James Brodie
Head of Learning & Development, Flux
AI Disruption, Trump to Roll Back Metals Tariffs, US Home Sales Down
AI shifts from driver to disruptor, sparking sector selloff; stocks slide; energy rotates higher; housing weak; CPI
For over 3 years AI was the engine driving record-breaking stock rallies, now it’s the disruptor.
Rather than waiting for evidence investors are fleeing, shoot first and ask questions later. Firstly, selling software stocks, then Monday insurance brokers, Tuesday financial advisors, Wednesday CRE brokers (CBRE -30% in two days) and yesterday was transportation logistics. The S&P500 fell -1.6%, Nasdaq -2%, 10-year -7bp, Brent -3%, Silver -10.8%.
S&P500 new highs are looking increasingly unlikely. 7,000 ceiling against stops below 6,780. (Chart 1, Bloomberg). Defensive money is hedged; aggressive money is short, foolish money is hoping.
Nasdaq composite is closer to triggering key stop levels. 24,000 for new highs against 21,900 stops and a break lower. (Chart 2, Bloomberg)
President Trump to roll back tariffs on metals and aluminium - Financial Times
China house prices continue their death spiral: January -3.1% y/y and -0.4% m/m
Bank of America says the energy sector is in a rotational bull market, driven by a shift away from large-cap tech. The XLE ETF outperformed the S&P 500 by 13% in January.
UBS warns credit markets are under-pricing AI disruption risk, with leveraged loans most vulnerable and potential spillovers threatening broader funding conditions and the AI investment boom.
"Zillow finished down 16.5% today. They commented in their earnings press release that housing market conditions will continue to be "challenging" in Q1. The housing recession isn't going to be over this year. The spring selling season is going to be a bust." (@ZacksResearch)
Mercedes shares fall as much as 5.7% after the German carmaker said margins would remain under pressure in 2026 due to US tariffs and China competition.
US home sales fell -8.4% in January, the biggest monthly decline since February 2022, leading to an unprecedented disconnect between home sales and mortgage rates, which remain at 6.29%. While rates stay higher, it will exaggerate the home sales pain. (Chart 3, zerohedge)
Today is CPI. Wall Street expects a cooler month for headline inflation but a hotter month for core in January. Forecasts headline CPI 2.7%, core 2.6%.
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