Comments based on information available as of 6:00 am CT on 2/13/2026
Growth: The Journey of a Thousand Miles
The manufacturing sector may finally be starting its recovery. While the January 2026 jobs report showed a headline gain of 130,000 positions, the notable story was the uptick in manufacturing payrolls—a sector that hasn’t consistently added jobs since early 2023. With production activity and new orders increasing, the manufacturing jobs recession appears to have bottomed.
Inflation: Meet in the Middle?
Over the last year, goods price deflation has morphed into 1.4% inflation. During that same time, services inflation has cooled from 3.7% to 3.0%. I expect a continued slide in the latter. Since households spend roughly three times more on services than goods, this slowdown will likely help keep pulling headline inflation lower.
Policy: Hindsight is Better Than 20/20
Payroll revisions now reveal that real-time data failed to capture a struggling labor market, with declines in four separate months and the slowest growth outside of a recession since 2003. Despite this, the Fed paused rather than cutting rates until September, a policy error masked only by a resilient private sector. The consumer provided a buffer for the central bank’s misread, proving that in monetary policy, it is sometimes better to be lucky than good.
Looking Ahead: Random Acts of Chaos
AI is rippling through markets, disrupting valuations from software to financial services. While AI promises value creation for some, others fear it as a “value destroyer.” Many tools lack commercial scale and adoption, but valuations remain hypersensitive to perceived threats. The random acts of chaos are unsettling, but it does look like AI is so far more a threat to valuations than to fundamentals.
