The Morning Call---The debate over AI displacement

 

The Morning Call

 

2/13/26

 

The Market

         

    Technical

 

            Thursday in the charts.

            https://www.zerohedge.com/markets/commodities-crypto-crushed-tech-wreck-rolls-goldman-sees-complete-lack-willingness-btfd

 

            Note: the S&P finished back below the former all-time high and its 50 DMA and is

close to challenging its 100 DMA (~6810). And it did so after making a lower high---though given the recent see sawing of the index that is not as ominous as it could be. My bottom line remains that the buyers and sellers are in a pitched battle with no winner yet apparent. A confirmed break either below the 100 DMA or above the former all time high would be an indicator of such. Until then, patience and follow through.          

             

            Thursday in the technical stats.

            https://www.barchart.com/stocks/momentum

            https://www.barchart.com/stocks/sectors/rankings

            https://www.barchart.com/stocks/signals/new-recommendations

 

            The best defense against continued volatility.

            https://www.zerohedge.com/markets/amid-ai-disruption-anxiety-top-goldman-trader-outlines-cleanest-hedge-board

 

            Remember fear?

            https://www.zerohedge.com/the-market-ear/remember-fear

 

            The same setup as last year---which didn’t end well.

            https://www.zerohedge.com/the-market-ear/same-setup-last-year-and-it-didnt-end-well

           

            Stocks hate rising bond volatility---and it is.

            https://www.zerohedge.com/the-market-ear/spx-hates-rising-bond-vol-and-move-just-woke

 

    Fundamental

 

       Headlines

 

              The Economy

 

                        US

 

                          January existing home sales fell 8.4% versus estimates of -3.4%.

                          https://www.advisorperspectives.com/dshort/updates/2026/02/12/existing-home-sales-sink-8-4-in-january

 

January CPI came in at +0.2% versus expectations of +0.3%; core CPI was +0.3%, in line.

                                  https://www.zerohedge.com/personal-finance/us-core-cpi-tumbles-slowest-4-years

 

                        International

 

The December EU trade balance was +E12.6 billion versus consensus of +E12.0 billion; Q4 preliminary employment change was +0.2% versus +0.1%; Q4 2^nd estimate of GDP growth was +0.3%. in line.

 

January German PPI was +0.9% versus predictions of +0.3%.

 

                        Other

 

                          The fallacy of trading on BLS statistics.

                          https://www.realclearmarkets.com/blog/2026/02/12/why_are_you_still_trading_on_the_jobs_report_1164376.html

 

                          But here is one of my favorite analysts’ try.

                          https://bonddad.blogspot.com/2026/02/leading-sector-benchmark-job-revisions.html

 

            Fiscal Policy

 

              Without reform, healthcare will swallow the federal budget.

              https://www.realclearmarkets.com/articles/2026/02/12/without_reform_healthcare_will_swallow_the_federal_budget_1164347.html

 

              The economic boost brought by full expensing.

              https://www.realclearmarkets.com/articles/2026/02/12/the_unsung_economic_boost_brought_by_full_expensing_1164370.html

 

              Reform social security.

              https://thedailyeconomy.org/article/to-save-social-security-stop-subsidizing-wealthy-retirees/

 

            Tariffs

 

              Global trade is leaving the US behind.

              https://www.bloomberg.com/opinion/articles/2026-02-12/on-trade-and-tariffs-the-world-is-moving-on-from-the-us?srnd=homepage-americas&sref=loFkkPMQ

 

            The Financial System

 

HELOCs, mortgages, housing-debt-to-income-ratio, serious delinquencies, and foreclosures in Q4 2025.

               https://wolfstreet.com/2026/02/12/here-come-the-helocs-mortgages-housing-debt-to-income-ratio-serious-delinquencies-and-foreclosures-in-q4-2025/

 

     Investing

 

            What drives gold volatility?

            https://www.advisorperspectives.com/commentaries/2026/02/12/looking-through-golds-volatility

 

            The value of forecasts from the betting market.

            https://www.capitalspectator.com/new-research-highlights-value-of-forecasts-from-betting-markets/

 

            Bubble fears in the bond market.

            https://www.ft.com/content/e87f04d5-9a19-4776-b0bc-3a78770be894

 

            Goldman on the collapsing software stocks.

            https://www.zerohedge.com/markets/best-trade-2026-how-profit-ongoing-collapse-software-stocks

 

            Counterpoint.

            https://www.zerohedge.com/the-market-ear/ai-panic-crushes-software-market-dead-wrong

 

 

    News on Stocks in Our Portfolios

 

 

 

What I am reading today

 

           

                        Conveniencing ourselves to irrelevance.

            https://om.co/2026/02/09/conveniencing-ourselves-to-irrelevance/

 

            Remembering Lincoln.

            https://www.powerlineblog.com/archives/2026/02/a-genius-for-friendship-12.php

            https://www.powerlineblog.com/archives/2026/02/remembering-mr-lincoln-15.php

 

 

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The Morning Call---Massive dispersion is a warning

 

The Morning Call

 

2/12/26

 

The Market

         

    Technical

 

            Wednesday in the charts.

            https://www.zerohedge.com/markets/good-jobs-news-bad-news-bonds-big-tech-bitcoin-gold-gains

 

                Wednesday in the technical stats.

            https://www.barchart.com/stocks/momentum

            https://www.barchart.com/stocks/sectors/rankings

            https://www.barchart.com/stocks/signals/new-recommendations

 

            It didn’t feel like a flat day.

            https://www.zerohedge.com/markets/goldman-it-sure-didnt-feel-sp-flat-type-day

 

    Fundamental

 

       Headlines

 

              The Economy

 

                        US

 

                          Weekly initial jobless claims totaled 227,000 versus forecasts of 225,000.

                          https://www.zerohedge.com/personal-finance/initial-jobless-claims-refuse-signal-labor-market-stress

 

                        International

 

Q4 UK preliminary QoQ GDP growth was +0.1% versus expectations of +0.2%; Q4 preliminary business investment fell 2.7% versus +0.5%; the December trade balance was -L4.3 billion versus -L6.0 billion; December industrial production declined 0.9% versus -0.2%; December YoY construction output was -0.3% versus -0.8%.

 

January Japanese PPI came in at 0.2%, in line.

 

                        Other

 

The bond market is suddenly flashing an economic slowdown (though not a recession).

https://www.marketwatch.com/story/the-u-s-bond-market-is-suddenly-flashing-a-warning-sign-about-the-economy-c56f307b?st=bc7djL

 

This was written before the release of yesterday’s jobs number but the author’s expectations were spot on.

https://stayathomemacro.substack.com/p/a-year-with-no-jobsbut-no-recession

 

                          More on the jobs report.

                          https://bonddad.blogspot.com/2026/02/january-jobs-report-superb-monthly.html

 

                          Households under stress.

                          https://econbrowser.com/archives/2026/02/households-under-debt-stress-two-pictures

 

The impact of ‘seasonal adjustments’ on December retail sales (remember that they were reported flat).

  https://wolfstreet.com/2026/02/10/not-seasonally-adjusted-retail-sales-spiked-by-80-billion-the-most-for-any-december-ever-by-far-to-817-billion-the-most-ever/

 

 

                          Update on big four recession indicators.

                          https://www.advisorperspectives.com/dshort/updates/2026/02/11/the-big-four-recession-indicators-january-2026-employment

 

            Overnight News

 

Out of the 346 S&P 500 companies that have reported so far in the earnings season, 77% have managed to beat analyst forecasts, while 19% have missed.

 

The House of Representatives has voted to overturn Trump’s tariffs on Canada in a major rebuke of the US president’s signature economic policy.

 

In a closed-door meeting with Senate Republicans Wednesday, Treasury Secretary Scott Bessent agreed with lawmakers who suggested the Senate Banking Committee could investigate Federal Reserve Chair Jerome Powell, instead of the Justice Department. 

 

            Fiscal Policy

 

              Your tax dollars at work: the $30 billion state ‘slush’ fund.

              https://www.wsj.com/politics/policy/how-a-30-billion-welfare-program-became-a-slush-fund-for-states-c39b8311?mod=hp_lista_pos2

 

            China

 

              China is winning.

              https://www.nytimes.com/2026/02/10/opinion/china-ai-ev-trump.html

 

     Investing

 

            Death of software---Nah.

            https://x.com/stevesi/status/2019167552794948020

 

            Massive dispersion is a warning.

            https://www.zerohedge.com/markets/nomura-warns-massive-dispersion-us-stocks-has-not-ended-well-past

 

            The gold/interest rate correlation has broken down.

            https://www.apolloacademy.com/gold-and-rates-correlation-breakdown/

 

The value rotation illusion. (I like the gist of the author’s thesis. However, he fails to consider, what in my mind is, a very important factor---the discounted value of future cash flow. That is cash flow to the investor, i.e., dividends. Many of the companies that would fit into the ‘growth’ mold pay no dividend. I don’t know how anyone can use a model that ignores the return to the investor [clearly, this is one man’s opinion]. As a value investor I ignore companies with no dividend; but for those with one, I combine the dividend yield with the earnings growth rate to calculate a theorical forward rate of return. That makes it easier to compare NVDA with a value stock [WMT is a really bad example because even though it pays a very small dividend, it is classed as a value stock], say Eversource Energy [a utility] e.g. NVDA stock yield [~.0005%] plus earnings growth [~32%] versus ES stock yield [~4.2%] plus earnings growth [~5.5%]. Then run a bastard PEG ratio ES [~15PE/9.7=1.5 versus NVDA [~33PE/32=1]. NVDA still wins as a better value by the author’s definition; but it is much less so and the comparison would be even narrower for other value/nonutility stocks. By the way, the growth, P/E, and yield numbers all come from Value Line)

            https://talkmarkets.com/content/stocks--equities/the-value-rotation-illusion?post=556691

 

            Trying to explain the crypto winter.

            https://www.wsj.com/finance/currencies/a-new-crypto-winter-is-here-and-even-the-biggest-bulls-are-worried-82019de4?mod=itp_wsj

 

 

    News on Stocks in Our Portfolios

 

 

 

What I am reading today

 

           

                        The Golden Thread.

            https://www.powerlineblog.com/archives/2026/02/the-golden-thread.php

 

 

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The Morning Call---Violating Ferguson's Law

 

The Morning Call

 

2/11/26

 

The Market

         

    Technical

 

            Tuesday in the charts.

            https://www.zerohedge.com/markets/software-pops-financials-flop-bad-data-sparks-bond-bid-rate-cut-hopes

 

            Tuesday in the technical stats.

            https://www.barchart.com/stocks/momentum

            https://www.barchart.com/stocks/sectors/rankings

            https://www.barchart.com/stocks/signals/new-recommendations

 

            Charts on the longer term.

            https://talkmarkets.com/content/stocks--equities/a-warsh-washout?post=554321

 

            Gold flushed $13 billion and is still standing.

            https://www.zerohedge.com/the-market-ear/gold-just-flushed-137bn-and-its-still-standing

 

    Fundamental

 

       Headlines

 

              The Economy

 

                        US

 

Weekly mortgage applications fell 0.3% while purchase applications were down 2.4%.

 

Month to date retail chain store sales grew 6.5% versus 6.7% in the prior week.

 

January nonfarm payrolls grew 130,000 versus consensus of 40,000; the unemployment rate was 4.3% versus 4.5%.

                                                  https://www.zerohedge.com/markets/us-unexpectedly-adds-130k-jobs-january-most-2024-amid-massive-negative-revisions

 

                        International

 

                          January Chinese CPI came in at +0.2% versus projections of +0.4%.

 

January Japanese YoY machine tool orders grew 25.3% versus estimates of +9.5%.

 

                        Other

                       

                          No reason to change your economic expectations.

                          https://alhambrapartners.com/monthly-macro-monitor-plus-ca-change/?src=news

 

                          The attribution of job losses.

                          https://econbrowser.com/archives/2026/02/announced-job-layoffs-attributed-to-ai

 

                          Mixed economic signals.

                          https://www.capitalspectator.com/mixed-economic-signals-complicate-fed-rate%e2%80%91cut-path/

 

                          The implications of yesterday’s poor retail sales number.

                          https://bonddad.blogspot.com/2026/02/real-retail-sales-turn-down-monthly-and.html

 

                          Consumer debt delinquencies soar.

                          https://www.zerohedge.com/markets/us-consumer-debt-delinquencies-soar-highest-2017-while-office-delinquencies-hit-record-high

 

            Fiscal Policy

 

              Debt solutions that don’t address why there is debt.

              https://www.realclearmarkets.com/articles/2026/02/10/national_debt_solutions_that_dont_address_why_theres_debt_1163206.html

 

              Liberty eroding, gold rising.

              https://thedailyeconomy.org/article/liberty-eroding-gold-rising-30-years-of-warning/

           

              Violating Ferguson’s Law.

              https://www.powerlineblog.com/archives/2026/02/crossing-fergusons-law.php

 

              The largest act of deregulation in US history.

              https://www.zerohedge.com/technology/largest-act-deregulation-us-history-trump-admin-repeal-obama-era-greenhouse-gas-finding

           

     Investing

 

            Bitcoin’s slide is a legitimacy test.

            https://www.realclearmarkets.com/articles/2026/02/10/bitcoins_slide_isnt_a_market_panic_its_a_legitimacy_test_1163477.html

 

            A cure for investment anxiety.

            https://www.safalniveshak.com/cure-for-investment-anxiety/

 

            Relative order in the stock market.

                https://politicalcalculations.blogspot.com/2026/02/the-s-500s-relative-order-continues.html

           

            The portfolio concentration debate.

            https://talkmarkets.com/content/stocks--equities/the-portfolio-concentration-debate?post=556467

 

            Why consensus fails.

            https://ofdollarsanddata.com/why-consensus-fails/

 

            Is it a good sign when executives buy their own stock?

                        https://www.wsj.com/finance/stocks/is-it-really-a-good-sign-when-executives-buy-their-own-stock-we-ran-the-numbers-2655b232?mod=hp_lead_pos8

 

            Bond market faces historic shock.

                        https://www.zerohedge.com/markets/bond-market-faces-historic-shock-mag-7-giants-turn-cash-flow-negative-fund-capex-tsunami

 

    News on Stocks in Our Portfolios

 

 

 

What I am reading today

 

            House goes after dark money NGOs.

            https://www.zerohedge.com/political/will-bombshells-drop-tuesdays-dc-hearing-foreign-influence-americas-ngos

 

 

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