Blue Owl Capital permanently halted redemptions on its private credit fund aimed at retail investors this morning.

Read that again. Permanently.

For those of you who have been following along, this shouldn't come as a surprise.

During our Market Blueprint webinar at the beginning of February, I specifically highlighted the necessity of watching private equity lenders that were wrapped up in massive loans for AI datacenter buildouts.

Names like KKR, Blue Owl, Ares, Apollo.

I said then: these stocks are already rolling over, and if they don't stop, we have a bigger problem.

They didn't stop. And now we're getting confirmation that the problem is real.

Why This Matters Beyond Private Equity

Blue Owl's fund wasn't some obscure corner of the market.

This was a retail facing private credit vehicle.. one of the new wave of products that Wall Street has been packaging and selling to everyday investors as "alternative income."

The underlying assets? Loans to companies building out AI infrastructure. Data centers. Cloud buildouts. The physical backbone of the AI trade.

When the lenders who funded the AI buildout start locking their doors, it tells you something about the health of what's underneath.

And Blue Owl isn't alone. Pull up a chart of any major private equity name right now:

The Private Equity Bellwether Basket:

• KKR — Down from October highs, making lower highs and lower lows
• BX (Blackstone) — Rolling over from its December peak
• ARES (Ares Management) — Same pattern. Lower highs since Q4.
• OWL (Blue Owl) — Cratering. Now permanently freezing redemptions.
• APO (Apollo) — Breaking down from its January range
• CG (Carlyle) — Flatlined after a sharp selloff
• BAM (Brookfield) — Stalling at resistance
• TPVG, ARCC — The BDC space (business development companies) showing similar stress

Put these nine names together in an equal weight basket and chart it. Here's what you get:

The basket peaked in January 2025.. right when the AI infrastructure trade was at peak euphoria.

Then it crashed over 40% by early April 2025. It bounced back over the summer. A nice recovery, sure.

But it failed to make a new high. Lower high. Textbook.

Now it's rolling over again.

That's an important industry group to the AI-trade making lower highs and lower lows while the S&P 500 presses into all time highs.

That's a divergence worth paying attention to.

The Connection to Tech and Software

I've said this before and I'll say it again: we are not buying the dip in tech and software. Not yet.

Last week, we talked about the massive de-grossing happening under the hood.

Goldman's trading desk said it didn't feel like a flat market day. It wasn't.

Hedge funds were aggressively unwinding growth positions and rotating into value.

As a matter of fact, last week saw the third most aggressive institutional selling since 2008:

That rotation hasn't stopped. And now we're getting a signal from the credit side of the equation that confirms what price has been telling us.

Think about it this way: if private equity firms.. the ones who raised billions to fund AI infrastructure.. are seeing their stocks break down and their funds freeze redemptions, what does that tell you about the sustainability of the AI capex cycle?

These are the guys on the ground writing the checks. If they're stressed, maybe the trillion dollar valuations on the companies receiving those checks deserve a second look.

And that's not my opinion. The market is already doing it.

This doesn't mean the AI trade is dead.. I certainly don't think it is. It means the easy money phase might be over.

And it means the stocks that got pulled higher on AI hype may be the most vulnerable.

Software stocks have been telling you this for weeks. Internet stocks have been telling you this. And now private equity is confirming it.

What We're Doing About It

Our approach hasn't changed. We follow price, not narratives. And price is telling us:

1. Energy is working. Oil services just hit eight year highs. We own exposure and we're buying pullbacks.
2. Industrials are working. Caterpillar, Boeing, General Electric, the entire sector pressing up and to the right.
3. Value is outperforming growth. Large cap value continues to lead. Small cap growth still hasn't proven itself.
4. Tech and software are NOT working. Until they stop going down, we stay out. Period.

The private equity breakdown is one more data point that says: don't rush back into the AI trade.

We can wait. Let the market figure out what works and what doesn't.

We'll buy the leaders off the floor whenever that happens. I'm not in the business of timing bottoms. Everyone who's tried over the last two months has been wrong.

There are too many things working right now to waste your time sitting in broken charts hoping for a reversal.

Stay on the right side of this. Follow price. Own what's working. And don't let FOMO on the AI trade trick you into buying broken charts.

We'll be here when it's time to buy. Right now, it's not time.

Profits Over Prophets,

Hamilton

PS. Every week inside TTI, we break down exactly which sectors, industries, and individual stocks are leading.. and which ones to avoid. If you want the full playbook, including our live weekly Market Blueprint sessions and real time trade alerts, join us here.