Yeah. To me, this is the real news of the month.

We got a better jobs report this morning than expected. AI is changing how companies think about work, and another inflation check is coming on Friday. Myra, let's start with jobs. What does this report today tell you about hiring and layoffs right now?

Well, it's interesting. The mood heading into this report was a little bit bleak, weaker ADP numbers, higher unemployment claims, companies announcing layoffs really across the economy. But the jobs report pushed back on a lot of that. We saw one hundred and thirty thousand jobs added.

The unemployment number ticked down to four point three, and wage growth came in above expectations. Now, listen, we're still in this low higher trend. So the jobs January jobs report also came with revisions to prior years, which showed that hiring averaged just fifteen k a month. Still, I think what we're looking at is a report that pushes back on worst case fears and as a result, expectations for an earlier rate cut.

Today, the market is split on whether the next cut will come either in June or July.

So now let's layer AI on top of that. In a slower hiring environment, how is AI disruption across software, insurance and wealth management really shaping the risks and opportunities that you see?

Yeah. To me, this is the real news of the month. So we have AI announcements around capabilities in legal, insurance, wealth management that have tanked those segments of the market. And at face value, these announcements would seem more to augment or streamline the work in those fields rather than replace it. And in fact, twenty twenty six earnings expectations for many of these companies remain strong, and that's especially the case for software.

But the announcements do create this enormous uncertainty, and the market is forward looking, anticipating that the potential, for AI might not just be to streamline work, but actually to replace it in these fields. So really, we're at this new moment of uncertainty where investors are trying to interpret an AI world. There's obvious risk to that as some companies may find their business models not suited for all the change, but there's also this potential upside. It's shoot, fire, aim, and some companies with resilient business models may be priced at attractive levels.

And Myrtle, let's look ahead to Friday's inflation report. If it comes in close to expectations, month over month inflation around last month's levels, How do you think that ties together with slower hiring and fast moving AI in your outlook for the economy from here?

Okay. So expectations, point three month over month for both core and headline consumer price index. Year over year levels are estimated about two point five percent for both. And of course, those numbers aren't at the Fed's two percent target, but they would be in line with our expectations for this meandering path lower.

But really, as in all things, the devil will be in the details. What's happening with core goods? Are we seeing additional tariff pressure there? What about services?

A lot of companies push increases annually, so economists and investors are nervous about what those adjustments could look like. I think to your question, overall, we are seeing an economy that's in line actually with our twenty twenty six outlook, which said that AI looms larger than the traditional economic narratives. But the details of what that's looked like so far this year, the amount of potential creative destruction is definitely a surprise, and it highlights the uncertainties we face today.

If we wanna go deeper, remind us where we can find your twenty twenty six outlook.

Yes. Empower dot com, the learn tab. You can find it there.

Alright, Marta. Thank you. So I think the big takeaways today, a more resilient jobs market than people expected, AI driving both disruption and opportunity, and Friday's inflation report, that's the next big test of just how durable this soft landing story really is. Marta Norton, thank you so much.

Thanks, Vanessa.