Weekly Recap:

by Michael Reinking, CFA & Eric Criscuolo

Published on 2/06/26

This week was supposed to be all about the build up to the Super Bowl and the Olympics, but the biggest storylines were whether or not the Ice Hockey rink would be ready in time and the fact that Sam Darnold’s grandfather was the Marlboro Man. Don’t worry, there was plenty of buzz in financial markets to make up for it including a historic day with the Dow Jones Industrial Average hitting 50k for the first time.

Last Friday after President Trump nominated Kevin Warsh to replace Fed Chair Powell, we got a sneak peek into some of this week’s trading. There are a couple of ways I’d describe that - a continuation of the great rotation, a momentum/speculative unwind (at least until today), SAAS-Pocalypse, Commod-atility, AI Invest-digestion. No, you can’t find the definition to those words in Webster’s dictionary, and some are made up by the MAC Desk, but we’ll help with definitions throughout the rest of today’s note. And a word of caution make sure to read the full story because it’s kind of a surprise ending (which we already spoiled).

Last Friday, the response within equity markets to the Warsh nomination was muted though there were signs of some defensive posturing with consumer staples and healthcare moving higher in a down tape. The Treasury market response was also pretty tame with a modest steepening of the yield curve. However, this did trigger a bounce back in the USD which had just tested the 2025 lows and sharp unwind within the metals complex with gold falling >10% intraday on Friday and silver declining over 30% hence the term - Commod-atility.

The rally in commodities, particularly precious metals, has been ongoing for a couple of years now but had gone parabolic since the start of the year. As of last Wednesday, the day before the first shot across the bow when gold fell ~10% intraday in a 30-minute window before bouncing back, the yellow metal was up ~25% YTD while silver was up ~65%. Before I go any further a quick plug, earlier this week I was on the Full Signal Podcast, with Phil Rosen author of the Opening Bell Daily where we talk about this price action and a range of other topics, please check it out.

There were multiple narratives driving the strength - a mix of increased central bank purchases, the narrative around debasement or the de-dollarization related to growing fiscal deficits and Washington foreign policy and they had just become momentum assets. Silver had become king of that growing momentum/speculation benefitting from the themes I just mentioned along with its industrial use case in electrification, data center and energy infrastructure build outs. Early last week we highlighted SLV was the first ETF outside of SPY to be the most actively traded issue since we’ve been tracking the data over the last 12 or so years. There were also surging volumes in Asia and silver/gold perpetual futures contracts on decentralized crypto exchanges. That backdrop provided the tinder, and the Warsh nomination provided the spark.

The volatility continued over the weekend with the crypto complex, which trades 24/7, taking the torch (see what I did there). Bitcoin broke below 80k and the November lows on Saturday ahead of the meeting between bank and crypto trade groups at the White House on Monday. That meeting didn’t yield much in the way of movement, but marching orders were given to come to a compromise by the end of the month to get the Clarity act back on track. The selling in crypto accelerated throughout the week with Bitcoin down >20% testing 60k last night before bouncing back to 70k today. The weakness bled into other momentum/speculative thematic retail favorites within the equity market.

Early in the week the weakness bled into other momentum/speculative thematic retail favorites within the equity market but  it was contained with most major US indices rallying on Monday despite Punxsutawney Phil seeing his shadow. This definitely dampened the mood around these parts as we prepare for six more weeks of winter and -20° windchill in NYC this weekend. And speaking of Groundhog Day, we re-lived another government shutdown, though it was short-lived, but just long enough to delay this week’s labor market data.

All was quiet on Tuesday morning until SAAS-Pocalypse. We’ve been highlighting the underperformance of software stocks within the market for some time now with the idea that AI could shrink the workforce and decrease the number of licenses, but more importantly VIBE Coding whereby companies can build their own in-house software solutions with the use of AI instead of paying for these subscription services. Over the weekend there was an update to Anthropic’s Claude Cowork AI offering to include plug-ins for areas like Legal and Finance. It took a while for reviews of the upgrade to make the rounds on Wall Street but when it did it sent shockwaves through financial markets. There were sharp declines in software, data analytics and staffing firms. This also raised some concern within private credit markets about exposure to the sector and hit many asset managers and private equity companies as well. After bouncing ~3% today, the iShares tech-software ETF is down ~9% for the week and >20% YTD.

Let’s move to the next term of the week - AI Invest-digestion. The first sign of that, came over the weekend as there were reports that the previously reported $100B Nvidia investment into OpenAI had hit a snag. Both parties continue to suggest the relationship is fine and the raise is currently looking like $100B with Nvidia reportedly $20B of that.  Also, on the funding side of things Oracle announced a big capital raise including up to $20B in an ATM offering to shore up the balance sheet. 

This week we also had the next round of hyperscalers earnings. Alphabet, former AI loser turned darling again after the release of Gemini 5.0 in the back half of last year had very solid results. Its businesses are clicking on all cylinders, akin to the Seahawks Defense this year. The company handily beat estimates across the board, including the capex guide. The company expects spending to increase from ~$90B in 2025 to $175B - $185B, versus consensus of ~$115B. That $65B difference between the guide and consensus is about what Exxon spent on capital expenditures over the last two years combined. Last night Amazon reported and also put up very solid numbers but shocked the street with the amount of Capex spending, which is expected to be $200B this year well ahead of estimates and up ~50% from last year. Both stocks have traded lower this week and along with the weakness in software weighed on the NYSE FANG+ index which is down ~5% WTD.

 With the Super Bowl just over the horizon the MAC Desk decided we should try to put the capex spending in perspective, for the record the below list was AI generated. The hyperscalers have guided to around $655 billion in capex spending this year. Instead of buying AI chips and nuclear power hookups, you could purchase:

There has been a lot of negativity throughout today’s note but the mood shifted this morning as healthy snacks started to get passed around on the trading floor ahead of the IPO of Jennifer Garner’s Once Upon a Farm. This was the fourth high profile IPO of the week along with Veradermics, Bob’s Discount Furniture and Forgent Power Solutions all joining our amazing community of companies.

Throughout the week, despite the weakness in tech and momentum the great rotation was continuing. Today there has been a sharp oversold bounce in the aforementioned momentum assets and cyclical sectors have been adding to gains. Pretty much all major US indices are up >1.5% today with multiple indices hitting new all-time highs including the Dow Jones Industrial Average which broke above 50k for the first time in history with much fanfare on the floor.

For the week value outperformed growth across all capitalizations which has steadily been the case since Halloween.  Below is a 9yr ratio chart looking at the Russell 1k growth vs. value ETFs. 

The partial shut down partially impacted economic data this week but we'll catch up by next week. The January ISM Manufacturing PMI was strong, coming in at 52.6, up from 47.9 in December and above consensus of 48.5. New Orders jumped 10 points to 57.1 and Production jumped as well. Employment was still in contraction but that moderated from 44.8 to 48.1 (<50=contraction). Prices rose slightly.

The solid headline numbers were undercut by the commentary within the report, however. A brief sample:

ISM Services was inline with last month’s downwardly revised 53.8 reading and a bit higher than consensus. Business Activity and New Orders rose, prices ticked up slightly while employment fell slightly. Commentary was a bit more sanguine in this one:

Soft employment data this week triggered a reversal of the yield backup that followed the ISM print. ADP employment data showed only 22k jobs added, missing consensus and the prior month. Education and Health Services added 74k jobs, while Professional and Business Services shed 57k and manufacturing shed 8k. Mid-sized firms added jobs 41k jobs while large employers shed 18k and small employers were flat.

Challenger job cuts came in well above last month, at 180k versus 36k and more than doubled last January’s 50k. It’s also the highest January print since 2009. While there’s usually a month-over-month bump and a lot of the cuts came from UPS (30k) Amazon (16k) and Dow (5k) announcements, it was still a weak print. Healthcare slashed 17k jobs, the most since April 2020. AI was referenced in 54,836 announced layoffs in 2025, making up about 70% of the total AI-referenced cuts since 2023 when Challenger first tracked it.

Initial jobless claims rose from last week, from 209k to 231k and were above estimates. Continuing claims also rose but were slightly below expectations. JOLTS job openings declined versus last month and missed estimates, while Private Layoffs and Discharges rose 70k from last month, to 1.696M. These continue to trend higher though are only returning to the pre-COVID range. Transportation/warehousing (103K) saw the biggest increase in layoffs. Layoffs versus total non-farm employees remain below historical levels, but are also trending higher. The soft labor data puts even more focus on next week’s (slightly) delayed non-farm payroll report.

Treasury yields were lower for the week by 2-4bp across the curve. The strong ISM Manufacturing print on Monday pushed yields higher, but that was more than countered by the weak job data on Thursday. At their lows this week the 10y was ~4.18%, a resistance level recently cleared.

Treasury vol was relatively well-contained in the midst of all the other chaotic moves and continues to bounce along 3-year lows. 

The Treasury’s Quarterly Refunding Statement provided no changes to anticipated auction sizes for notes and bonds for “at least the next several quarters”, as expected. However it also said it will evaluate “potential further increases to nominal coupon and FRN auction sizes” and is monitoring the Fed’s purchase of Treasury bills as well as the growing demand for them by the private sector. With a regime change coming for the Fed and a potential closer relationship with Treasury, we expect markets to play close attention for any signals from both.

The US Dollar Index gained ~1% and was particularly strong against the yen ahead of that country’s elections. After a brief bout of strengthening on verbal intervention, the yen is heading back toward 158/$. The dollar strengthened with this week’s cross asset volatility and yields falling, though it pulled back on Friday with the equity strength. The US Dollar Index is back ~97.50, inching closer to all 3 major moving averages 98.15-98.50. 

After a few days of almost not-freezing temperatures, below-zero conditions will hit the NYC-area. Perfect excuse to hunker down and watch the Winter Olympics. Opening Ceremony is this Friday. That provides a good lead-up to the Puppy Bowl, and also Super Bowl 60, on Sunday. Can Sam Darnold write the last chapter of his comeback story, or will the ghosts of the Pats D reappear as he drops back to throw? In US data, the delayed non-farm payrolls and CPI data will be released, along with Retail sales. Japan will be voting in a snap election for the lower house. Earnings will continue, with Coca-Cola, Robinhood, McDonalds, Cisco and Coinbase among the many reporters. Have a great weekend and enjoy the Big Game.

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