After the latest bout of AI-related jitters, markets remain under pressure, with U.S. equity futures lower, including the Nasdaq, as investors continue to digest its worst two-day pullback since last April’s Liberation Day selloff. Canadian futures are also lower after finishing yesterday’s session higher. Investors are still digesting yesterday’s after-close earnings from Alphabet, where solid quarterly results were offset by the disclosure of higher capital spending plans as competition in AI intensifies, while a busy earnings week continues with Amazon reporting after the close. In Canada, Barrick, BCE, Bombardier, Saputo, Thomson Reuters, and TMX Group also report today. In the UK, the Bank of England held its policy rate at 3.75% in a close 5–4 vote, with four members favouring a cut. Updated forecasts are pointing to inflation returning to 2% by April and running below target through 2027 alongside weaker growth and rising unemployment. BOE Governor Andrew Bailey signalled scope for rate cuts later this year, citing softer demand and diminishing upside inflation risks (more details in fixed income below). As expected, the ECB also left rates unchanged as officials assess the economic toll of a rally in the euro and renewed trade unpredictability. The ECB didn’t offer guidance on future steps, reiterating that incoming data will steer decision-making.
Challenging times. Employers in the U.S. appear to be scaling back after announcing the most January job cuts since the depths of the 2009 recession, according to the most recent Challenger report. Companies disclosed 108,435 planned layoffs, up 118% from a year earlier, while hiring plans fell 13% to just 5,306, the weakest January total in the firm’s records, signaling caution about the 2026 outlook. Nearly half the cuts came from a handful of large firms, including Amazon, UPS, and Dow Inc., with additional reductions announced by Peloton and Nike. The most common reasons given for the planned layoffs were lost contracts, weaker economic conditions, and corporate restructuring. Overall, the data adds to signs of a fragile, low-hiring labour market that is weighing on confidence, even as policymakers at the Fed argue unemployment has begun to stabilize.
Investors have been rotating into cheaper, more economically sensitive stocks, pushing the Russell 1000 Value Index up 8.6% since early November and ahead of the Russell 1000 Growth Index by about 14%, one of the widest gaps in years. Strategists say stretched valuations in Big Tech, economic resilience, and expectations for rate cuts are helping to drive flows into consumer staples, energy, and materials while software and AI names lag. This has drawn comparisons to similar bursts of value outperformance, like the 2001 dot-com crash and the 2022 bear market. Still, growth companies are expected to post much faster earnings gains this year, suggesting the shift may reflect relative positioning and valuation catch-up rather than an end to tech leadership.
Speaking of which, investors are wondering whether the recent decline in global software stocks has gone too far. Shares tied to the S&P 500 Software & Services Select Industry Index have fallen nearly 13% in five sessions and remain about 26% below their October peak, significantly underperforming the broader S&P 500. The latest selling was sparked by a new legal and business tool from Anthropic’s Claude model, which highlighted how large language models are threatening traditional software vendors’ core revenue streams. That has revived fears that AI could disrupt legacy software systems much like how Amazon upended retail and cloud markets, though analysts say concerns may be premature. For now, strategists have noted that investors are hesitant to jump back in until it’s clearer which software businesses can coexist with (or even benefit from) AI rather than be replaced by it.
Political and policy turbulence in the U.S. has been weighing on the USD beyond what traditional shocks would normally imply. Analysts point to a growing risk premium, evident in the dollar weakening even as U.S. yields remain relatively attractive and exchange rates diverge from fair-value models. After last year’s tariff shock and renewed 2026 worries over trade, geopolitics, and Fed independence, the USD also slid even as U.S. yields stayed relatively attractive, with the euro rising above $1.20 and volatility jumping. Strategists estimate the implied premium has widened to roughly 4%–5% against major currencies, reflecting hedging and concerns about capital outflows from U.S. assets. The nomination of Kevin Warsh as Fed chair briefly steadied the greenback, as markets expect a more standard, hawkish stance that could support rates. Still, analysts think lingering uncertainty could keep the dollar under pressure and leave broader U.S. markets vulnerable to further stretches of weakness.
Toronto’s housing market didn’t start the year off well, with both sales and prices slipping as buyers remain cautious and confidence in a near-term rebound fades. Data showed transactions fell 9.9% in January from the prior month, while the benchmark home price dropped 1.7% on a seasonally adjusted basis to about $941,200, marking the steepest monthly decline in more than two years. Even though affordability has improved slightly as the BoC has spent the past two years cutting rates, lower borrowing costs haven’t been enough to revive demand, with trade tensions and broader economic uncertainty keeping many prospective buyers on the sidelines. Experts are forecasting flat sales and further price weakness in the first half of the year as higher listings give buyers more negotiating power and keep pressure on prices across Toronto.
Forbes does it again. A founder once included on the Forbes 30 Under 30 list has joined the growing roster of alumni facing jail time. Gökçe Güven, the 26-year-old CEO of fintech startup Kalder, was charged by U.S. prosecutors with securities fraud, wire fraud, visa fraud, and aggravated identity theft, according to the U.S. Department of Justice. The New York–based company, Kalder, pitched itself as a platform that helps brands monetize customer rewards programs and claimed clients including Godiva and the International Air Transport Association. Prosecutors allege that during a 2024 seed round, Güven raised $7 million from more than a dozen investors using a pitch deck filled with inflated or false claims about customer adoption and revenue, including overstating recurring revenue and listing brands that either had only discounted pilots or no agreements at all. The case adds to the list of the Forbes 30 Under 30 recipients who have been charged with fraud, including, Sam Bankman-Fried, Charlie Javice, Joanna Smith-Griffin, Martin Shkreli, and Elizabeth Holmes.
Diversion: Hope mom doesn’t find out
