Overview of A $140 Million BlackRock Loss Revives Private Credit Worries
This episode of The Wall Street Journal’s "What's News" (PM edition) covers top headlines affecting markets and politics, with a feature explaining how a surprise $140 million loss at a BlackRock private-credit fund has revived investor concerns about valuation, transparency, and retail exposure to private credit. The show also runs through major national and international developments—legal actions involving Don Lemon and Jeffrey Epstein files, President Trump’s legal and policy moves, the Fed nominee, restaurant protein trends, global energy and oil developments, and the broader sense of "Washington whiplash."
Top headlines (bullet summary)
- Former CNN anchor Don Lemon was arrested by federal agents over a church protest in St. Paul; he says he was there as a journalist.
- A judge ruled federal prosecutors cannot seek the death penalty for Luigi Mangione, charged with killing a UnitedHealthcare executive.
- DOJ began releasing millions of pages of Jeffrey Epstein documents after a new law required disclosure.
- The FBI expanded an investigation into whether agents violated civil rights in the fatal shooting of Alex Preddy in Minneapolis.
- President Trump sued the IRS and Treasury, seeking at least $10 billion over an alleged 2019 leak of his tax returns.
- President Trump nominated Kevin Warsh to be Fed chair; markets reacted nervously (stocks down, dollar up, gold/silver plunged), and confirmation may be complicated by the criminal probe into current Fed Chair Jerome Powell.
- Senate working on a funding vote; a partial government shutdown appears likely if a House vote is delayed.
- Restaurant chains (Chipotle, Starbucks, Subway, Dunkin', Papa John’s) are rolling out and marketing high‑protein offerings to boost traffic.
- Ukraine: President Zelensky supported a U.S.-proposed pause on strikes against energy infrastructure.
- Cuba: Mexico has paused oil shipments and the U.S. threatened tariffs on countries exporting oil to Cuba; Cuba risks running out of fuel.
- Chevron and Exxon reported their smallest annual profits since 2021 amid a crude-glut-driven price drop.
- WSJ coverage notes intense, frequent crises out of Washington this year—what the show calls “Washington whiplash.”
Deep dive — Private credit: BlackRock loss and why it matters
What happened
- A BlackRock private-credit (BDC-style) fund reported an unexpected $140 million loss and significantly marked down the value of certain holdings (reportedly about a 19% markdown).
- BlackRock declined to comment to the WSJ.
Why private credit is hard to value
- These are private corporate loans to small/medium businesses (e.g., manufacturers) that don’t trade on public markets, so there is no observable market price.
- Fund managers set valuations using discretion and internal models, creating opacity.
- Because these loans are illiquid and opaque, funds can delay or stagger write-downs—potentially masking declines until they materialize.
Why ordinary investors should care
- Business development companies (BDCs) and private-credit vehicles are widely held by retail investors as income-producing assets.
- Opacity and delayed write-downs can hide “time bombs” in portfolios, suddenly imposing large losses on investors when valuations are revised.
- This matters as regulators and the administration are pushing to expand retail access to such products.
Other notable segments and context
- Fed nomination: Kevin Warsh (55) nominated; markets reacted with volatility. Confirmation may be affected by the ongoing criminal probe into Jerome Powell; some senators (e.g., Sen. Tom Tillis) signal conditional opposition until the Powell probe is resolved.
- Protein trend in restaurants: Chains seek to drive traffic by emphasizing protein—both new product formats (protein-infused dough, protein cups/pockets) and rebranded existing items; value-priced protein offerings may be most appealing to cost-conscious diners.
- International energy and geopolitics: U.S. push for an energy-strike pause in Ukraine; Mexico has paused oil shipments to Cuba amid U.S. pressure; the U.S. is using diplomatic and economic tools related to Iran and Venezuela (including pressure to rebuild Venezuela’s oil industry).
Key takeaways — what to watch next
- Private-credit transparency: Monitor additional fund write-downs, investor disclosures, and any policy or regulatory responses around retail access to private-credit products.
- BDC exposure: Retail investors should check holdings in BDCs/private-credit funds and ask about valuation methods and liquidity risks.
- Fed confirmation: Watch Senate hearings and the effect of the Powell investigation on Kevin Warsh’s confirmation and market expectations for monetary policy.
- Near-term political risk: Government funding votes (possible partial shutdown) and ongoing White House-driven crises could keep volatility elevated around midterm politics.
- Energy & geopolitics: Follow developments on Ukraine’s energy strike pause, Cuba’s fuel situation, and U.S. actions toward Venezuela and Iran for market and regional stability implications.
Notable quotes
- Matt Wertz (WSJ): “The short answer is in the name. They are private.”
- Matt Wertz (on BDCs): “These funds can drag out the write-downs of their assets…you as an investor may not know that you're sitting on some time bombs in your fund that can turn into a massive loss.”
- Damian Paletta (WSJ): The rapid-fire crises amount to “Washington whiplash,” which risks public disengagement and could become a political liability.
Practical advice (for readers/investors)
- If you own BDCs or private-credit funds, request recent valuation methodology and mark-to-market policies from fund providers or your adviser.
- Consider liquidity needs: illiquid private loans can create mismatches if you need cash during stress.
- Watch Fed nomination developments and fiscal funding votes—these can move markets quickly.
- For consumers: look for value-priced protein items if you’re trying to eat more protein without higher restaurant prices.
That's the concise summary of today's PM edition of What's News from The Wall Street Journal.