With markets off to a positive start this year, leadership has begun to shift away from the mega-cap technology names that dominated recent performance. Instead, small caps, mid caps, value stocks, international markets, and energy have emerged as early leaders, highlighting what Noah and Chris describe as an “everything rotation.” The discussion explores whether this broader participation reflects a healthier market environment or simply another transition phase as investors reassess valuations and future growth expectations.
This episode connects market performance with broader economic developments, including changes in employment trends, rising corporate investment in AI, and the long-term implications of productivity gains driven by automation.
While major indexes remain near highs, returns in early 2026 have come from different areas than investors have grown accustomed to in recent years. Technology and growth stocks have taken a pause, while sectors such as energy and consumer staples, along with small and mid-sized companies, have seen stronger performance.
Rather than signaling weakness, this shift reflects a broadening of market participation as capital rotates toward areas that may have been underappreciated during the previous cycle. Rotation periods often occur as markets adjust to new economic conditions, and they can help create a more balanced foundation for future growth if earnings trends follow.
Noah and Chris also discuss the latest jobs report, including stronger-than-expected headline numbers alongside significant downward revisions to prior employment data. The conversation highlights how slowing job growth and declining job openings may signal a cooling labor market even as unemployment remains relatively low.
This leads to a broader discussion around automation and artificial intelligence, and how productivity gains could reshape employment over time. Rather than focusing solely on job losses, the episode explores how technology may change the types of jobs available and the skills employers prioritize in the years ahead.
The discussion raises an important long-term question: if productivity rises faster than job creation, how does that impact consumer spending and economic growth?
The episode also examines the ongoing AI investment cycle and the recent selloff in software stocks, sometimes described as a “SaaS correction.” Noah and Chris discuss whether fears of AI replacing traditional software models are overstated, noting that many legacy platforms may ultimately integrate AI rather than be displaced by it.
Large capital spending plans from major technology companies continue to support the long-term AI narrative, but the conversation emphasizes that markets often overreact in both directions as investors attempt to price in new technologies before their full impact is understood.
Additional topics include volatility in Bitcoin and commodities, ongoing trade tensions, and the potential impact of global competition in industries such as automotive manufacturing. These developments highlight how policy decisions, currency movements, and global supply dynamics can influence inflation expectations and investor sentiment.
The episode also touches on how speculative assets and technology sectors can sometimes move together during risk-on and risk-off market environments, reinforcing the importance of understanding correlations rather than relying on simple narratives.
As markets navigate shifting leadership, rapid innovation, and evolving economic signals, the episode reinforces several core principles:
Strong markets are rarely driven by a single sector or theme. Sustainable growth typically comes from broader participation, balanced expectations, and investors maintaining a long-term perspective despite changing headlines.
Hey, welcome back to the market enthusiast. I’m Noah Brooks and obviously this is Chris needs.
So moving into the middle of February, we’re coming out of our deep freeze here in, in, you know, Pennsylvania, we had a week, no two weeks where we didn’t get above freezing today is 40 degrees and it feels like a freaking heat wave around here.
We had our trip down to Florida to our Orlando headquarters and I wish I could say it was sunny and warm Florida, but we didn’t get that lucky. Did we got there on, Sunday and it was 26 degrees in Orlando. Yeah. On Thursday I went to Disney world with the family and I didn’t pack for it. I needed heavier. weren’t in shorts and a T-shirt at Disney. Well, I was originally wearing shorts and I luckily brought some pants, but I needed a coat.
Not just a sweatshirt. You know what I haven’t heard about? And I don’t know if this is just a function of me not listening to it, but when it used to get cold in Florida and frost up and freeze, we always used to talk about like oranges, right? And you, in some cases you would see pictures of the farmers out there and they would have like literally heaters in the fields because it impacts obviously the orange crop, which obviously takes me back to trading places, right? When they’re talking about frozen orange juice concentrate.
We better check on those orange juice futures. Right. So that leads me to something that I saw this week. Apparently, did you ever, did you grow up? Did you ever have frozen concentrate orange juice as a kid? I don’t think we had it often, but we definitely had it in the fridge at certain points. Yeah. Well, after 80 years, Minute Maid is going to stop making frozen orange juice concentrate.
What was the ideal usage for the frozen constant for us? It was it was popsicles. That’s sort where I was going to guess. Yeah. And then as you got older, it moved on to, you know, maybe alcoholic beverages, something like that. All right. Yeah. But no, it was really, it was really chilly down there and it’s obviously warming up. It’s warming up here. I think everybody’s coming out of their shell a little bit. Everybody’s being a little bit more active. Now the groundhog pokes Tony Phil. He said we have six more weeks of winter. Screw that guy. Yeah.
Noah Brooks (02:20.046)
I don’t need any of that. You can’t walk on two legs. Well, I guess they can for a little bit. I don’t walk on two legs. You shouldn’t be reporting the weather. Yeah. Is that right? Yeah. Okay. You’re a Debbie downer. All right. Going into the beginning of February markets up for the year, right? S and P 500 up almost 3%. But it is not the lead performer. It is not the star of the show this year. Small caps are rallying up over 10%.
mid caps up 8 % international, depending on what you’re looking at nine to nine to 12%. Values up seven growth indexes are down about 3%. This is the everything rotation. mean, once again, this year we have international over us domestic stocks. And it’s not even all like last year, the first half of the year, we had the dollar down 10 % over the first six months.
which obviously is a boost to international. We’re not even seeing that much movement on the Dixie so far. It’s down about 1 % in, you know, less than two months here, but that’s just international true out performance and fundamentals getting a little better and then being maybe underappreciated for a long time. Like you said, smalls, mids doing much better than large caps, which is been rare to come by over the last several years. Yeah. Value overgrowth that rotations continuing.
And we have like consumer staples and energy is really leading the way so far this year in terms of sectors compared to technology in the red and financials in the red. Yeah. Best performing sector year to date. I mean, it’s only the 12th or 11th of February, but best performing year to date is energy up 13%. Materials right behind there, like 17, 18 % approximately. Did I get my numbers flipped? No, you’re right. Energy’s at 20.
Yeah, we’re good.
Noah Brooks (04:19.554)
No, it’s not.
I was thinking, didn’t you? What’d you say? No, energies up 15. That’s the best performance sector here today. I’ve read every ran the weekly today and said 19.88.
Noah Brooks (04:38.539)
I haven’t
Noah Brooks (04:46.19)
I mean, those two are definitely accurate. Well, shiver me timbers. Shiver me timbers. I’m going to go back to that. I don’t know where we left off, but I’m going to go back to it. And I’m just going to say best performing sector. Yeah. Year to date.
Noah Brooks (05:10.296)
Yeah, best performing sector year to date energy up close to 20 % and a lot of that has to do with oil being up. I think oil is up 13 or 14 % year to date. Worst performers, financials down two and a quarter tech tech down one right? Obviously software down a little bit. What else is going on? We had his jobs report that came out this morning.
right on a Wednesday. Yeah. Isn’t that interesting? was a jobs report on a Wednesday is not really a thing. Yeah. You know, it’s normally, normally a Friday. Um, but there were some positives in the jobs report. There were some negatives in the jobs report. Uh, let’s start with the bad stuff. So I mean, so we’ll just start with the report. 130 K jobs versus 75 expected unemployment, 4.3%. Well, that was the, that’s the good stuff.
versus 4.4 expected, we’ll just set the stage with that. But yeah, government jobs, just, again, just getting killed out there for the month minus 34,000 on government jobs. Yeah. If you go back to January of 2025, negative 324,000 on government jobs. So something that previously, you know, was a headwind behind healthcare, certainly, but a tailwind for high jobs numbers.
has definitely become a detractor. Yeah. I mean that I don’t think there’s anybody out there that was surprised with that with the government jobs part. Yeah. I mean the this administration has told us plain as day that they want to reduce the size of government and you know for whatever it’s worth there’s 300,000 jobs less over the last is it 12 months or 13 months or 13 months. So I don’t know that that was expected but so you said 130,000 and 75 expected
The thing that kind of caught me and this is where I said with the negative stuff is the revisions. Oh yeah. Right. So in 2024, they estimated that it was two billion, excuse me, two million jobs created in the United States. And they came back and they said, well, it’s more like 1.5 million. And then the 2025 revisions were pretty good. I think I told you last time we were sitting here, it was an average of about 50,000 jobs a month or a 600,000 jobs.
Noah Brooks (07:35.118)
for all of 2025. Well today, Bureau of Labor Statistics has come out and they said, well, actually 2025 it was only 181,000 jobs total for the year. So 15,000 per month. Yeah. That was significantly lower. Significantly lower. The other thing that happened wasn’t today, but the job opens job opening and labor turnover survey, which essentially says how many jobs are out there at the moment.
that are at least posted has fallen pretty dramatically over the last six or nine months. We’re down to about 6.5 million jobs, which is essentially cut in half from the peak in 2022 at like 12.3 million job openings. That takes us back essentially to February of 2018. That was the last time this little jobs.
or this few jobs were being offered out there. So you take that into account, you take the jobs report into account and certainly those revisions out there and the narrative shifts a little bit on unemployment. Now you’re going to remember my 2026 word of the year, even though we haven’t had the word of the year for 2026, right? You remember what it is? UBI, universal basis income. And I said that that was going to be the word of the year simply because
we’re going to wind up talking about automation and robots for a long time when it comes to jobs. with Joltz, you’re saying the human labor market doesn’t look so strong going forward. Well, I’m not a so I’m not really worried about what it looks like for I mean, from a financial perspective and investment perspective. Yeah, but I’m care more about people working than robots working. And
you know, you, you really just ask yourself like, yes, there, we want to automate crappy jobs. We want robots to do, you know, things that are repetitive. So you don’t hurt your back and all that stuff. And, know, make assembly lines faster and profit margins better, but we still want people employed. know, certainly investors want people employed. And so you have this dichotomy of these two areas, productivity, which is ramping up pretty dramatically, based on, know,
Noah Brooks (09:59.758)
software and automation and robotization of factory lines and factory floors and warehousing, which is great. But the warehousing especially has been a source of jobs over the last decade for people that maybe don’t have traditional skill sets for offices. Yeah.
you go out any major highway and look at all of the commercial real estate built for distribution centers and things like that, obviously, going back to the COVID trend when we all had to start ordering from home and there’s that boom. And maybe we’re coming back to maybe a bust of that amount. I don’t know. But yeah, I know Amazon, for example, they want to automate all of their distribution centers, they want as few humans
on the distribution center floor as possible in five, 10 years. And like you said, they are, I think they’re still lower. Did they recently pass Walmart? Walmart was always the biggest US employer. And I maybe temporarily they might have caught up. I’m not sure. But yeah, that’s a big hit to the US labor market if they decide, you know, 30 % of our jobs, we’re just going to automate into robots in the next five to 10 years. What’s their total total number of employees?
I don’t know if top my head, but it’s like 2 million, right? It’s a lot. Yeah. you know, then you question, well, you still have the drivers, right? For now. So if you have, if you pair a self-driving van with an optimist robot, it can get out and drop off your package on your front door. How many more people are gone? Yeah. I don’t, I don’t know. I mean, this leads into, since we’re talking about Amazon, they did report last week, mixed earnings.
stock got walloped. I’m not even sure it was really on the earnings. We’ve talked about Oracle and the reaction they’ve had being a part of software, you know, also doesn’t help them. But with their capex being so huge and going free cash flow negative, what sort of bruised that was on their company’s prospects for the investor sentiment side of things. But Amazon brought out a bazooka.
Noah Brooks (12:17.294)
$200 billion in CapEx they’re forecasting for 2026 when market analysts whisper number was like 144. What a huge CapEx and then you have Google at 180 billion. I don’t know is the AI story strong because you see software getting hit so badly. there’s no question about it. We call it a sasspocalypse. I think that’s what the Wall Street Journal has reported it on. Right? Yeah.
it’s it’s been a meltdown, obviously. You have the software subsector, you know, down over 30%. You know, it’s been it’s been a rough drawdown for them. And it’s been this sort of mix or last couple months of people saying, ooh, AI is a bubble, we can’t invest in that in the AI stocks are getting hit. So maybe software won’t get wiped out. But no software has been wiped out. And that story has continued. I feel like
both ends you can’t have. either one’s going to win. AI is going to be as effective and powerful as analysts seem to think it will be or software will be just fine. And I think the truth is in the middle. the truth definitely lies within, within that range, if you will. So, you know, this week we had some new AI technology that came out from a company called Altruist, which is financial services, a brokerage company that
dropped a lot of stocks in the financial industry. Yeah. What was the name of their software? The hazel hazel. Yeah. So an automated, automated investment planning for financial advisors. And, you know, so some of that has to do with, you know, the adaptation of it, but it’s all of these companies, all of the wealth management companies really got hit that
last week. Now they’ve done very, well over the last few years. There’s no question about it. but they, they got hit. And I think you might see more of that anytime there’s positive news on whether it’s a large language model like, chat, GPT obviously, or any of those, or a new use. So two weeks ago or week and a half ago, we saw, anthropics.
Noah Brooks (14:33.684)
model Claude co work which that hit a bunch of software companies again. Yeah, even hit legal company. Yeah, that’s legal. Legal. was the other one legal and wasn’t financials? mean, there was legal was the big one. Yeah. But I mean, there’s a lot of thing happened happening in there. And this is why I think to myself,
You know, we’re, have 158 million people employed in the United States of America, 158 and a half, 158 and a half million people employed in the United States right at the moment. And historically speaking, we need about 70,000 new jobs a month to keep that number flat. And like the replacement rate. But what if the number for replacement rate is going down?
and the number of jobs being created is also going down. Those two things together will keep the total job, the total number of people employed relatively stable.
And I’m not sure how that’s going to work out in the end. Again, 2026 word of the year for me, universal basic income, but like you really don’t know. And so when I said there’s this dichotomy between markets and jobs, the companies may continue to get more profitable and part profit margins going up and stock prices going up, but they may continue to employ less people.
At some point, though, you can’t have everybody unemployed, they have to find new jobs. And so they need consumers on the other side of things. definitely need dwindling. So if this is a slow change, over a long period of time, it is going to work out perfectly and everybody will find new jobs. And we won’t be talking about universal, universal basic income. But if the productivity gains that happen from artificial intelligence,
Noah Brooks (16:39.618)
happen in a matter of two or three years, there’s going to be a lot of people that are going to be unemployed and looking for work. And I’m not sure that, you know, we all know the consumer is very strong in the United States and certainly has been driving the economy for a long time. I’m just not sure how long that that can continue if there’s a lot of people out of work and there’s not a lot of run out of rope eventually for the economy. Right.
So what does it what does it look like in three years versus 10 years? know, if it’s slow and steady, I think we’ll be a okay. If it happens overnight, I don’t know. Like you said, UVI, eventually, companies will have even higher profit margins than the all time highs we’re at right now. And the government will probably tax them more to give us all helicopter money to keep the consumer spending. But I want to take a step back here real quick back to the SAS apocalypse.
because I don’t fully buy into it. So anthropic, didn’t say it’s as software as a service, essentially subscription software. Yeah. So think about so what the proposal is, is why would a company employ Oracle Salesforce ServiceNow, Monday.com, you know, all these different companies to provide this software as a service.
and this coding and workflow stuff when they could just have Anthropic do it. Here’s why I don’t fully buy into it. It’s great that they can do that and can help those companies. I think it will overlay and make them more valuable in the longterm and they’ll have to employ less people and they’ll be even more asset light than they already are as software companies. But we are in the financial services industry. We just can’t.
write a code and create a platform and try it has to be an approved vendor that is enough security, you know, procedures in place to protect client information, things like that. Think about hospitals and medical companies. Like you can’t just say, Hey, Claude, write me this code and build me a CRM. It has to be like totally locked down, safe and protected. And that’s why I think this is all overdone.
Noah Brooks (18:58.486)
Yeah. I’m not saying calling a bottom right here because the market can obviously remain irrational longer than we remain solvent. But in the end, I don’t think cutting their value in half or more is accurate from analyzing their profitability and their revenues because they will have contracts that will still like Salesforce with us that we’re not going to give up just because Anthropic can write code and build a platform.
We can’t just jump to think the other way to look at this is these software companies, I’ll take CRM Salesforce as an example, they’re going to use the large language models and they’re going to overlay their software on top of whichever large language model that you want. And they have the data already for most of their contracts. And they’re set up, they’re secure. so you might have, Salesforce has, I think it’s AgentForce,
that their AI is and you might have their agent force that’s utilizing, you know, take your pick. You might have a dropdown. Well, I want to use chat GPT or I want to use Anthropic or I want to use Claude and that large language model can be used within the Salesforce platform. And, we don’t have any positions in Salesforce. I don’t own any Salesforce, but it’s certainly an example of what will happen in, in the software field, because if it doesn’t happen,
And all of a sudden they will go the way of the dodo if they don’t re-invigorate, know, reinvent themselves. And these are some of the smartest people out there. You know, think of Larry Ellison, like you said, Benny off, like all these guys know what they’re doing. They’re not just sitting idly by and watching Anthropic, a private company take their whole business. in addition to that, I think, you know, from a jobs perspective, I don’t, I can’t speak to, let’s say menial task job.
You know, I, I don’t know what the fast food restaurant of 10 years is going to look like. I imagine there’s less people in it than there are now, from artificial intelligence at the drive-through window, you know, voice recognition and things of that nature to robots within the cooking area. But it’s not necessarily that AI is going to take the jobs. It’s going to take the jobs of the people that don’t understand AI and don’t implement it. Right. There’s going to be.
Noah Brooks (21:23.34)
the old job market and the new job market. And it’s really about the set of skills, I think that employees are going to be, employers are going to be looking for, you know, do you know how to get the most out of the artificial intelligence? AI enabled in legacy, the sort of dichotomy we’re going to see. agree with that. Yeah, I think that’s definitely, definitely going to happen.
Yeah, so we have that jobs report that came out. So there’s more trade tensions between the United States and Canada. You mentioned Carney earlier today. One thing that’s happening in Canada is they’re talking about the possibility of importing Chinese cars. Now we do not allow Chinese cars on the road here in the United States. Doesn’t mean that we won’t at some point in the future.
But they are looking at it and car dealers are worried. theory, can you just then go to Canada or to Mexico buy him drive him across and I think you could probably you not register. I think you could self register them, but I don’t think they’re going to be allowed to be sold here. And you know, that’s something on the horizon because the cost of those cars is dramatically lower than the cost of our cars. So you know, we talked about where they’re leading.
Last week we talked about solar panels and Automated driver driverless cars And we mentioned Waymo and all that but their their cars are significantly less expensive than our cars especially their EVs because of course they have all the good stuff over there, right and so You know that is something on the horizon You have a situation where you have these legacy automakers the the Ford the General Motors
of the world, not the Teslas of the world. And they’re already down in the dumps. They already have legacy debt. Although, you know, some of the companies went bankrupt after the global financial crisis. Ford did not, General Motors did. Chrysler, I think they reorg. But if you get, and I’ll just pause there for a second. What I haven’t heard from this administration right now is that they’re not going to start importing Chinese cars.
Noah Brooks (23:45.696)
I think they might be using that as some type of leverage in the future. Now, I got to tell you, I don’t think American car manufacturers are going to like it. But if you’re talking about affordability, and you’re talking about bringing inflation down, or even the possibility of, of, manufacturing jobs, though, it would not, which are already not doing that. Well, we did have a positive number in this jobs report. I think it was 5,000.
Yeah, but it’s not strong. we they haven’t come back. I know it’s a long on ramp to bring manufacturing back after decades of Pawnee it off overseas. And I’m sure the president wants it to happen immediately. But that’s not how the world works, even if you put in punitive tariffs. But yeah, that definitely would hurt a powerful lobby in terms of carmakers, as well as the labor unions. No question about it.
It reminds me of the fight for, let’s say Korean cars when they started entering the markets in the eighties and nineties and certainly Japanese cars in the late sixties and seventies. Growing up, the first one of the first new cars that was in my household was a bright yellow Toyota Tercel 1980 that got, I don’t know, 25 miles through the gallon in 1980. Wow. Yeah. And, know,
that was this tiny little car and everybody else was driving these gigantic beasts 25 foot wide or 25 feet long. But it’s a very similar situation. South Koreans came and they imported cars and now Hyundai, one of their largest plants is here in the United States in South Carolina, if I’m not mistaken. they get caught in Georgia at one plant and like we just sent immigration, immigration raid. Yeah. We sent like 2000 people back.
We’re waiting for visas, but they didn’t like that too much. I bet. I just saw that there was a Irish guy who was locked up for like four months. A guy from Ireland who I think we like those guys, right? I think we like the Irish. You know, there’s probably like 30 million Irish people here in the United States. I don’t know that they are. I’m not sure. We have a lot of software in Ireland. Yeah. How are we?
Noah Brooks (26:09.014)
Yeah. Although they got ripped off by that whole thing between the EU and Ireland. Remember that Ireland promised them no taxes. huh. And he was like, we didn’t negotiate this pay us taxes. geez. That was several years ago. Yeah. I don’t know if the Irish have anybody in the Olympics. Right? Do you are you watching any Olympics? I haven’t been watching much. No, I mean, no, but I did wear my red, white and blue here though. is American rider cup. Yeah.
got the red shirt under here. I don’t like to wear red in our industry. Just bad vibes. don’t wear green a lot. You know, I should change that. We’ve been watching when we get home a little bit here or there. Some of the stuff is really cool. The speed skating is amazing. Some of the big air, you know, this Lindsey Vonn Lindsey complex tibia fracture. So she went out there a week after she tore her ACL and tried to do it.
And I don’t, I just don’t get her. I, like, I understand the athleticism and the drive to want to be the best, but like you literally just tore your ACL and, and eight days afterwards, I think was gonna, right. Yeah. And that’s dangerous. Like I said, obviously she had a complex tibia fracture after the ACL tear. Like you’re moving on downhill. Yeah. I’ve never done it, but I mean, I’ve never skied.
or done anything and don’t start now. You don’t think I will knees. So we’ve been watching a lot of the Olympics. Also this kidnapping, right? You can’t look away from it. Savannah Guthrie’s mom has been kidnapped. It is. It’s kind of nutty. It reminds me of a little bit like I wasn’t around for the Limburg kidnapping, but it’s like, wow, everybody’s focused on this. And yes, it’s not a little kid. Yeah, it’s her mom, of course. But so what they what were they asking for?
that and lots of Bitcoin $6 million worth depending on the day how that may change the number of bitcoins you need by a lot, right? Yeah, it’s been a fun ride for Bitcoin lately. people ask me all the time, you know, what what’s the deal with Bitcoin and we that’s a that’s a whole nother conversation. But my first thing that I always say to to most people is was really good for money laundering.
Noah Brooks (28:28.406)
Right? Yes, it’s investible. Great evidence. But it’s it’s really good for money laundering. And I think this proves it. So kidnapper says I want my ransom in gold bars. No cash. No. He says I want him Bitcoin. It’s untraceable. 6 million of gold bars would be really heavy. You’d need like a military plane to move that. don’t know about that. I don’t think it’s that heavy.
Did you see the video of the guy that got the gold bar out of the thing at one of the casinos? It’s his box where it’s only a circle and you can, there’s a gold bar in there and if you can get it out, it’s yours. And he got it. Yeah, he got it. It’s pretty funny. feel like that’s the thing where they come back and say, well, actually you don’t get to keep it. You know, you weren’t supposed to win. Yeah. Well, hopefully that it was malfunctioning. Hopefully that doesn’t happen to them. But you know, Bitcoin obviously has come down dramatically for people that
are uninitiated, it was as high as I think 128,000. Now it’s down to like 67 or so. Yeah, I mean, so let’s think about this real quick here. So we’re just talking about software getting really beat up. And people always say, you know, you have Bitcoin is digital gold, and then you have the other half saying, no, it’s just like, three times levered NASDAQ or
growth, what have you, you know, has not been a great head. No, it has not been it’s, you know, risk on essentially, we’ll call it. But take a look at we’re talking about software getting beat up like the IGV is I think the I shares software ETF overlay that chart with Bitcoin. What is Bitcoin? What is software software is just a bunch of code built into a platform that you can use enter information on, you know,
do workflows, you know, save that info for later. What’s Bitcoin? A bunch of code where you can save transactions on this ledger. And there’s this proof of all these transactions that stays there forever. And your value is on there. So it’s just a bunch of code just like software. So overlay software and Bitcoin. Look at those charts. What they what they tell you I know correlation down
Noah Brooks (30:44.618)
It may be five times levered, you know, or five times beta versus software sector, but some, some in common shapes in those charts. Yeah. Let’s see if we can’t get some of those charts up here. I don’t, I don’t have one handy. I didn’t look at it today, but let’s, let’s see if we can get one of those up here. so you think, or do you think that Bitcoin is highly correlated to the software index?
I do think it’s very risk on as we found it’s not a good hedge lately, you see what gold and silver have been doing. Definitely risk on speculative asset of some type that at times is very correlated with growth or software. And at other times is relatively uncorrelated. I’m going to ask the million dollar question here, Chris, is correlation causation? Not necessarily, right?
I would be interested to delve into that a little bit more because it does seem like the trend of software is, you know, very correlated to the trend of Bitcoin or vice versa. But I’m not sure why, right? What the cause of that is. We don’t hold any Bitcoin in any of our models or, you know, what we manage, but you know, if you loved it at 128.
looking awful juicy at 67 odd bet. You know, every time Bitcoin has had these massive drawdowns over the last, you know, since really since 2013, since 2012. Every single time, it has come back dramatically higher than where the post pre drawdown was. Yeah. And yeah, this does look like normal activity in terms of price movement on Bitcoin. Historically.
But we, I feel like the consensus view was it wouldn’t be this dramatic anymore. You have regulation largely out of the way with the Trump admin being fairly friendly to Bitcoin and to cryptos of all sorts. I don’t know what Melania coin is trading at right now, but is there a Melania coin there? What is was, I don’t know. Okay. But not only do you have regulation out of the way, think about
Noah Brooks (33:01.07)
the institutional adoption that they said this is the next big wave, this is going to carry it to new heights when it gets in brokerage accounts and stuff, it’s going to go to the moon. Well, we have that now. It’s not going to the moon. It like it was going to the moon when it was over 120,000. But yeah, air is out of the balloon right now. So I guess the question that everybody wants to know is like,
now the time to buy it or is it going to fall further? And I certainly don’t have an answer on that. to your financial advisor, financial advisor on that one. It is down, you know, almost cut in half. Speaking of things that are down dramatically, you know, silver, we had this massive blow off rally, it was over 100. I think it closed the spot price closed over 113 one day. And now what do we think is down in the mid 70s? Yeah, as we speak here.
Yeah. Isn’t wild. Two of its worst days in the history of silver have come in the last two weeks. Yeah, that’s pretty crazy. Three weeks. That is that is nutty. I had actually had somebody I know, a contractor that I’ve worked with in the past called me a few weeks ago and asked me how I thought he should unload his word, his physical silver. And I said, well, where, where have you bought it at?
He said, well, I’ve bought it around over the years. I’ve been collecting it. And I imagine his cost is significantly lower than it was at that time. It was well over, well, I know if it was well over a hundred, but it was around a hundred or a little bit higher. Um, and he was talking about, you know, slowly kind of moving it out and, know, selling it for over a hundred. And then it dropped, you know, 40, 40 % in a matter of like three or four days. Yeah. Kind of, kind of crazy that it can move that fast for a commodity like that.
I would speculate that some of that has to do with the ability to buy and sell it instantaneously through exchange traded funds, just like, just like Bitcoin, right? I we didn’t have Bitcoin ETFs three years ago or five years ago. massive amounts of leverage definitely involved in those moves. You know, people long and short, you know, exacerbate, you know, those movements in both directions. Yeah. So going back to the, going back to the kidnapping for a minute,
Noah Brooks (35:23.054)
You know, yesterday throughout all the news, we saw this video of a masked man that was up on, uh, the mom’s porch, trying to cover up the nest cam. apparently they didn’t pay for a subscription and that slowed them down in terms of getting the data. But what I read afterwards is that apparently there’s a function in there where the nest cam can, uh, all of the nest cams can talk to one another.
And they can look for. So the way it was pushed position to me was if you have a missing dog in a neighborhood, that dog will be ID on one of them. And then it’ll send the information to all these other nest cams and they’ll be able to pick it up. And if you’re using like, what’s that neighborhood app, is it neighborhood? There’s one of, there’s one of those, one of those neighborhood apps and it can say, it was just spotted over here. Well, I think to myself, replace the word dog with person.
and then think about privacy. And essentially you have this massive grid of Nest cams that can track you anywhere you go. It’s like hive mind from stranger things. I just started watching hive mind or some Orwellian thing. Some Orwellian thing. Yeah, absolutely. You remember that scene in 12 monkeys where they have all of the monitors all lined up and they’re all in this, the globe. Yeah, but it is Orwellian.
Yeah, right. I mean, if everybody didn’t give permission, well, I guess in that situation, maybe you would have given permission. But technically, in this situation, it sounds like they didn’t need it. They just automatically connect. Well, do the do the law enforcement agencies or the government agencies or even local agencies, do they have permission to tap into the Nest cams? Or can they tap in without permission? If there’s an emergency, let’s cut to the chase. Yes.
You think so? Yes. That’s tough. You know how Apple pretends like the government they don’t share with the government no matter what. If it’s a murder case or anything they don’t share with the government. Yeah, okay. As a proud, you know, Apple user. Yeah, okay. buy that for a second. That’s tough, though. I mean, there’s going to be a line between you know, greater good and privacy. Why are you using my Nest Cam?
Noah Brooks (37:46.956)
looking for I don’t know. do you think all of these echo devices and Nest cams were so cheap? Get us into our pocket. Yeah. But listen, they’re already listening to us. Yeah, phones. Yeah, every single phone that we have is waiting to there’s more.
Noah Brooks (38:05.785)
boy. Alright, what else do we have today?
I just want to throw out a stat I thought was pretty wild. We were talking about Walmart and I was throwing out those numbers. So 25 years ago, so we’re talking 2001, Walmart’s revenue was 47 times Amazon’s revenue. 47 times. 10 years ago, Amazon closed the gap. know, you know, they’re behemoth now. As of 10 years ago,
Walmart’s was three times Amazon’s revenue. Finally, now, Amazon has surpassed Walmart in revenue. And they have AWS, a high profit margin business. You know, they’re growing clearly much more of a growth company than Walmart. So their price to earnings is probably way higher, right? Wrong. Wrong. So we have Walmart forward PE one year, just under 40.
We have Apple just under 30, Alphabet 24, Amazon 22.6, Microsoft 21, Nvidia 18, Meta 18. Why is Walmart so expensive? It’s wild. Either they’re running the best business ever and everyone’s 100 % sure, which may be a decent bet. I mean, their revenues are pretty strong.
they don’t deviate that much. mean, what’s not about what have you done for me today? It’s about what you’re going to do for me. So there’s obviously an expectation that their margins are going to raise their revenues are going to rise. Right? Yep. I’m just so surprised by the extent that they are being all but Tesla in the mags. So what can we extrapolate from that data? Anything? All the other companies are screaming by and they’re not or should everybody be looking at Walmart? We’re not as overpriced as maybe you would think on some of those mag seven. They’ve come back, you know,
Noah Brooks (40:00.854)
Not all of them. I mean, we’re talking about Nvidia like 191 or so today. Not every one of them has been hit dramatically, but yeah, they’re not as expensive as as they’re made out to be, I think. Absolutely. But the rotation is still in full force. The rotation is still in full force. And I think that’s where we’re where we’ll leave it for the moment. Small caps rallying international rallying growth, not so much value doing really well.
So we’ll keep our eye on it, see what happens over the next few weeks and we’ll check back with you in two weeks. Hope everybody is experiencing that same thaw as we are. After a long, long, too long of a winter, we are ready for some springtime. So we’ll see you in a few weeks. Thanks everybody for listening. Appreciate it. For everybody, a good life. Have a wonderful Valentine’s Day. Thanks so much.
Have questions about how this impacts your investment strategy? Reach out to your advisor or email us at marketenthusiast@goodlifefa.com.
The opinions voiced in this podcast are for general information only and are not intended to provide specific advice or recommendations for any individual. To determine which strategies or investments may be suitable for you consult the appropriate qualified professional prior to making a decision. Economic forecast set forth may not develop as predicted and there can be no guarantee that strategies promoted will be successful. All performance referenced is historical and is no guarantee of future results. All indices are unmanaged and may not be invested into directly.
In Episode 55 of The Market Enthusiast, Noah Brooks and Chris Needs break down the forces currently shaping markets as February 2026 unfolds, focusing on changing market leadership, evolving labor dynamics, and the growing impact of artificial intelligence and automation on both the economy and investment trends.
With markets off to a positive start this year, leadership has begun to shift away from the mega-cap technology names that dominated recent performance. Instead, small caps, mid caps, value stocks, international markets, and energy have emerged as early leaders, highlighting what Noah and Chris describe as an “everything rotation.” The discussion explores whether this broader participation reflects a healthier market environment or simply another transition phase as investors reassess valuations and future growth expectations.
This episode connects market performance with broader economic developments, including changes in employment trends, rising corporate investment in AI, and the long-term implications of productivity gains driven by automation.
Table of Contents
Markets Are Rising, but Leadership Is Changing
While major indexes remain near highs, returns in early 2026 have come from different areas than investors have grown accustomed to in recent years. Technology and growth stocks have taken a pause, while sectors such as energy and consumer staples, along with small and mid-sized companies, have seen stronger performance.
Rather than signaling weakness, this shift reflects a broadening of market participation as capital rotates toward areas that may have been underappreciated during the previous cycle. Rotation periods often occur as markets adjust to new economic conditions, and they can help create a more balanced foundation for future growth if earnings trends follow.
Economic Data, Jobs, and the Changing Labor Picture
Noah and Chris also discuss the latest jobs report, including stronger-than-expected headline numbers alongside significant downward revisions to prior employment data. The conversation highlights how slowing job growth and declining job openings may signal a cooling labor market even as unemployment remains relatively low.
This leads to a broader discussion around automation and artificial intelligence, and how productivity gains could reshape employment over time. Rather than focusing solely on job losses, the episode explores how technology may change the types of jobs available and the skills employers prioritize in the years ahead.
The discussion raises an important long-term question: if productivity rises faster than job creation, how does that impact consumer spending and economic growth?
AI Investment, Software Volatility, and Market Expectations
The episode also examines the ongoing AI investment cycle and the recent selloff in software stocks, sometimes described as a “SaaS correction.” Noah and Chris discuss whether fears of AI replacing traditional software models are overstated, noting that many legacy platforms may ultimately integrate AI rather than be displaced by it.
Large capital spending plans from major technology companies continue to support the long-term AI narrative, but the conversation emphasizes that markets often overreact in both directions as investors attempt to price in new technologies before their full impact is understood.
Global Trade, Commodities, and Market Sentiment
Additional topics include volatility in Bitcoin and commodities, ongoing trade tensions, and the potential impact of global competition in industries such as automotive manufacturing. These developments highlight how policy decisions, currency movements, and global supply dynamics can influence inflation expectations and investor sentiment.
The episode also touches on how speculative assets and technology sectors can sometimes move together during risk-on and risk-off market environments, reinforcing the importance of understanding correlations rather than relying on simple narratives.
Practical Lessons as 2026 Continues
As markets navigate shifting leadership, rapid innovation, and evolving economic signals, the episode reinforces several core principles:
• Market leadership changes over time
• Productivity gains can reshape economic trends
• Innovation creates opportunity but also volatility
• Economic data often tells a mixed story
• Long-term discipline matters more than short-term noise
Strong markets are rarely driven by a single sector or theme. Sustainable growth typically comes from broader participation, balanced expectations, and investors maintaining a long-term perspective despite changing headlines.
Key Topics Covered in This Episode
• Market rotation toward small caps, value, and international markets
• Energy sector leadership and changing market dynamics
• Jobs data revisions and labor market trends
• AI investment and software sector volatility
• Bitcoin and commodity price movements
• Trade tensions and global economic influences
• Automation, productivity, and future employment trends
Investor Takeaways
Market Leadership Evolves: Leadership rotations can signal healthier market participation.
AI Is Changing the Landscape: Productivity gains may reshape industries and employment.
Volatility Is Normal: Emerging technologies often create periods of market adjustment.
Economic Signals Are Mixed: Strong markets can coexist with slowing job growth.
Discipline Still Wins: Diversification and long-term focus remain essential.
Listen to the Full Episode
Full Episode Transcript
Hey, welcome back to the market enthusiast. I’m Noah Brooks and obviously this is Chris needs.
So moving into the middle of February, we’re coming out of our deep freeze here in, in, you know, Pennsylvania, we had a week, no two weeks where we didn’t get above freezing today is 40 degrees and it feels like a freaking heat wave around here.
We had our trip down to Florida to our Orlando headquarters and I wish I could say it was sunny and warm Florida, but we didn’t get that lucky. Did we got there on, Sunday and it was 26 degrees in Orlando. Yeah. On Thursday I went to Disney world with the family and I didn’t pack for it. I needed heavier. weren’t in shorts and a T-shirt at Disney. Well, I was originally wearing shorts and I luckily brought some pants, but I needed a coat.
Not just a sweatshirt. You know what I haven’t heard about? And I don’t know if this is just a function of me not listening to it, but when it used to get cold in Florida and frost up and freeze, we always used to talk about like oranges, right? And you, in some cases you would see pictures of the farmers out there and they would have like literally heaters in the fields because it impacts obviously the orange crop, which obviously takes me back to trading places, right? When they’re talking about frozen orange juice concentrate.
We better check on those orange juice futures. Right. So that leads me to something that I saw this week. Apparently, did you ever, did you grow up? Did you ever have frozen concentrate orange juice as a kid? I don’t think we had it often, but we definitely had it in the fridge at certain points. Yeah. Well, after 80 years, Minute Maid is going to stop making frozen orange juice concentrate.
What was the ideal usage for the frozen constant for us? It was it was popsicles. That’s sort where I was going to guess. Yeah. And then as you got older, it moved on to, you know, maybe alcoholic beverages, something like that. All right. Yeah. But no, it was really, it was really chilly down there and it’s obviously warming up. It’s warming up here. I think everybody’s coming out of their shell a little bit. Everybody’s being a little bit more active. Now the groundhog pokes Tony Phil. He said we have six more weeks of winter. Screw that guy. Yeah.
Noah Brooks (02:20.046)
I don’t need any of that. You can’t walk on two legs. Well, I guess they can for a little bit. I don’t walk on two legs. You shouldn’t be reporting the weather. Yeah. Is that right? Yeah. Okay. You’re a Debbie downer. All right. Going into the beginning of February markets up for the year, right? S and P 500 up almost 3%. But it is not the lead performer. It is not the star of the show this year. Small caps are rallying up over 10%.
mid caps up 8 % international, depending on what you’re looking at nine to nine to 12%. Values up seven growth indexes are down about 3%. This is the everything rotation. mean, once again, this year we have international over us domestic stocks. And it’s not even all like last year, the first half of the year, we had the dollar down 10 % over the first six months.
which obviously is a boost to international. We’re not even seeing that much movement on the Dixie so far. It’s down about 1 % in, you know, less than two months here, but that’s just international true out performance and fundamentals getting a little better and then being maybe underappreciated for a long time. Like you said, smalls, mids doing much better than large caps, which is been rare to come by over the last several years. Yeah. Value overgrowth that rotations continuing.
And we have like consumer staples and energy is really leading the way so far this year in terms of sectors compared to technology in the red and financials in the red. Yeah. Best performing sector year to date. I mean, it’s only the 12th or 11th of February, but best performing year to date is energy up 13%. Materials right behind there, like 17, 18 % approximately. Did I get my numbers flipped? No, you’re right. Energy’s at 20.
Yeah, we’re good.
Noah Brooks (04:19.554)
No, it’s not.
I was thinking, didn’t you? What’d you say? No, energies up 15. That’s the best performance sector here today. I’ve read every ran the weekly today and said 19.88.
Noah Brooks (04:38.539)
I haven’t
Noah Brooks (04:46.19)
I mean, those two are definitely accurate. Well, shiver me timbers. Shiver me timbers. I’m going to go back to that. I don’t know where we left off, but I’m going to go back to it. And I’m just going to say best performing sector. Yeah. Year to date.
Noah Brooks (05:10.296)
Yeah, best performing sector year to date energy up close to 20 % and a lot of that has to do with oil being up. I think oil is up 13 or 14 % year to date. Worst performers, financials down two and a quarter tech tech down one right? Obviously software down a little bit. What else is going on? We had his jobs report that came out this morning.
right on a Wednesday. Yeah. Isn’t that interesting? was a jobs report on a Wednesday is not really a thing. Yeah. You know, it’s normally, normally a Friday. Um, but there were some positives in the jobs report. There were some negatives in the jobs report. Uh, let’s start with the bad stuff. So I mean, so we’ll just start with the report. 130 K jobs versus 75 expected unemployment, 4.3%. Well, that was the, that’s the good stuff.
versus 4.4 expected, we’ll just set the stage with that. But yeah, government jobs, just, again, just getting killed out there for the month minus 34,000 on government jobs. Yeah. If you go back to January of 2025, negative 324,000 on government jobs. So something that previously, you know, was a headwind behind healthcare, certainly, but a tailwind for high jobs numbers.
has definitely become a detractor. Yeah. I mean that I don’t think there’s anybody out there that was surprised with that with the government jobs part. Yeah. I mean the this administration has told us plain as day that they want to reduce the size of government and you know for whatever it’s worth there’s 300,000 jobs less over the last is it 12 months or 13 months or 13 months. So I don’t know that that was expected but so you said 130,000 and 75 expected
The thing that kind of caught me and this is where I said with the negative stuff is the revisions. Oh yeah. Right. So in 2024, they estimated that it was two billion, excuse me, two million jobs created in the United States. And they came back and they said, well, it’s more like 1.5 million. And then the 2025 revisions were pretty good. I think I told you last time we were sitting here, it was an average of about 50,000 jobs a month or a 600,000 jobs.
Noah Brooks (07:35.118)
for all of 2025. Well today, Bureau of Labor Statistics has come out and they said, well, actually 2025 it was only 181,000 jobs total for the year. So 15,000 per month. Yeah. That was significantly lower. Significantly lower. The other thing that happened wasn’t today, but the job opens job opening and labor turnover survey, which essentially says how many jobs are out there at the moment.
that are at least posted has fallen pretty dramatically over the last six or nine months. We’re down to about 6.5 million jobs, which is essentially cut in half from the peak in 2022 at like 12.3 million job openings. That takes us back essentially to February of 2018. That was the last time this little jobs.
or this few jobs were being offered out there. So you take that into account, you take the jobs report into account and certainly those revisions out there and the narrative shifts a little bit on unemployment. Now you’re going to remember my 2026 word of the year, even though we haven’t had the word of the year for 2026, right? You remember what it is? UBI, universal basis income. And I said that that was going to be the word of the year simply because
we’re going to wind up talking about automation and robots for a long time when it comes to jobs. with Joltz, you’re saying the human labor market doesn’t look so strong going forward. Well, I’m not a so I’m not really worried about what it looks like for I mean, from a financial perspective and investment perspective. Yeah, but I’m care more about people working than robots working. And
you know, you, you really just ask yourself like, yes, there, we want to automate crappy jobs. We want robots to do, you know, things that are repetitive. So you don’t hurt your back and all that stuff. And, know, make assembly lines faster and profit margins better, but we still want people employed. know, certainly investors want people employed. And so you have this dichotomy of these two areas, productivity, which is ramping up pretty dramatically, based on, know,
Noah Brooks (09:59.758)
software and automation and robotization of factory lines and factory floors and warehousing, which is great. But the warehousing especially has been a source of jobs over the last decade for people that maybe don’t have traditional skill sets for offices. Yeah.
you go out any major highway and look at all of the commercial real estate built for distribution centers and things like that, obviously, going back to the COVID trend when we all had to start ordering from home and there’s that boom. And maybe we’re coming back to maybe a bust of that amount. I don’t know. But yeah, I know Amazon, for example, they want to automate all of their distribution centers, they want as few humans
on the distribution center floor as possible in five, 10 years. And like you said, they are, I think they’re still lower. Did they recently pass Walmart? Walmart was always the biggest US employer. And I maybe temporarily they might have caught up. I’m not sure. But yeah, that’s a big hit to the US labor market if they decide, you know, 30 % of our jobs, we’re just going to automate into robots in the next five to 10 years. What’s their total total number of employees?
I don’t know if top my head, but it’s like 2 million, right? It’s a lot. Yeah. you know, then you question, well, you still have the drivers, right? For now. So if you have, if you pair a self-driving van with an optimist robot, it can get out and drop off your package on your front door. How many more people are gone? Yeah. I don’t, I don’t know. I mean, this leads into, since we’re talking about Amazon, they did report last week, mixed earnings.
stock got walloped. I’m not even sure it was really on the earnings. We’ve talked about Oracle and the reaction they’ve had being a part of software, you know, also doesn’t help them. But with their capex being so huge and going free cash flow negative, what sort of bruised that was on their company’s prospects for the investor sentiment side of things. But Amazon brought out a bazooka.
Noah Brooks (12:17.294)
$200 billion in CapEx they’re forecasting for 2026 when market analysts whisper number was like 144. What a huge CapEx and then you have Google at 180 billion. I don’t know is the AI story strong because you see software getting hit so badly. there’s no question about it. We call it a sasspocalypse. I think that’s what the Wall Street Journal has reported it on. Right? Yeah.
it’s it’s been a meltdown, obviously. You have the software subsector, you know, down over 30%. You know, it’s been it’s been a rough drawdown for them. And it’s been this sort of mix or last couple months of people saying, ooh, AI is a bubble, we can’t invest in that in the AI stocks are getting hit. So maybe software won’t get wiped out. But no software has been wiped out. And that story has continued. I feel like
both ends you can’t have. either one’s going to win. AI is going to be as effective and powerful as analysts seem to think it will be or software will be just fine. And I think the truth is in the middle. the truth definitely lies within, within that range, if you will. So, you know, this week we had some new AI technology that came out from a company called Altruist, which is financial services, a brokerage company that
dropped a lot of stocks in the financial industry. Yeah. What was the name of their software? The hazel hazel. Yeah. So an automated, automated investment planning for financial advisors. And, you know, so some of that has to do with, you know, the adaptation of it, but it’s all of these companies, all of the wealth management companies really got hit that
last week. Now they’ve done very, well over the last few years. There’s no question about it. but they, they got hit. And I think you might see more of that anytime there’s positive news on whether it’s a large language model like, chat, GPT obviously, or any of those, or a new use. So two weeks ago or week and a half ago, we saw, anthropics.
Noah Brooks (14:33.684)
model Claude co work which that hit a bunch of software companies again. Yeah, even hit legal company. Yeah, that’s legal. Legal. was the other one legal and wasn’t financials? mean, there was legal was the big one. Yeah. But I mean, there’s a lot of thing happened happening in there. And this is why I think to myself,
You know, we’re, have 158 million people employed in the United States of America, 158 and a half, 158 and a half million people employed in the United States right at the moment. And historically speaking, we need about 70,000 new jobs a month to keep that number flat. And like the replacement rate. But what if the number for replacement rate is going down?
and the number of jobs being created is also going down. Those two things together will keep the total job, the total number of people employed relatively stable.
And I’m not sure how that’s going to work out in the end. Again, 2026 word of the year for me, universal basic income, but like you really don’t know. And so when I said there’s this dichotomy between markets and jobs, the companies may continue to get more profitable and part profit margins going up and stock prices going up, but they may continue to employ less people.
At some point, though, you can’t have everybody unemployed, they have to find new jobs. And so they need consumers on the other side of things. definitely need dwindling. So if this is a slow change, over a long period of time, it is going to work out perfectly and everybody will find new jobs. And we won’t be talking about universal, universal basic income. But if the productivity gains that happen from artificial intelligence,
Noah Brooks (16:39.618)
happen in a matter of two or three years, there’s going to be a lot of people that are going to be unemployed and looking for work. And I’m not sure that, you know, we all know the consumer is very strong in the United States and certainly has been driving the economy for a long time. I’m just not sure how long that that can continue if there’s a lot of people out of work and there’s not a lot of run out of rope eventually for the economy. Right.
So what does it what does it look like in three years versus 10 years? know, if it’s slow and steady, I think we’ll be a okay. If it happens overnight, I don’t know. Like you said, UVI, eventually, companies will have even higher profit margins than the all time highs we’re at right now. And the government will probably tax them more to give us all helicopter money to keep the consumer spending. But I want to take a step back here real quick back to the SAS apocalypse.
because I don’t fully buy into it. So anthropic, didn’t say it’s as software as a service, essentially subscription software. Yeah. So think about so what the proposal is, is why would a company employ Oracle Salesforce ServiceNow, Monday.com, you know, all these different companies to provide this software as a service.
and this coding and workflow stuff when they could just have Anthropic do it. Here’s why I don’t fully buy into it. It’s great that they can do that and can help those companies. I think it will overlay and make them more valuable in the longterm and they’ll have to employ less people and they’ll be even more asset light than they already are as software companies. But we are in the financial services industry. We just can’t.
write a code and create a platform and try it has to be an approved vendor that is enough security, you know, procedures in place to protect client information, things like that. Think about hospitals and medical companies. Like you can’t just say, Hey, Claude, write me this code and build me a CRM. It has to be like totally locked down, safe and protected. And that’s why I think this is all overdone.
Noah Brooks (18:58.486)
Yeah. I’m not saying calling a bottom right here because the market can obviously remain irrational longer than we remain solvent. But in the end, I don’t think cutting their value in half or more is accurate from analyzing their profitability and their revenues because they will have contracts that will still like Salesforce with us that we’re not going to give up just because Anthropic can write code and build a platform.
We can’t just jump to think the other way to look at this is these software companies, I’ll take CRM Salesforce as an example, they’re going to use the large language models and they’re going to overlay their software on top of whichever large language model that you want. And they have the data already for most of their contracts. And they’re set up, they’re secure. so you might have, Salesforce has, I think it’s AgentForce,
that their AI is and you might have their agent force that’s utilizing, you know, take your pick. You might have a dropdown. Well, I want to use chat GPT or I want to use Anthropic or I want to use Claude and that large language model can be used within the Salesforce platform. And, we don’t have any positions in Salesforce. I don’t own any Salesforce, but it’s certainly an example of what will happen in, in the software field, because if it doesn’t happen,
And all of a sudden they will go the way of the dodo if they don’t re-invigorate, know, reinvent themselves. And these are some of the smartest people out there. You know, think of Larry Ellison, like you said, Benny off, like all these guys know what they’re doing. They’re not just sitting idly by and watching Anthropic, a private company take their whole business. in addition to that, I think, you know, from a jobs perspective, I don’t, I can’t speak to, let’s say menial task job.
You know, I, I don’t know what the fast food restaurant of 10 years is going to look like. I imagine there’s less people in it than there are now, from artificial intelligence at the drive-through window, you know, voice recognition and things of that nature to robots within the cooking area. But it’s not necessarily that AI is going to take the jobs. It’s going to take the jobs of the people that don’t understand AI and don’t implement it. Right. There’s going to be.
Noah Brooks (21:23.34)
the old job market and the new job market. And it’s really about the set of skills, I think that employees are going to be, employers are going to be looking for, you know, do you know how to get the most out of the artificial intelligence? AI enabled in legacy, the sort of dichotomy we’re going to see. agree with that. Yeah, I think that’s definitely, definitely going to happen.
Yeah, so we have that jobs report that came out. So there’s more trade tensions between the United States and Canada. You mentioned Carney earlier today. One thing that’s happening in Canada is they’re talking about the possibility of importing Chinese cars. Now we do not allow Chinese cars on the road here in the United States. Doesn’t mean that we won’t at some point in the future.
But they are looking at it and car dealers are worried. theory, can you just then go to Canada or to Mexico buy him drive him across and I think you could probably you not register. I think you could self register them, but I don’t think they’re going to be allowed to be sold here. And you know, that’s something on the horizon because the cost of those cars is dramatically lower than the cost of our cars. So you know, we talked about where they’re leading.
Last week we talked about solar panels and Automated driver driverless cars And we mentioned Waymo and all that but their their cars are significantly less expensive than our cars especially their EVs because of course they have all the good stuff over there, right and so You know that is something on the horizon You have a situation where you have these legacy automakers the the Ford the General Motors
of the world, not the Teslas of the world. And they’re already down in the dumps. They already have legacy debt. Although, you know, some of the companies went bankrupt after the global financial crisis. Ford did not, General Motors did. Chrysler, I think they reorg. But if you get, and I’ll just pause there for a second. What I haven’t heard from this administration right now is that they’re not going to start importing Chinese cars.
Noah Brooks (23:45.696)
I think they might be using that as some type of leverage in the future. Now, I got to tell you, I don’t think American car manufacturers are going to like it. But if you’re talking about affordability, and you’re talking about bringing inflation down, or even the possibility of, of, manufacturing jobs, though, it would not, which are already not doing that. Well, we did have a positive number in this jobs report. I think it was 5,000.
Yeah, but it’s not strong. we they haven’t come back. I know it’s a long on ramp to bring manufacturing back after decades of Pawnee it off overseas. And I’m sure the president wants it to happen immediately. But that’s not how the world works, even if you put in punitive tariffs. But yeah, that definitely would hurt a powerful lobby in terms of carmakers, as well as the labor unions. No question about it.
It reminds me of the fight for, let’s say Korean cars when they started entering the markets in the eighties and nineties and certainly Japanese cars in the late sixties and seventies. Growing up, the first one of the first new cars that was in my household was a bright yellow Toyota Tercel 1980 that got, I don’t know, 25 miles through the gallon in 1980. Wow. Yeah. And, know,
that was this tiny little car and everybody else was driving these gigantic beasts 25 foot wide or 25 feet long. But it’s a very similar situation. South Koreans came and they imported cars and now Hyundai, one of their largest plants is here in the United States in South Carolina, if I’m not mistaken. they get caught in Georgia at one plant and like we just sent immigration, immigration raid. Yeah. We sent like 2000 people back.
We’re waiting for visas, but they didn’t like that too much. I bet. I just saw that there was a Irish guy who was locked up for like four months. A guy from Ireland who I think we like those guys, right? I think we like the Irish. You know, there’s probably like 30 million Irish people here in the United States. I don’t know that they are. I’m not sure. We have a lot of software in Ireland. Yeah. How are we?
Noah Brooks (26:09.014)
Yeah. Although they got ripped off by that whole thing between the EU and Ireland. Remember that Ireland promised them no taxes. huh. And he was like, we didn’t negotiate this pay us taxes. geez. That was several years ago. Yeah. I don’t know if the Irish have anybody in the Olympics. Right? Do you are you watching any Olympics? I haven’t been watching much. No, I mean, no, but I did wear my red, white and blue here though. is American rider cup. Yeah.
got the red shirt under here. I don’t like to wear red in our industry. Just bad vibes. don’t wear green a lot. You know, I should change that. We’ve been watching when we get home a little bit here or there. Some of the stuff is really cool. The speed skating is amazing. Some of the big air, you know, this Lindsey Vonn Lindsey complex tibia fracture. So she went out there a week after she tore her ACL and tried to do it.
And I don’t, I just don’t get her. I, like, I understand the athleticism and the drive to want to be the best, but like you literally just tore your ACL and, and eight days afterwards, I think was gonna, right. Yeah. And that’s dangerous. Like I said, obviously she had a complex tibia fracture after the ACL tear. Like you’re moving on downhill. Yeah. I’ve never done it, but I mean, I’ve never skied.
or done anything and don’t start now. You don’t think I will knees. So we’ve been watching a lot of the Olympics. Also this kidnapping, right? You can’t look away from it. Savannah Guthrie’s mom has been kidnapped. It is. It’s kind of nutty. It reminds me of a little bit like I wasn’t around for the Limburg kidnapping, but it’s like, wow, everybody’s focused on this. And yes, it’s not a little kid. Yeah, it’s her mom, of course. But so what they what were they asking for?
that and lots of Bitcoin $6 million worth depending on the day how that may change the number of bitcoins you need by a lot, right? Yeah, it’s been a fun ride for Bitcoin lately. people ask me all the time, you know, what what’s the deal with Bitcoin and we that’s a that’s a whole nother conversation. But my first thing that I always say to to most people is was really good for money laundering.
Noah Brooks (28:28.406)
Right? Yes, it’s investible. Great evidence. But it’s it’s really good for money laundering. And I think this proves it. So kidnapper says I want my ransom in gold bars. No cash. No. He says I want him Bitcoin. It’s untraceable. 6 million of gold bars would be really heavy. You’d need like a military plane to move that. don’t know about that. I don’t think it’s that heavy.
Did you see the video of the guy that got the gold bar out of the thing at one of the casinos? It’s his box where it’s only a circle and you can, there’s a gold bar in there and if you can get it out, it’s yours. And he got it. Yeah, he got it. It’s pretty funny. feel like that’s the thing where they come back and say, well, actually you don’t get to keep it. You know, you weren’t supposed to win. Yeah. Well, hopefully that it was malfunctioning. Hopefully that doesn’t happen to them. But you know, Bitcoin obviously has come down dramatically for people that
are uninitiated, it was as high as I think 128,000. Now it’s down to like 67 or so. Yeah, I mean, so let’s think about this real quick here. So we’re just talking about software getting really beat up. And people always say, you know, you have Bitcoin is digital gold, and then you have the other half saying, no, it’s just like, three times levered NASDAQ or
growth, what have you, you know, has not been a great head. No, it has not been it’s, you know, risk on essentially, we’ll call it. But take a look at we’re talking about software getting beat up like the IGV is I think the I shares software ETF overlay that chart with Bitcoin. What is Bitcoin? What is software software is just a bunch of code built into a platform that you can use enter information on, you know,
do workflows, you know, save that info for later. What’s Bitcoin? A bunch of code where you can save transactions on this ledger. And there’s this proof of all these transactions that stays there forever. And your value is on there. So it’s just a bunch of code just like software. So overlay software and Bitcoin. Look at those charts. What they what they tell you I know correlation down
Noah Brooks (30:44.618)
It may be five times levered, you know, or five times beta versus software sector, but some, some in common shapes in those charts. Yeah. Let’s see if we can’t get some of those charts up here. I don’t, I don’t have one handy. I didn’t look at it today, but let’s, let’s see if we can get one of those up here. so you think, or do you think that Bitcoin is highly correlated to the software index?
I do think it’s very risk on as we found it’s not a good hedge lately, you see what gold and silver have been doing. Definitely risk on speculative asset of some type that at times is very correlated with growth or software. And at other times is relatively uncorrelated. I’m going to ask the million dollar question here, Chris, is correlation causation? Not necessarily, right?
I would be interested to delve into that a little bit more because it does seem like the trend of software is, you know, very correlated to the trend of Bitcoin or vice versa. But I’m not sure why, right? What the cause of that is. We don’t hold any Bitcoin in any of our models or, you know, what we manage, but you know, if you loved it at 128.
looking awful juicy at 67 odd bet. You know, every time Bitcoin has had these massive drawdowns over the last, you know, since really since 2013, since 2012. Every single time, it has come back dramatically higher than where the post pre drawdown was. Yeah. And yeah, this does look like normal activity in terms of price movement on Bitcoin. Historically.
But we, I feel like the consensus view was it wouldn’t be this dramatic anymore. You have regulation largely out of the way with the Trump admin being fairly friendly to Bitcoin and to cryptos of all sorts. I don’t know what Melania coin is trading at right now, but is there a Melania coin there? What is was, I don’t know. Okay. But not only do you have regulation out of the way, think about
Noah Brooks (33:01.07)
the institutional adoption that they said this is the next big wave, this is going to carry it to new heights when it gets in brokerage accounts and stuff, it’s going to go to the moon. Well, we have that now. It’s not going to the moon. It like it was going to the moon when it was over 120,000. But yeah, air is out of the balloon right now. So I guess the question that everybody wants to know is like,
now the time to buy it or is it going to fall further? And I certainly don’t have an answer on that. to your financial advisor, financial advisor on that one. It is down, you know, almost cut in half. Speaking of things that are down dramatically, you know, silver, we had this massive blow off rally, it was over 100. I think it closed the spot price closed over 113 one day. And now what do we think is down in the mid 70s? Yeah, as we speak here.
Yeah. Isn’t wild. Two of its worst days in the history of silver have come in the last two weeks. Yeah, that’s pretty crazy. Three weeks. That is that is nutty. I had actually had somebody I know, a contractor that I’ve worked with in the past called me a few weeks ago and asked me how I thought he should unload his word, his physical silver. And I said, well, where, where have you bought it at?
He said, well, I’ve bought it around over the years. I’ve been collecting it. And I imagine his cost is significantly lower than it was at that time. It was well over, well, I know if it was well over a hundred, but it was around a hundred or a little bit higher. Um, and he was talking about, you know, slowly kind of moving it out and, know, selling it for over a hundred. And then it dropped, you know, 40, 40 % in a matter of like three or four days. Yeah. Kind of, kind of crazy that it can move that fast for a commodity like that.
I would speculate that some of that has to do with the ability to buy and sell it instantaneously through exchange traded funds, just like, just like Bitcoin, right? I we didn’t have Bitcoin ETFs three years ago or five years ago. massive amounts of leverage definitely involved in those moves. You know, people long and short, you know, exacerbate, you know, those movements in both directions. Yeah. So going back to the, going back to the kidnapping for a minute,
Noah Brooks (35:23.054)
You know, yesterday throughout all the news, we saw this video of a masked man that was up on, uh, the mom’s porch, trying to cover up the nest cam. apparently they didn’t pay for a subscription and that slowed them down in terms of getting the data. But what I read afterwards is that apparently there’s a function in there where the nest cam can, uh, all of the nest cams can talk to one another.
And they can look for. So the way it was pushed position to me was if you have a missing dog in a neighborhood, that dog will be ID on one of them. And then it’ll send the information to all these other nest cams and they’ll be able to pick it up. And if you’re using like, what’s that neighborhood app, is it neighborhood? There’s one of, there’s one of those, one of those neighborhood apps and it can say, it was just spotted over here. Well, I think to myself, replace the word dog with person.
and then think about privacy. And essentially you have this massive grid of Nest cams that can track you anywhere you go. It’s like hive mind from stranger things. I just started watching hive mind or some Orwellian thing. Some Orwellian thing. Yeah, absolutely. You remember that scene in 12 monkeys where they have all of the monitors all lined up and they’re all in this, the globe. Yeah, but it is Orwellian.
Yeah, right. I mean, if everybody didn’t give permission, well, I guess in that situation, maybe you would have given permission. But technically, in this situation, it sounds like they didn’t need it. They just automatically connect. Well, do the do the law enforcement agencies or the government agencies or even local agencies, do they have permission to tap into the Nest cams? Or can they tap in without permission? If there’s an emergency, let’s cut to the chase. Yes.
You think so? Yes. That’s tough. You know how Apple pretends like the government they don’t share with the government no matter what. If it’s a murder case or anything they don’t share with the government. Yeah, okay. As a proud, you know, Apple user. Yeah, okay. buy that for a second. That’s tough, though. I mean, there’s going to be a line between you know, greater good and privacy. Why are you using my Nest Cam?
Noah Brooks (37:46.956)
looking for I don’t know. do you think all of these echo devices and Nest cams were so cheap? Get us into our pocket. Yeah. But listen, they’re already listening to us. Yeah, phones. Yeah, every single phone that we have is waiting to there’s more.
Noah Brooks (38:05.785)
boy. Alright, what else do we have today?
I just want to throw out a stat I thought was pretty wild. We were talking about Walmart and I was throwing out those numbers. So 25 years ago, so we’re talking 2001, Walmart’s revenue was 47 times Amazon’s revenue. 47 times. 10 years ago, Amazon closed the gap. know, you know, they’re behemoth now. As of 10 years ago,
Walmart’s was three times Amazon’s revenue. Finally, now, Amazon has surpassed Walmart in revenue. And they have AWS, a high profit margin business. You know, they’re growing clearly much more of a growth company than Walmart. So their price to earnings is probably way higher, right? Wrong. Wrong. So we have Walmart forward PE one year, just under 40.
We have Apple just under 30, Alphabet 24, Amazon 22.6, Microsoft 21, Nvidia 18, Meta 18. Why is Walmart so expensive? It’s wild. Either they’re running the best business ever and everyone’s 100 % sure, which may be a decent bet. I mean, their revenues are pretty strong.
they don’t deviate that much. mean, what’s not about what have you done for me today? It’s about what you’re going to do for me. So there’s obviously an expectation that their margins are going to raise their revenues are going to rise. Right? Yep. I’m just so surprised by the extent that they are being all but Tesla in the mags. So what can we extrapolate from that data? Anything? All the other companies are screaming by and they’re not or should everybody be looking at Walmart? We’re not as overpriced as maybe you would think on some of those mag seven. They’ve come back, you know,
Noah Brooks (40:00.854)
Not all of them. I mean, we’re talking about Nvidia like 191 or so today. Not every one of them has been hit dramatically, but yeah, they’re not as expensive as as they’re made out to be, I think. Absolutely. But the rotation is still in full force. The rotation is still in full force. And I think that’s where we’re where we’ll leave it for the moment. Small caps rallying international rallying growth, not so much value doing really well.
So we’ll keep our eye on it, see what happens over the next few weeks and we’ll check back with you in two weeks. Hope everybody is experiencing that same thaw as we are. After a long, long, too long of a winter, we are ready for some springtime. So we’ll see you in a few weeks. Thanks everybody for listening. Appreciate it. For everybody, a good life. Have a wonderful Valentine’s Day. Thanks so much.
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The opinions voiced in this podcast are for general information only and are not intended to provide specific advice or recommendations for any individual. To determine which strategies or investments may be suitable for you consult the appropriate qualified professional prior to making a decision. Economic forecast set forth may not develop as predicted and there can be no guarantee that strategies promoted will be successful. All performance referenced is historical and is no guarantee of future results. All indices are unmanaged and may not be invested into directly.
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