Economic Overview - The U.S. economy added 130,000 jobs in January, with the unemployment rate decreasing to 4.3% and average hourly earnings rising by 0.4% month-over-month and 3.7% year-over-year [1][2] - However, a significant revision revealed that the U.S. had nearly 900,000 fewer payroll jobs in the previous year than initially reported, leading to a downward revision of total job growth in 2025 from +584,000 to +181,000 [3] Labor Market Dynamics - Despite the positive job growth, employers announced 108,435 job cuts in January, marking a 118% increase from the previous year and the highest January total since 2009 [4] - Hiring plans were also at a low, with only 5,306 plans announced, down 13% from the same month last year and 49% from December 2025 [4][5] Consumer Sentiment and Spending - Retail sales were flat in December, with a decline in the control group that directly impacts GDP, indicating a mixed consumer picture [6] - Consumer sentiment, as measured by the University of Michigan, fell to 57.3, significantly lower than the previous year's 64.7, highlighting a K-shaped recovery where asset owners benefit while lower-income households struggle [7][8] Structural Changes in the Economy - The labor market is experiencing structural changes, with companies increasingly relying on automation and AI to enhance productivity without necessarily increasing headcount [9][10] - This shift suggests that while job growth appears stable, the nature of work is evolving, potentially leading to fewer human jobs in the future as productivity gains come from technology rather than labor [11][12] Investment Implications - Companies are investing heavily in AI infrastructure, which is reshaping work dynamics and may lead to improved margins and earnings despite subdued hiring [14][17] - The transition towards an AI-driven economy raises concerns about long-term wage growth and consumer demand, as fewer stable incomes could constrain consumption [15][19]

Vi e w p o i n t | 06 Feb 2026 02:36:20 ET │ 29 pages Global Macro Strategy - Views and Trade Ideas Warsh as a Productivity Dove, Japan, gold, G10 CBs and more… CITI'S TAKE Is it only February? Macro markets have been off to a blistering start and once again we have a lot of topics to cover. We focus on the risk of Warsh as a "productivity dove" and leg into receiving SOFR Z7 (this also supports our USD short lean, mostly driven by equity broadening risks). We discuss our equity market warning signals, and ...

Well, he is everyone's least favorite candidate. I mean, I mean, to me, look, the main criticism I have of Kevin Warsh is lack of judgment. Okay.Because. The performance. His performance during the financial crisis was not a pretty a particularly good one.And I think you could say arguably that it is disqualifying. I mean, to be that concerned about inflation at a time when the unemployment rate was rising very rapidly, you know, it kind of strains credulity. So.And in the years since. Everyone makes bad ca ...

Core Viewpoint - The company is experiencing record earnings per share and a favorable deal environment, with significant activity in IPOs and investments in AI infrastructure, leading to strong momentum and inflows [1][3][4]. Group 1: Financial Performance - The company achieved record earnings per share for both the quarter and the year, indicating strong financial health [1]. - Private equity companies within the firm reported a 9% revenue growth in the quarter, reflecting positive performance in the investment landscape [5]. Group 2: Market Environment - The current deal environment is favorable, reminiscent of the post-GFC period in 2013-2014, with expectations for continued activity as long as market conditions remain stable [2][4]. - The company noted $71 billion in inflows for the quarter and $239 billion for the year, highlighting strong investor interest [3]. Group 3: AI and Infrastructure Investments - The company has positioned itself as a leading investor in AI infrastructure and data centers, which has contributed to its positive results [3][6]. - Long-term contracts with creditworthy counterparties in infrastructure projects provide downside protection, enhancing investment security [9][10]. Group 4: Disruption and Risk Management - The company is aware of potential disruptions from AI and is actively assessing the risk associated with various industries, particularly those vulnerable to technological changes [10][12]. - There is a focus on evaluating the impact of AI on different business models, with a particular emphasis on vertical versus horizontal software solutions [13][14]. Group 5: Regulatory and Economic Factors - The regulatory environment for M&A has improved, facilitating energy projects and overall business operations [22]. - The underlying strength of the US economy, along with decreasing costs of capital and inflation, are seen as key elements for successful investing [27].

Market Overview - U.S. stock futures rose on Wednesday following a mixed close on Tuesday, with major benchmark indices showing higher futures [1] - The CME Group's FedWatch tool indicates a 97.2% likelihood of the Federal Reserve keeping interest rates unchanged in January [2] - The 10-year Treasury bond yielded 4.24%, while the two-year bond was at 3.57% [2] Index Performance - Dow Jones increased by 0.04%, S&P 500 by 0.30%, Nasdaq 100 by 0.74%, and Russell 2000 by 0.40% in premarket trading [2] - The SPDR S&P 500 ETF Trust (NYSE:SPY) was up 0.33% at $697.77, and Invesco QQQ Trust ETF (NASDAQ:QQQ) advanced 0.77% to $635.96 [2] Stocks in Focus - Starbucks Corp. (NASDAQ:SBUX) was down 0.76% in premarket, projected to post quarterly earnings of $0.59 per share on revenue of $9.73 billion [4] - Microsoft Corp. (NASDAQ:MSFT) rose 0.087% ahead of earnings expected to be $3.97 per share on revenue of $80.27 billion [4] - Tesla Inc. (NASDAQ:TSLA) advanced 0.23%, projected to post quarterly earnings of $0.45 per share on revenue of $24.78 billion [4] - Seagate Technology Holdings PLC (NASDAQ:STX) jumped 10.02% after reporting better-than-expected revenue and earnings, along with strong guidance [4] Economic Insights - Jeffrey Roach, Chief Economist at LPL Financial, forecasts a resilient U.S. economy in 2026, with real economic growth projected at 2.5% year-over-year and nominal growth surpassing 5% [8] - Roach emphasizes that productivity growth, particularly from early AI adoption, will support economic expansion without reigniting inflation [8] - His team maintains a "tactical neutral stance on equities," favoring large-cap growth stocks and the communication services sector [9] Upcoming Economic Data - The FOMC will announce its interest-rate decision at 2:00 p.m., followed by a press conference from Fed Chair Powell at 2:30 p.m. ET [10] Commodities and Global Markets - Crude oil futures were down 0.22% to around $62.25 per barrel, while Gold Spot rose 1.75% to approximately $5,272.90 per ounce [11] - Bitcoin (CRYPTO: BTC) was trading 1.52% higher at $89,223.76 per coin [13]

Summary of Key Points from the Conference Call Industry Overview - The focus of the conference call is on the Federal Reserve's monetary policy and its implications for the broader economy, particularly in the context of upcoming leadership changes within the Fed [4][5][12]. Core Insights and Arguments - **Fed's Reaction Function**: The expectation is that the Fed's reaction function will remain largely unchanged in 2026, despite potential shifts in leadership. The new Chair is anticipated to be orthodox, which suggests continuity in policy direction [5][6][12]. - **Interest Rate Outlook**: The market anticipates two additional rate cuts in 2026, with projections indicating a federal funds rate of just over 3% by year-end. This reflects a consensus that the Fed will maintain a cautious approach amid mixed economic signals [8][12]. - **Supreme Court Influence**: The Supreme Court's decisions regarding the legality of tariffs and the President's authority over Fed Board members could significantly impact the Fed's policy direction. A ruling that expands the President's power could lead to a reshaping of the Board, potentially affecting monetary policy [4][13][14]. - **Economic Growth vs. Labor Market**: There is a tension between solid economic growth and moderate job growth. The Fed may choose to hold rates steady if inflation remains stable, despite strong growth, indicating a complex decision-making environment for the new Chair [14][15]. Additional Important Points - **Composition of the FOMC**: The Federal Open Market Committee (FOMC) will see changes in its composition over time, which could influence policy decisions. The new Chair's ability to guide the Committee amid conflicting economic data will be crucial [8][15]. - **Market Sentiment**: Current market pricing reflects a belief in a stable policy environment, with expectations that the Fed will not make abrupt changes without clear evidence of economic shifts [12][15]. - **Political Dynamics**: The political landscape, including pushback from Senate members regarding Fed appointments, may complicate the process of implementing significant changes to monetary policy [13][14]. This summary encapsulates the key themes and insights from the conference call, highlighting the interplay between economic indicators, Fed leadership, and market expectations.

Okay, let's uh let's keep doing this, Steve. It's it's pretty interesting. For more on all this data, I want to bring in uh Hyundai Yuba Yuva, uh senior US economist at BFA Securities.You're sitting there with Steve. What do you what do you what do you think of what you just heard. >> I think this is a very very impressive GDP report.As Steve correctly pointed out, 8% essentially nominal GDP growth. Consumer spending really beat expectations. This is pretty unusual.I mean we had the monthly data for July, A ...

Summary of Key Points from the Macro Outlook 2026 Conference Call Industry Overview - The report focuses on global economic growth forecasts for 2026, with specific attention to the US, China, and the Euro area, highlighting macroeconomic trends and potential investment opportunities. Core Insights and Arguments - **Global Growth Forecast**: Expected global growth of 2.8% in 2026, surpassing the consensus forecast of 2.5% [2][4] - **US Economic Performance**: The US is projected to grow at 2.6%, significantly above the consensus of 2.0%, driven by reduced tariff impacts, tax cuts, and improved financial conditions [2][5] - **China's Resilience**: China is forecasted to grow at 4.8%, slightly above the consensus of 4.5%, supported by strong exports despite sluggish domestic demand [2][16] - **Euro Area Growth**: The Euro area is expected to grow at 1.3%, aided by fiscal stimulus in Germany and robust growth in Spain, despite underlying structural weaknesses [2][27] - **Job Market Outlook**: The job market remains weak, with rising unemployment rates in the US despite solid GDP growth, indicating a disconnect between economic growth and job creation [2][35] - **Inflation Trends**: Inflation is expected to stabilize near target levels, with core inflation in the US and UK projected to decrease from around 3% to near 2% by the end of 2026 [2][38] - **Federal Reserve Policy**: Anticipated Fed rate cuts of 50 basis points to a range of 3-3.25%, with dovish risks due to disinflation and labor market concerns [2][62] - **Market Implications**: The forecasts are favorable for equities and emerging market assets, with expectations of better US growth and lower inflation not fully priced into the markets [2][79] Additional Important Insights - **AI Investment Impact**: The direct impact of AI investment on GDP growth is currently negligible, with potential future benefits not yet realized in broader economic metrics [2][8] - **China's Current Account Surplus**: Expected to rise to nearly 1% of global GDP by 2029, which may negatively impact competing economies, particularly in Europe [2][22] - **Structural Weaknesses in Euro Area**: Increased competition from China exacerbates existing issues such as demographic decline and high energy costs, leading to a downward revision of growth estimates [2][25] - **Labor Market Dynamics**: The disconnect between productivity gains and job growth raises concerns about the sustainability of economic recovery, particularly in the US [2][32] - **Investment Opportunities**: The report suggests that sectors benefiting from US demand and China's export growth may present attractive investment opportunities, despite potential volatility [2][84] This summary encapsulates the key points from the macroeconomic outlook, emphasizing growth forecasts, inflation trends, and the implications for investment strategies across different regions and sectors.

Labor Market Analysis - The unemployment rate has increased for the fourth consecutive month, reaching 4.6%, indicating a potential weakening labor market [1] - The report suggests that the labor market is decoupling from GDP growth, with solid GDP growth expected despite a weakening labor market [5][6] - The private sector is particularly affected, with significant job losses in government sectors, while health and education are the only areas showing strength [3][5] Economic Drivers - AI-related spending is identified as a major driver of economic activity, but it lacks the same multiplier effect as traditional spending [6] - Low-income consumers are facing more difficulties, raising concerns about the future as AI transitions from a demand issue to a supply issue [7] - Companies like Accenture and Walmart emphasize the labor enhancement potential of AI, although there is a risk of labor displacement [7][8] Future Economic Scenarios - There are two potential scenarios for the economy: a non-inflationary boom driven by AI productivity or stagflation if the bond market tightens [11][12] - The central scenario of solid growth above 2% is considered compelling but only has a 50% probability, with significant risks on either side [10][12] Treasury and Bond Market - The bond market is facing increased supply from both public and private sectors, with a notable deficit of 6% of GDP [20][21] - There is concern that the bond market may not be pricing in risk adequately, which could lead to a tightening of conditions [21] Fed Chair Speculation - Betting odds indicate a shift in favor of Kevin Worsh as a potential next Fed chair, reflecting market sentiment influenced by political statements [22][23] - Worsh is viewed as a more favorable candidate due to his understanding of Fed reforms and balance sheet issues compared to Kevin Hassett [24]

Economic Outlook - The economy is experiencing good final demand and GDP growth, with real GDP running around 2.5% this year, influenced by tariff-related weaknesses in the first quarter and shutdown impacts in the fourth quarter, while the second and third quarters showed strong performance [3] - The forecast for next year predicts real GDP growth of 3% to 3.5%, with labor force growth between 0.5% and 1%, and productivity expected to be at least 2% [4] Labor Market Dynamics - The labor market is described as "funky," with various factors affecting it, but strong productivity growth is beneficial for consumers as it leads to rising wages outpacing prices [2] - There are challenges in the labor market, including restricted immigration and a mismatch between the skills of recent graduates and the needs of businesses, which may hinder hiring [6][8] Productivity and Technology - Companies are increasingly looking at artificial intelligence to enhance the productivity of their current workforce, which is expected to continue improving [6][7] - The overall productivity growth is anticipated to remain strong, contributing positively to the economy [7]