Private Credit Crisis, IEA Unleashing 400M Barrels of Oil, & 25% Chance of a Recession

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0:49Robert Croak:So go build your dream team today with Indeed. Get a$75 sponsored job credit at Indeed.com slash podcast. Terms and conditions apply. Welcome back to the Rich Habits Radar, our Friday episode of the Rich Habits Podcast, where every Friday morning, we're coming at you with the biggest headlines impacting you and your money. This episode is brought to you by VCX, the public ticker for private tech. My name is Austin Hankwitz, and I'm joined by my co-host, Robert Croak, and the three things sitting at the top of our Rich Habits Radar this week include the private credit meltdown taking place, Rivian's new humanoid robot, and the IEA's emergency release of their oil reserves.

1:33Robert Croak:And be sure to stick around to the end of the show where we talk about Disney's new CEO. Who knew? I didn't know Disney got a new CEO. That's kind of cool. We'll talk about it. But Robert, first, we got to dig into our first story.

1:44Austin Hankwitz:Yes. Last week on the Rich Habits Radar, we told you about Blackstone's flagship credit fund, BeatCred, getting hit with$3.8 billion in record redemption requests, roughly 8 % of the fund's$82 billion in assets. Blackstone lifted its usual 5 % redemption cap, and senior staff invested$400 million of their own money to honor every single request, which is awesome. We told you it was a story worth watching, and it actually got worse.

2:13Robert Croak:It certainly did. So our first story here is the sort of private credit liquidity crisis that is spreading faster than it should. Because on Monday, Bloomberg reported that Cliffwaters'$33 billion corporate lending fund, which is one of the largest interval funds in the private credit space, received redemption requests totaling 14 % of total shares outstanding. The fund is only required to repurchase 5 % per quarter. So it actually capped those redemptions at 7 % and told the rest of their investors to pound sand. You just got to wait. This means half the people who wanted their money back during this quarter are not getting their money back.

2:52Austin Hankwitz:Then on Tuesday, Morgan Stanley disclosed that investors in its North Haven private income fund tried to withdraw nearly 11 % of shares outstanding. Morgan Stanley actually restricted redemptions altogether. And the one that arguably started the entire chain reaction, Blue Owl Capital permanently froze rejections on its$1.6 billion OBDC-II fund back in February. Then they had to sell$1.4 billion in direct lending investments just to provide some liquidity to these trapped investors. Saba Capitals went on to CNBC this week and warned that private credit problems are multiplying. And that's why we felt it was so important to cover this meltdown again today.

3:37Robert Croak:Yeah, BlockRock is finding themselves now in the mix as well. $26 billion private credit fund that they've got, limited withdrawals for the first time in its history. Bloomberg called it the latest sign of investor anxiety about the$1.8 trillion private credit industry, where Reuters described the situation as the world's largest alternative asset managers confronting a painful choice. A, block investors who want to exit, or B, honor the requests and betray their guiding principles.

4:11Austin Hankwitz:Yeah, it really shows you that even at that level, that the knee-jerk reactions happen and people get scared quickly. So here's what's important to understand. Private credit was the hottest trade in alternative investments for three straight years. Pension funds, think endowments, financial advisors, and increasingly everyday retail investors poured money into these funds, attracted by yields north of 10 % and the promise of low volatility. What many didn't fully appreciate is the term semi-liquid does not mean liquid. These funds hold loans to private companies that cannot easily be sold on the open market.

4:50Austin Hankwitz:And when too many investors want out at the same time, the fund managers have three options, literally. Sell the assets at a discount, restrict redemptions, or put up their own capital. And now we're seeing all three of these happening simultaneously across the industry.

5:06Robert Croak:What a great breakdown sort of explaining what's going on about private credit in the industry and what's taking place. But what does this mean, Robert, for our listeners and their money?

5:16Austin Hankwitz:Yeah, it means that if you invested in any private credit fund, whether it's through your financial advisor, a brokerage platform, or your retirement account, you need to remember to always read the fine print. Not next week, right now. How often can you withdraw? What's the quarter redemption cap? What happens when requests exceed the cap? Because what we're seeing this week is even the biggest names in finance, Blackstone, BlackRock, Morgan Stanley, Blue Owl, are either limiting or outright freezing withdrawals because of this liquidity issue. That's why you need to always be on top of the fine print.

5:53Robert Croak:Yeah, and we're not saying that private credit's going to zero. So please do not take this, you know, breakdown as, oh, no, run for the hills. Private credit is terrible. The underlying loans and many of these funds are still performing just fine. you know, Blackstone's B-Cred Fund posted an 11 % annualized return recently, but this is a return you can't access, right? So it's a theoretical return. It's not a real return. You don't actually get to take this money out and put it in your bank account. If you can buy a high yield bond ETF or some treasury bills on public.com and you can sell them on any given trading day in the market and you're earning, you know, five or 6%, you need to ask yourself, is the extra four or 5 % yield worth the idea of being trapped in an investment you can't get liquidity from.

6:40Robert Croak:The rule we shared last week still applies. Never put your money in an illiquid investment that you might need access to in the next three to five years. After this week, I'd argue that you should probably stress test your portfolio for these illiquid investments even stronger. Again, we talk about Masterworks a lot. We talk about VinoVest. We've talked about a ton of different alternative investments and they're not bad. They're great. I'm up a ton on Masterworks. I'm up a ton on VinoVest. I'm up a ton on all these, you know, Fundrise. We talk about them all the time. I'm up a ton on all of these opportunities, but that's with money that I don't need for years from now.

7:15Robert Croak:Because what is more illiquid than real estate, than fine artwork, than a aging barrel of whiskey or wine, right? Like that's how you need to be thinking about these. And unfortunately, I think a lot of people made the mistake of saying, oh, private credit, 10 % yield, no problem. I go get 5 % here with the T-bill or 4 % with the T-bill, or I can get 10 with a private credit fund. I'm going to choose that. Oh, look, my account balance is going up. That's so cool to see. I'm ready to cash out nine months later, 12 months later, 18 months later. Well, actually, you can't cash out. And here's why.

7:48Robert Croak:We don't have your money. We're taking, you know, it's a whole thing. So please read the fine print and do what Robert said.

7:54Austin Hankwitz:Yeah, we talk about it a lot in the Rich Habits Network and really try to get people to understand the illiquid nature of these private credit investments. And this really helps, I think. And I'm glad we're covering it on this episode because I just don't want people to see themselves backed into a corner because they invested in things they didn't understand. And then they can't get the money out when they need it.

8:14Robert Croak:Now, that takes us to our second story, a lot more interesting and exciting than private credit, which is Rivian's CEO starting a robotics company. And now he's taking shots at Elon Musk. So the CEO of Rivian, the electric vehicle company, this week, according to the Wall Street Journal, quietly founded and separated this robotics company away from Rivian. So they spun it out, out of the Rivian actual company here, and they just raised$500 million from Andreessen Horowitz and other top-tier investors at a$2 billion valuation.

8:48Austin Hankwitz:Talk about quietly. We didn't even know about it until just a few days ago. and Mind Robotics is building AI-powered robots designed to do real work inside of Rivian's own factories. Picking up parts, assembling components, manipulating wiring harnesses, the robots are being trained to use data from thousands of cameras already installed in Rivian's manufacturing plants, and Rivian said they'll have a large number of robots deployed already by the end of this year.

9:15Robert Croak:Now, you can't talk about this, of course, without also talking about what Elon is doing with his Optimus robots and Tesla. It's a very similar sort of approach. Elon has been promising humanoid robots via Optimus for years now. Tesla's approach, however, and this is a little bit different than what Rivian's doing, is Tesla saying, hey, we're going to go build general purpose humanoid robots, which is a robot that can do anything from folding laundry to working in a warehouse to pouring you a glass of water, right? It's not a specialized, specific humanoid robot that that Rivian's mind robotics seems to be building instead.

9:51Robert Croak:In our opinion, general purpose humanoid robots are much harder to build than those specialized ones. So it's kind of like the moonshot, right? Now, to be fair, Tesla has made some real progress. They've shown optimists walking, picking up objects, even working in the Tesla factories in limited demonstrations. And I think we even saw Mark Benioff have a conversation with one asking it where the Coca-Cola was at the headquarters. Oh, come follow me. And it's pretty cool stuff. So they're doing some interesting stuff there, but I'm interested, Robert, to know what's going on with mind robotics.

10:22Austin Hankwitz:Yeah, I think you hit the nail on the head. Rivian is doing something very different. They're not trying to build a general purpose humanoid. They're building purpose built factory robots trained on real manufacturing data from day one. And they took a direct shot at the humanoid approach, telling the journal doing cartwheels does not create value in manufacturing. And I think that's a pretty big shot at Tesla and everyone else building these general purpose robots. And they said the robotics industry has been flooded with flashy demos that showcase stunts rather than useful work. And their thesis is simple.

10:56Austin Hankwitz:If Rivian was going to partner with one of those flashy robotics companies to automate its factories, they determined we should just build the company ourselves. And they have kept it really quiet. So it'll be definitely something to watch with not only the robotics division, but also Rivian as a whole.

11:12Robert Croak:Yeah, and also embodied AI as a whole. Global venture capital investments in physical AI, embodied AI, robotics, things like that. They've already hit$26.5 billion just in the first couple months here of 2026, according to Crunchbase. At the current pace they're on this year, investments in embodied AI will exceed last year's$33 billion of investments very, very quickly. I mean, just think, Waymo alone raised$16 billion in February.

11:41Austin Hankwitz:So Austin, break it down for our audience, everyone following along. What does this mean for you and your money?

11:48Robert Croak:I think that this is a very clear signal that the AI investment wave is moving through different cycles. In the beginning, it was very much software and it still is software. But I think we're getting more excited about the progress made with hardware. The first phase, you know, those large language models, OpenAI, Anthropic, the chatbots, like all that fun stuff. But now the second phase is happening. Physical AI, robots, autonomous vehicles, and other machines that interact with the real world. Because that, I mean, we're just seeing it, right? That's where venture capital money is flooding into.

12:24Robert Croak:For investors listening right now, the question is whether the Tesla approach or the Rivian approach is going to win. Tesla's betting on that general purpose humanoid robot and is worth the what is, I'm sure, hundreds of millions of dollars that they have spent building and researching for one of these robots because they think the total addressable market of a general robot is massive. It's important. I mean, it's human labor, right? Where Rivian is betting on something very different. They're building those purpose-built robots trained on real factory data. They also plan to be able to ship the robots very, very fast compared to a general robot.

13:03Robert Croak:I mean, think about it. If you have a Rivian purpose-built robot that is built entirely on fitting these wiring harnesses or moving around a specific heavy part or doing something very specific in a factory, you can train a robot to do that pretty quickly and go do that for other factories versus thinking about all the general things we do as humans with our hands and our arms and our legs. It's a very different story here. So if you're watching the robotic space, I think the divide between the purpose-built robots and the general purpose robots are really what's separating investors right now.

13:37Robert Croak:Lucky for us and those people inside the Rich Habits Network, we're kind of on both sides. We've been talking about Tesla and their optimists. I think it's going to happen one day, who knows when, but I'm a massive Tesla shareholder. We're also shareholders in purpose built robotics companies like StandardBots. And we're shareholders in purpose and more maybe general, I guess, depending on how you think about Aptronic. We're just doing it all. And I think that's the way that investors should play this game is they shouldn't make a hard line of like, oh, I think this is going to be it. And it's of course going to do this.

14:08Robert Croak:And if it's not, it's like, it's not as black and white as investors might think.

14:12Austin Hankwitz:And I think there's a subtler point here is the CEO of a public traded company, and he's founding a separate private startup on the side. And Rivian invested in Mind Robotics and is providing the factory data to train the AI. So it's a very close relationship. And that's not necessarily a bad thing. Obviously, Elon Musk is doing it throughout all of his platforms and his companies, but it's something Rivian shareholders should be aware of. And additionally, those same shareholders should be aware that if he's right and Mind Robotics pops off and turns into a 10, 20, 50, 100 billion dollar robotics company, that's potentially a massive win for Rivian's current stock price hovering right around$15 a share.

14:54Robert Croak:Yeah. I mean, imagine if, because Rivian, I think according to the Wall Street Journal report we read, is a massive shareholder in Mind Robotics, right? So you've got all that equity on the balance sheet of Rivian. I mean, who knows what's going to happen with their Mind Robotics. Maybe it turns into a 20 or a 50 or a hundred billion dollar company because every, you know, manufacturing plant wants to work with them. Who knows, right? There's all just hypothetical stuff here. But I mean, if they own 10, 20, 40 percent of mine robotics, again, I have no idea how much they own. But like what's 20 percent of a 50 billion dollar company?

15:27Robert Croak:That's 10 billion dollars. And if Rivian's current market cap right now is 20 billion and you just slap 10 billion dollars of equity on their balance sheet. Well, that has to be absorbed somewhere. Their stock price has to pop by 50%, right? 10 billion, 20 billion. I got to make up for that. So I think that's the play here, Robert. I mean, take a moonshot, dice roll on the fact that Mind Robotics maybe does well and pick yourself up some Rivian stock. I've bought a couple of shares. I'll probably build a little bit of a position here. Nothing big, but I think it's kind of a no-brainer.

15:57Austin Hankwitz:Yeah, purpose-built robots have been around forever. And what I like about this, what they're doing with Mind Robotics is they're saying, all right, we're not going to chase all the fancy stuff with the humanoids. We're going to build something for a specific task that needs to be remedied within our own production. And then they can scale out from there. The main thing is, will they be able to scale and be able to reach all of these other companies doing similar tasks to Rivian? So that'll be what we need to keep an eye on.

16:24Robert Croak:Couldn't agree more. Now, our final story here is the IEA announcing the largest emergency oil release in history. On Tuesday, the International Energy Agency's 32 member countries voted unanimously to release 400 million barrels of oil from strategic petroleum reserves around the world. That's the largest coordinated release of emergency stockpiles in the IEA's 52-year history. The United States alone is contributing 172 million barrels over four months starting next week. To put all that in context, the previous record was the 2022 release during the Russian-Ukraine war, which was about 180 million barrels from the IEA.

17:07Robert Croak:This one, as you guys can do the math, is more than twice that size.

17:11Austin Hankwitz:And I think the reason here is straightforward. The Iran war, which began with the Operation Epic Fury on February 28th, has knocked an estimated 8 million barrels per day offline, which is roughly 20 % of global oil supply. The Strait of Hormuz, which carries about one-fifth of the world's oil, is under direct threat from Iranian counterattacks on shipping vessels. So oil went from around$60 a barrel at the start of the year to over$91 last week, which is a 50 % move in less than the last three months.

17:43Robert Croak:Yeah, showing up at the pump as well. National average of gasoline jumped 17 % to about$3.50 a gallon since these strikes began. And some regions are already approaching$5 a gallon. But if you live in California, you've been paying five bucks a gallon for probably your whole life. Drivers are paying roughly 20 percent more to fill their tanks than they were just two weeks ago.

18:02Austin Hankwitz:And here's the part that most people are missing. This reserve release only addresses crude oil. It does nothing for natural gas. So make sure everyone understands that. And that's a massive problem for Europe, which is far more dependent on natural gas for electricity and heating.

18:18Robert Croak:Yeah, the Iran conflict. I think it's not just an oil story. It's a full spectrum energy shock and different parts of the world are getting hit different ways. It also brings up the question about what happens after this 400 million barrel release. Strategic petroleum reserves are finite, right? They're strategic. The U.S. Strategic Petroleum Reserve has already hit a historic low level after the drawdowns during the Russia-Ukraine crisis. I think President Biden started pulling those down in like 2022, kind of refilled them a little bit. but like we're still not that great. Releasing 172 million more barrels depletes the buffer even more.

18:59Robert Croak:So if the Iran conflict drags on for months and there's no indication it's ending anytime soon, despite President Trump saying the war is very complete and it is going to end, so who knows? But again, the world burns through these reserves. Then what happens? The IEA doesn't have a second 400 million barrels to release. So Robert, we've got a lot of things to cover with this story specifically. walk me through a couple big takeaways as to what people should think about as it relates to their own portfolios.