

Two funds confirmed. The next two weeks of BDC earnings reveal whether this is a pattern or a coincidence. One more major fund markdown makes it a pattern.

The data is now catching up to the warning.

The Vintage

Ninety-one percent of BlackRock's losses came from 2021 loans. That vintage tells you exactly which loans to look at across every other fund reporting next.

He shipped an entire power plant across the Atlantic Ocean.

Why? He's burning nearly $1 billion a month — and he can't turn on the world's largest supercomputer without equipment that normally takes 2 years to source.

While the retail crowd waits for a SpaceX ticker that doesn't exist yet, the smart money has already moved.

One small supplier is sitting on a $1.5 billion backlog of the exact hardware Musk's "Colossus" site can't scale without.

Wall Street still prices it like a sleepy industrial stock.

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The assumption built into markets right now is straightforward. Iran deal happens. Hormuz reopens. Costs normalize. Maersk's CEO said that assumption is wrong.

Vincent Clerc said the energy crisis "does not go away the day peace comes." Maersk is paying $472 million more per month in fuel costs than before the war. Those costs are already embedded in global shipping rates. They do not reset the moment a ceasefire is signed.

Six Maersk ships are still trapped in the Gulf. Hundreds more need to exit and redeploy globally before supply chains normalize. Chevron separately estimated that process takes weeks to months even after a deal.

The Fed's supply chain pressure index hit a July 2022 high this week. Maersk's numbers explain why. $472 million per month in extra shipping costs flows into goods prices before anything reaches a U.S. port.

The Lag

Peace ends the shooting. It does not unwind the cost structure already baked into global trade. That difference is what the market has not fully absorbed yet.

Uber and Disney reported Wednesday that their consumers are holding strong. Today, McDonald's (MCD) gave a different read from a different income level.

Revenue grew 9 percent. Earnings beat estimates. But CEO Chris Kempczinski said on the call that consumer spending "may be getting a little bit worse." He specifically cited gas prices hitting low-income customers hardest.

Uber and Disney customers skew higher income. McDonald's customers are precisely the people who feel $4.52 gas most directly. That is why both things can be true at once.

The CEO said the value menu is becoming a traffic opportunity as people trade down from full-service restaurants. That is not a sign of consumer strength. It is a sign of consumer stress moving down the income ladder.

The Floor

The consumer resilience story has an income limit. Above a certain income, gas prices are manageable. Below it, they change behavior. McDonald's just named where that floor sits.

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The U.S. responded to the global fuel crisis by exporting record amounts of oil and fuel. That was the right geopolitical move. It also drained domestic diesel supplies to their lowest level since 2003.

U.S. distillate supplies fell to 102.3 million barrels. The country exported a record 14.2 million barrels per day in a single week. Domestic stocks fell 24.1 million barrels in seven days. Diesel now averages $5.67 nationally.

Diesel is not gasoline. It moves trucks, freight, and farm equipment. When diesel gets expensive, goods get more expensive shortly after.

What Is Already Low

A Mizuho energy director called it "a shortage of our own making." Every barrel exported to help Europe is a barrel not in a U.S. tank before summer.

The Transmission

Diesel at $5.67 moves into goods prices within weeks. The April CPI lands next week. The May CPI is where diesel's full impact shows up. That number will be harder to explain away.

Today drew the line between what is immune and what is not.

Datadog and Fortinet proved AI monitoring is untouchable. Maersk proved peace does not reset costs. McDonald's proved consumer resilience has an income floor. And diesel at a 20-year low proved the U.S. exported its way into its own shortage.

The split is no longer a forecast. It is a result.