and this is Markets Weekly. So, this

past week was a very volatile week in

markets. As we've been discussing over

the recent weeks, it really seemed to me

that the market was losing momentum.

Now, this past week, we saw the S&P 500

lose the 50-day moving average. On

Friday, it came very close to losing the

100 day moving average as well. That

kind of reminded me of a wise person who

traded through the.com boom and bust

that during the dot a lot of people went

broke selling it and a few years later

even more people went broke buying it.

Now I'm getting the sense just a guess

that we we probably have to test the 200

day moving average around 6500. Um

because we really this trend doesn't

doesn't look that great. This past week

we got a lot of tier one data. We got

the non-farmms payroll spread. We got

retail sales and we also got CPI. So

first let's talk about the data and

secondly I started using cloud AI last

week. Of course we saw huge amounts of

selling and the SAS stocks and even some

wealth management stocks everyone uh

that all the stocks that were perceived

to be disrupted by AI. So I had to try

the latest AI myself and I'm beginning

to think that AI is going to be very

good for bonds. All right, starting with

the data.

week. First of all, of course, the

non-formms per print. The January print

was delayed until last week and it was

much better than expected. However, it

also came with the annual benchmark

revisions and the benchmark revisions

basically erased 1 million jobs created

last year. So, as we've been discussing

before, the market really doesn't care

about revisions. It only cares about the

monthly prints. If the monthly prints

last year were accurate, we would have

had zero or negative monthly prints. Uh

but and that would have been very

upsetting to the markets. But um now

that we a year later we revised them all

away, the market really doesn't care.

What it does care about though is that

it seems like the job market is

improving. So the January report was

better than expected and maybe it will

be revised away a year from now but at

the moment it's better than expected and

the market is going to perceive that to

be good and that uh the economy is less

likely to go into recession but it also

of course reduces the odds of Fed rate

cuts.

last week but before we talk about that

we have to mention a little bit about

seasonal adjustments. So throughout the

year data is uneven because of seasonal

effects. For example, uh people you tend

to do a lot of shopping in November and

December. That's a big holiday season.

So retail sales there are going to be a

lot more. And in January, people tend to

reset their p to reset their prices. For

example, if you're a company and you

want to raise or lower prices on your

products or services, you tend to do

that in the beginning of the year. So

there is some seasonality to how these

this data is computed and to make data

more comparable monthtomonth uh

economists or statistitians tend to do

these seasonal adjustments. So keep that

in mind when thinking about the data. So

for retail sales the data was much lower

than expected. they were basically flat

monthtomonth and some people think that

could be due to aggressive seasonal

adjustments which are difficult to make

because of course the economy is

changing um behavioral changes and so

sometimes seasonal adjustments can be

overdone or underdone. Now moving on to

CPI data CPI was better than expected

but still at at the end of the day it's

still about you know 2 and a.5% above

the Fed's target. Uh, one thing to note

of course is that companies do raise

their prices in January and so these

seasonal adjustments make the January

print uh less accurate than than other

prints as well. So all in all though

this is I know data that is you know

kind of positive right you have better

than expected job growth and you have

inflation that's coming down but of

course the market didn't seem to really

care about this they were really more

cared about uh what seemed to be

happening in the AI world and that is

the AI is cannibalizing uh current

companies. So that brings us to our next

topic.

started trying to use AI to help me with

my workload. And in the beginning, it

was very disappointing. So, I asked AI

to do basic things like, yo, tell me

when are speaking. And it really

couldn't do that. It was amazing to me

that I asked it to go on the Federal

Reserve's website to look up who's going

to be speaking this week, and it could

not do that. So, that was very

disappointing. But last week we had the

release of the latest cloud model and we

also had carnage in a lot of software as

a service companies. The market or at

least people who follow this was

thinking that the latest AI is really

going to be very destructive to the

value of these companies. Maybe there's

more competition. Uh maybe uh consumers

are going to u move to bespoke AI

created vibecoded platforms and so

forth. We even saw some wealth

management companies like Schwabs go up

aggressively because maybe AI can uh

provide tax efficient strategies in

place of wealth advisors. So again I had

to try this for myself. So I signed up

for the cloud max plan. So that's like

$100 a month and got to use it. So what

did I use it for? Well as you guys know

I am writing the second edition to my

book central banking 101. Uh the last

one was 5 years ago and so between then

and now a lot of things happened. So

I've updated all the data, added a whole

bunch of new sections about, you know,

the Silicon Valley bust, uh, Silicon

Valley bank bust, you know, Treasury

buybacks, QT, all that stuff. So I

basically updated everything and I felt

like I was basically done with the

manuscript. So usually what I would do

is I would hire an editor, a freelancer,

and pay him a few thousand to go through

this. And I would also hire some artists

to make a new book cover for for a few

hundred. And these are people that I

would source through upwork.com.

basically sites that post for

freelancers.

But this time I decided I would give AI

a try since that's what all the cool

kids are doing right now. So I uploaded

everything into cloud and asked him to

kind of you know be my editor and

proofread it. It said he said that it

would take 6 hours and so uh I waited

for 6 hours and what I got back was you

know

I guess he gave me like a few

suggestions updated some data points and

things like that some very general

stuff. I thought it was actually pretty

uh you know just meh not not that

special but you know maybe it's my

fault. Maybe I'm not prompting cloud

correctly.

So uh this is what I did. I prompted him

in a more precise way. I said could you

look at the reviews that I that are

posted on good readads on Amazon and

there are a lot of reviews and can you

bearing bring bearing that feedback in

mind can you go through the manuscript

and you can you give me some suggestions

and also just you know broad suggestions

as to what where I could do better and

so forth like that so this time it only

took you know a few minutes maybe was

it's already in his me memory or

something like that and he came back

with actually something that was pretty

helpful gave me a list of suggestions

gave me a separate word document

detailing

And you know looking through it some of

them were not that great stylistic of

course some of them were pretty good.

One of them for example was that in your

reviews people suggest you having a

glossery glossery so that they can look

back look up these acronyms QT FOMC uh

stuff like that. That was pretty good

suggestion. And some of them also

suggested that hey maybe you could have

summary chapter bullet points. you know,

kind of like a textbook, at the end of

the textbook, you kind of give you a

summary as to what you should be what

you should have learned from this

chapter. I thought that was a pretty

good suggestion as well. And so I asked

Cloud, could you do that for me? And

like just like that, they created

wonderfully made glossery, wonderfully

made bullet points, and I thought that

was that was pretty cool.

I'm guessing that it could do more to

help me with my manuscript, but I'm

probably not prompting it well enough.

It did tell me though that it was very

good and well written and so I think

it's just part of its job. Um, like any

employee,

um, when I went to ask it about helping

me create a new cover for my updated

version, I gave it my prior cover and,

you know, gave it some ideas and it

immediately basically like Grock gave me

a number of ideas and ways to pursue and

that's actually exactly what my like a

real human cover designer would have

done. he would have given me a few

design choices and then I would have,

you know, decided which one to go and

and how to advance it. So, I'm probably

just going to use cloud as an editor. I

think it's really good enough and

honestly I I don't know some of the

human it's hard for me to know if the

human editors that I hire are good or

not until after the fact. But for the

artistic stuff, I think I'm still going

to hire a real designer. I think having

that human artistic touch is something

that I'm not really sure that Cloud can

fully do right now. The covers he's

shown me is are very good. Um, but I

guess I'm just not confident enough in

my own judgment and prefer someone who

who I a proper artist to do that. But

that immediately got me thinking as to

just what the implications of this are.