February 2026 Market Commentary | OnePoint BFG Wealth Partners

Monthly Update

I write this February letter a few days into March and after the US and Israel attacked Iran in order to greatly diminish their military capabilities and hopefully encourage a change in their repressive regime with the killing of their Supreme Leader Ali Khamenei. The former is almost guaranteed though the latter is not. Either way, we focus on the markets here and will just talk on the implications rather than the geopolitics. Understand that markets are very dispassionate. It does not care about the politics and it has no feelings. It is only trying to figure out the economic situation and how what is happening will influence it.

Historically, geopolitical events have had just a fleeting impact on market prices as the worst fears are rarely realized and any potential supply disruptions of key commodities and other goods usually don’t happen and if it does, it’s very temporary. When it comes to Iran, the focus is certainly crude oil and natural gas and not just the production of about 3 million barrels a day from Iran but the about 20 million barrels per day that flow through the Strait of Hormuz that Iran abuts and can highly disrupt. Huge amounts of natural gas, mostly via Qatar, also flows through the Strait. As of this writing, Iran said they will attack any ships that transport through the Strait and along with skyrocketing insurance costs, if one can even get insurance, the Strait is essentially closed right now.

Market prices are reacting in kind with oil prices up about $10 in two days post the attack. Sovereign bonds around the world have not been a safe haven as the inflationary implications of higher energy prices are the worry, especially for those countries that import most of their energy needs like those in Europe and parts of Asia. Stocks are also in a risk off mode after a flattish start for the year for US markets but with a better start for international markets. The US dollar is also rallying sharply as the US is less negatively impacted by an energy supply disruption with its large base of natural gas and access to its other oil needs not coming from the Middle East.

We of course don’t know how things play out from here but I just don’t see the Strait being closed for long. Iran needs the money from its oil resources. China in particular imports about 45% of its crude oil needs from the Middle East and are a big customer of Iran. They are not happy and Bloomberg has reported that they are in the ears of the Iranians to not disrupt the flow of tankers in the region. Iran has also fired many rockets at its Middle Eastern neighbors and they are certainly not happy with both those attacks and the blockage of passage of their oil and LNG tankers meant to ship to the rest of the world.

Moving away from this very important geopolitical event and the market consequences, the other two noteworthy things I believe the markets are highly focused on are the state of the GenAI tech trade and private credit. The development of GenAI, the current iteration of artificial intelligence that has been an ongoing evolution over decades, is the most exciting technological trend right now. And while the case, the cost to build it out is easily the most expensive technological development we’ve seen in terms of dollars. To quantify, the big hyperscalers (the developers of the large language models) consisting of Google/Alphabet, Microsoft, Meta, Amazon and Oracle are expected to spend about $600 billion on capital expenditures. That is up from around $450 billion in 2025. For context, depending on the company, this dollar level now makes up about 30%-75% of revenue. Not cash flow, but of revenue, an astonishing pace of spend.

Investors are now becoming more concerned with the ability of these amazing companies to generate an attractive return on this large CapEx at the same time that CapEx is eating up most of their free cash flow. Reduced free cash flow means lower multiples that investors are willing to pay. Also, and what happens with any new technology, at some point investors realize that not everyone can win and we’ve reached that point of differentiation I believe.

Also, the biggest receiver of that spend, Nvidia, along with other infrastructure providers, are now a mixed bag in terms of stock market performance. Investor concerns are growing that the competitive moat of Nvidia is shrinking and that has capped that stock and the same can be said with some others in the semiconductor space. The area that has done very well most recently has been in memory chips and storage due to supply shortages.

A waning in the GenAI tech trade is something to watch because it dominates the S&P 500 in terms of concentration with almost 50% of the index touching the data center buildout in some fashion and the Magnificent 7 group making up about 35% of the index. Also, about 40% of the contribution to GDP growth in 2025 was the construction of these data centers.

The other area of focus so far this year is the private credit sector. Private credit has grown to become a $1.5 to $2 trillion asset class making up loans that historically was done by banks. Post Great Financial Crisis when regulations tightened up on the US banking system, it resulted in less lending via this channel and that vacuum has been filled by private credit. Also, private credit and private equity who historically have relied on institutional investors like pension funds, insurance companies and endowments, decided to reach out to the retail world for capital and they have since raised many billions of dollars doing so.

What we have now though is a rising default rate with private credit. According to Fitch, the credit ratings agency, its default rate measure has risen to 5.8% as of January, up from 5.6% in December and that is the highest since they started calculating it in August 2024. Much of the investor concern has been with the large amount of loans private credit made to the software sector, with estimates I’ve seen ranging from 20-30% of all private credit loans. Threats to the ‘software as a service’ business model from GenAI is the key concern. But, healthcare and consumer product companies are in fact seeing a higher default rate relative to software according to Fitch. We are closely watching to see the implications of possibly tighter credit to those companies with lower quality balance sheets.

Positively this year market performance wise has been the broadening out of the stock market where small and mid cap stocks along with non AI related stocks like energy and consumer staples, to name a few groups, have done well. Also too, many international markets have carried their strong 2025 momentum into 2026. The other side of investor questions about the GenAI trade has been to analyze who can be disrupted and the rising stocks have mostly been those companies that won’t get disrupted and will actually benefit from integrating GenAI into their businesses.

Conclusion

Readers and investors of ours understand that risk management is a number one focus of ours so while the things I’ve talked about so far here sound cautious, it is just our way of expressing our main areas of concern. The big picture trend of stronger overseas markets relative to the US, a weaker US dollar, the desire to own hard assets like gold and oil to name a few, remains intact. And expectations that value stocks will do well relative to expensive growth stocks continues.

Something I said last month in our January letter, I think we’re seeing a multi-year trend of a shift in global trade and capital flows away from the US. We have to remind ourselves that about 75% of global GDP takes place outside the US and 96% of the world’s population lives outside the US. In other words, there is a whole world of investing and economic opportunities that investors have now finally realized after many years of underperformance relative to the US.  

Something I say every letter, that regardless of what is going on out there, it remains vital that investors have adequate short-term liquidity over the next 2-3 years; knowing that period is covered can help separate the balance of one’s portfolio from the ups and downs of the market. Time horizon is always crucial and is always the best friend of any investor.

Disclaimers

The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. The market and economic data is historical and is no guarantee of future results. All indices are unmanaged and may not be invested into directly. The information in this report has been prepared from data believed to be reliable, but no representation is being made as to its accuracy and completeness.

Any company names noted herein are for educational purposes only and not an indication of trading intent or a solicitation of their products or services.

Nothing in this material should be construed as investment advice offered by Bleakley Financial Group, LLC or Peter Boockvar. This market update is for informational purposes only and is not meant to constitute a recommendation of any particular investment, security, portfolio of securities, transaction or investment strategy. No chart, graph, or other figure provided should be used to determine which securities to buy, sell or hold. No representation is made concerning the appropriateness of any particular investment, security, portfolio of securities, transaction or investment strategy. You should speak with your own financial professional before making any investment decisions.

Past performance is not indicative of future results. Neither Bleakley Financial Group, LLC nor Peter Boockvar guarantees any specific outcome or profit. These disclosures cannot and do not list every conceivable factor that may affect the results of any investment or investment strategy. Risks will arise, and an investor must be willing and able to accept those risks, including the loss of principal.

Certain statements contained herein are statements of future expectations and other forward-looking statements that are based on opinions and assumptions that involve known and unknown risks and uncertainties that would cause actual results, performance or events to differ materially from those expressed or implied in such statements. 

The economic forecasts set forth in this material may not develop as predicted and there can be no guarantee that strategies promoted will be successful. The fast price swings in commodities and currencies will result in significant volatility in an investor’s holdings. International investing involves special risks such as currency fluctuation and political instability and may not be suitable for all investors. These risks are often heightened for investments in emerging markets. The fast price swings in commodities and currencies will result in significant volatility in an investor’s holdings.

Peter Boockvar is solely an investment advisor representative and Chief Investment Officer of OnePoint BFG Wealth Partners.

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