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January Jobs Reports & AI Trade Summary +3

09:19 11-Feb-26


The BLS employment reports for January are finally out with headline numbers of +130K jobs and 4.3% unemployment, more than doubling most estimates for the former and lower by a tenth on the latter.  This is generating a substantial upward move in American equity futures, indicating that the market is still favoring this data over the ADP results reported by CrowdWisers, below, which this service views as more reliable.  As predicted there, FedWatch had more than doubled to well over a 20% chance of a rate cut, but dropped quickly back down to 6%.  The Participation Rate ticked up by another tenth to 62.6% and the Employment-population ratio by two tenths to 60.1% and earnings were up 0.4%.  Some are already noting seasonal changes and that much of this will be revised away, but the beat is too big to disregard.  Others are noting that most of the gains are in healthcare and social assistance, which more than doubled. 

On 2/6/26 9:12 AM, Esekla wrote:
The BLS recently updated its schedule to note that we won't get the Employment Situation reports that should have come out this morning until Wednesday the 11th due to the partial federal shutdown.  CPI will also be delayed from that day to the following Friday morning.  JOLTS was reported yesterday, though, and it showed December jobs openings at the lowest level since September 2020.  On that cue, the FedWatch rate cut probability briefly spiked well above 20%, and now sits just below 17%.

On 2/4/26 9:36 AM, Esekla wrote:
The ADP employment report for January was just half of forecasts at +22K jobs.  Though pay gains were steady at +4.5%, those for job changers stayed slow at +6.4%.  This is another data point in support of the frozen and weakening labor outlook I've had for months, which has now been echoed by more than one Fed governor.  Accordingly, the chances of a rate cut on March 18th have moved up a little to 10%, and I expect them to move much further if the BLS report on Friday is also weak.
That report went on to examine individual performance at AI behemoths as the FedWatch rate cut probability rose well above 20%, before separate coverage of Alphabet earnings, which concluded:

On 2/5/26 1:36 PM, Esekla wrote:
Still, I see that as a stabilizing influence on the market, since the company is one of the few that can afford such expenditures without ratcheting up debt.  My two canary stocks, Lumen and AMD both fared MUCH worse coming out of their earnings reports, despite beating analyst forecasts, and my guess on the former.  Now those analysts are talking their books on GOOG(L), which leads me to suspect the AI investing boom is irreparably cracked though still not shattered.  Looking forward, I doubt the data center trade will hit rock bottom until Bitcoin has lost almost all its market value, given that it is a far greater waste of electricity.  We're already about halfway there in only four months, and I might comment further after Strategy earnings tonight...