Stealth Correction

Despite a stock market within 3% of its all-time highs, your portfolio likely feels a bigger pinch right now.

Fears of high spending on AI are leading to another pullback in the market’s biggest names. The Mag 7 stocks are collectively 10% off their peak, and now in correction territory:

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AI spending fears push the Mag 7 stocks down into to “correction” territory. (Source: Barchart)

“It’s tough to see the market making new all-time highs while tech stocks are coming down,” noted Andrew Packer to members of the Grey Swan Trading Fraternity this week. “As we’ve warned, the top seven stocks make up too much of the market.”

In the Grey Swan Trading Fraternity Mr. Packer added a put option trade to hedge against a market decline much like yesterday’s.

The market is throwing off more warning signs than usual right now. The all-clear sign? When bad news hits a market that’s been down and stocks trend higher anyway.

~ Addison

P.S. For the record, the names in the Grey Swan Model Portfolio continue to pay strong dividends outside roiling tech and we still like bitcoin and Dollar 2.0 digital asset plays. See the library of special reports in the members section on the website for more alternatives to tech stocks.

Yesterday, U.S. Global Investors founder Frank Holmes reviewed some of the trends today. Despite the short-term challenge to the stock market, economic fundamentals are in good shape right now.

Frank explained in detail how alternative data, like global airline demand, helps his team rebalance their portfolio of ETFs when market trends shift.

Washington is betting that crypto assets and stablecoins can create a bigger, more efficient market for U.S. debt, extending the dollar’s reserve-currency status.

Frank noted that the recent crash in crypto could easily reverse as regulatory conditions improve and market sentiment can return on a dime. And that many of the companies in our Dollar 2.0 wheelhouse are poised to benefit from that shift. We’ll have the replay up for members shortly.

Turn Your Images On

Despite a stock market within 3% of its all-time highs, your portfolio likely feels a bigger pinch right now.

Fears of high spending on AI are leading to another pullback in the market’s biggest names. The Mag 7 stocks are collectively 10% off their peak, and now in correction territory:

Turn Your Images On

AI spending fears push the Mag 7 stocks down into to “correction” territory. (Source: Barchart)

In the Grey Swan Trading Fraternity Mr. Packer added a put option trade to hedge against a market decline much like yesterday’s.

The market is throwing off more warning signs than usual right now. The all-clear sign? When bad news hits a market that’s been down and stocks trend higher anyway.

~ Addison

Yesterday, U.S. Global Investors founder Frank Holmes reviewed some of the trends today. Despite the short-term challenge to the stock market, economic fundamentals are in good shape right now.

Frank explained in detail how alternative data, like global airline demand, helps his team rebalance their portfolio of ETFs when market trends shift.

Washington is betting that crypto assets and stablecoins can create a bigger, more efficient market for U.S. debt, extending the dollar’s reserve-currency status.

Turn Your Images On

Mustafa Suleyman, who leads Microsoft’s AI initiatives, told the Financial Times that most white-collar professional tasks could be automated within 12 to 18 months.

Lawyers, accountants, marketers, project managers — anything related to desk work faces compression.

Challenger data showed 7,624 January layoffs attributed directly to AI — about 7% of the month’s total. Since 2023, AI has been linked to nearly 79,500 announced job cuts. Morgan Stanley’s Stephen Byrd cautioned clients that measurable macroeconomic impact may lag several years.

In Silicon Valley, Mercor quietly hired tens of thousands of highly credentialed contractors at $45 to $250 per hour to train large language models for OpenAI and Anthropic.

Private education and health services accounted for the bulk of job creation over the past year.

Over the last twelve months, that category added roughly 780,000 positions. Excluding those gains, the economy shed approximately 350,000 jobs.

Manufacturing, the purported object of Trump’s tariff strategy, declined by about 100,000 in 2025. Transportation and warehousing fell by more than 100,000. Professional and business services contracted. Information and financial activities declined.

Federal employment dropped again in January, down 42,000. The civilian federal workforce now sits roughly 11% below its October 2024 peak.

Most investors are familiar with the price-to-earnings, or PE, ratio. But what if you invert that, and divide earnings by price? You get what’s called the “earnings yield.”

Earnings yield on the S&P 500 is near a 100-year low.

Moody’s Mark Zandi urged restraint. “I wouldn’t exhale,” he wrote. The data coming out of the Bureau of (be)Labor(ed) Statistics (BLS) is still undergoing an overhaul from years of wonky miscalculations.

Downward revisions erased much of last year’s gains. Since April, aggregate job growth has barely moved.

Over the past twelve months, private education and health services added roughly 780,000 jobs. Remove those gains, and the broader economy shed about 350,000 positions.

Mustafa Suleyman, who leads Microsoft’s AI initiatives, told the Financial Times that most white-collar professional tasks could be automated within 12 to 18 months.

Lawyers, accountants, marketers, project managers — anything related to desk work faces compression.

In Silicon Valley, Mercor quietly hired tens of thousands of highly credentialed contractors at $45 to $250 per hour to train large language models for OpenAI and Anthropic.

Private education and health services accounted for the bulk of job creation over the past year.

Over the last twelve months, that category added roughly 780,000 positions. Excluding those gains, the economy shed approximately 350,000 jobs.

Federal employment dropped again in January, down 42,000. The civilian federal workforce now sits roughly 11% below its October 2024 peak.

Most investors are familiar with the price-to-earnings, or PE, ratio. But what if you invert that, and divide earnings by price? You get what’s called the “earnings yield.”

Earnings yield on the S&P 500 is near a 100-year low.

Downward revisions erased much of last year’s gains. Since April, aggregate job growth has barely moved.

Over the past twelve months, private education and health services added roughly 780,000 jobs. Remove those gains, and the broader economy shed about 350,000 positions.