Markets Weekly February 14, 2026

Market Weekly Update: February 14th

Market Volatility and Moving Averages

• The past week experienced significant market volatility, with the S&P 500 losing its 50-day moving average.

• There is a concern that the market may test the 200-day moving average around 6500 due to a perceived loss of momentum.

• Historical context is provided by referencing traders from the dot-com boom who faced losses both selling and buying during that period.

Key Economic Data Released

• Important economic data released included non-farm payrolls, retail sales, and CPI (Consumer Price Index).

• The January non-farm payroll report was better than expected but revised previous job creation figures down by one million jobs.

• Despite revisions, the current job market appears to be improving, which could reduce recession fears but also lower expectations for Fed rate cuts.

Seasonal Adjustments in Economic Data

• Seasonal adjustments are crucial for interpreting economic data accurately; they account for shopping trends during holiday seasons and price resets in January.

• Retail sales were flat month-to-month, potentially influenced by aggressive seasonal adjustments amid changing consumer behavior.

• CPI showed inflation slightly above the Fed's target despite being better than expected; January's price changes can skew results due to seasonal factors.

Impact of AI on Markets

• The rise of AI technologies has led to significant selling pressure on SaaS stocks as concerns grow about their future value amidst increased competition from AI solutions.

• Initial experiences with AI tools were disappointing; basic tasks like retrieving information from official websites proved challenging for these systems.

Personal Experience with AI Tools

• After subscribing to an advanced cloud AI service, there was a focus on using it for writing updates related to central banking topics in a new book edition.

• The author updated various sections based on recent financial events such as the Silicon Valley Bank bust and Treasury buybacks while utilizing AI assistance in this process.

AI in Editing and Design: A Personal Experiment

Exploring AI as an Editor

• The speaker initially considered hiring a human editor and artists for book cover design but opted to try AI tools instead, citing their popularity.

• After uploading the manuscript to an AI platform, the initial feedback was underwhelming, prompting the speaker to refine their prompts for better results.

• By asking the AI to consider specific reviews from Goodreads and Amazon, more useful suggestions were generated regarding manuscript improvements.

• Suggestions included adding a glossary for acronyms and summary bullet points at the end of chapters, which were well-received by the speaker.

• The AI successfully created a glossary and bullet points upon request, demonstrating its capability in enhancing content.

Evaluating AI vs. Human Input

• While satisfied with the editing capabilities of the AI, the speaker expressed uncertainty about relying on it for artistic tasks like cover design.

• The AI provided multiple design ideas similar to what a human designer would offer; however, confidence in artistic judgment remained low.

• The decision was made to continue using human designers for artistic elements while utilizing AI for editing tasks due to perceived limitations in creativity.

Economic Implications of Using AI

• The shift from hiring freelance editors to using an affordable AI service raises questions about economic impacts on employment and GDP.

• Although faster service is achieved through AI, this may lead to increased unemployment among traditional editors who lose potential work opportunities.

• The speaker notes that while quality improves with technology (like iPhones), these advancements often do not reflect positively in GDP metrics due to non-monetary transactions involved with free services.

Broader Impact on Business Practices

• This trend reflects broader technological changes where improved goods/services are produced without corresponding increases in costs or GDP contributions.

• As businesses adopt similar technologies (e.g., newsletters), they can leverage efficiency gains while potentially displacing traditional roles within industries.

AI's Impact on Productivity and GDP

The Role of AI in Document Analysis

• In 2020, the speaker utilized AI to analyze extensive documents, which would have been time-consuming otherwise. This highlights AI's capability to enhance efficiency in processing large amounts of information.

Efficiency vs. Economic Growth

• Despite improvements in product quality due to AI, there is no increase in subscription prices or subscriber numbers, indicating that enhanced productivity does not necessarily translate into economic growth (GDP).

Changes in Legal Work Due to AI

• The speaker reflects on their experience at a law firm where junior associates spend significant time researching legal cases. AI can perform these tasks more efficiently than human associates.

• On the transactional side of law, tasks like editing contracts can be automated by AI, reducing the need for junior associates and increasing efficiency for senior staff.

Implications for Employment and Pricing Structures

• As firms adopt AI, they may reduce headcount while maintaining or increasing profits without adjusting pricing structures immediately. This leads to higher profit margins but does not necessarily expand customer bases.

• The initial impact of increased efficiency from AI will likely be GDP neutral as firms produce the same amount of services with fewer employees.

Long-term Economic Consequences

• Over time, if demand does not increase alongside productivity gains from AI, aggregate GDP could shrink due to reduced consumer spending from laid-off workers.

• While consumers may benefit from higher-quality goods and services through improved access to information via AI, this does not reflect positively on GDP metrics.

Market Dynamics and Future Predictions

• The speaker discusses "creative destruction" within markets where some companies thrive with higher profit margins while others fail. Eventually, competition will drive down these margins across industries.

• Given potential disruptions caused by unemployment and market adjustments due to technological advancements like AI, bonds may become a more favorable investment compared to stocks amidst anticipated rate cuts and lower employment rates.