Strong Jobs Report Curbs Fed-Cut Bets | Balance of Power 2/11/2026
Watch on YouTube ↗  |  February 11, 2026 at 19:48 UTC  |  41:12  |  Bloomberg Markets
Speakers
Joe Mathieu — Anchor, Balance of Power
Kailey Leinz — Anchor, Balance of Power
Tyler Kendall — Bloomberg Reporter (White House)
Katie Richards — Senior Strategic Advisor, Groundwork Collaborative
Jeanne Sheehan Zaino — Bloomberg Politics Contributor
Rick Davis — Partner, Stonecourt Capital
Alexandra Semenova — Bloomberg Reporter (Equities)
Rebecca Lissner — Council on Foreign Relations

Summary

  • Labor Market Distortion: January 2026 payrolls beat estimates (130k vs low expectations), but 2025 revisions revealed a massive 1 million job loss, signaling a much weaker underlying economy than headline numbers suggest.
  • Fed Policy Shift: The "strong" headline number has pushed Fed cut expectations from June to July, creating a "higher for longer" environment despite the structural weakness revealed in revisions.
  • The "AI Displacement" Trade: The market narrative has shifted from "AI Bubble" (CapEx concerns) to "AI Displacement" (software replacing humans). This is triggering a sell-off in seat-based software stocks (IGV) while capital rotates into broad market value (Equal Weight S&P).
  • Geopolitical Escalation: President Trump is considering deploying a second carrier strike group ("armada") to the Middle East amid rising tensions with Iran regarding ballistic missiles, signaling potential military engagement.
Trade Ideas
Ticker Direction Speaker Thesis Time
SHORT Alexandra Semenova
Bloomberg Reporter
Software stocks (IGV) fell ~4% and the "Mag Seven" index dropped 1% following the jobs report. Semenova notes a narrative shift: investors are no longer just worried about AI CapEx spending, but are now pricing in "AI coming for different industries... replacing a lot of the companies' business models." This is the "AI Deflation" thesis. If AI agents replace human workers, "seat-based" SaaS pricing models collapse. Companies that charge per user (System of Record) face existential revenue compression. The sell-off is not broad panic; it is a targeted liquidation of legacy tech/software in favor of other sectors. SHORT. The rotation out of software is structural, driven by the realization that AI is deflationary for software revenues. Oversold bounce if tech earnings show resilience in seat retention. 29:17
LONG Alexandra Semenova
Bloomberg Reporter
While Tech/Software sold off, the S&P 500 Equal Weight Index (RSP) hit a new all-time high. Deutsche Bank reported $62 billion in inflows to non-tech sectors in the first five weeks of 2026 (more than all of 2025). Investors are not leaving the market; they are rotating. The "Golden Age" narrative (Trump administration) combined with sticky inflation/rates favors Value, Industrials, and Cyclicals over long-duration Tech growth. The Equal Weight index captures this rotation perfectly, avoiding the drag from the Mag-7 correction. LONG. This confirms the breadth of the rally is improving, decoupling from the Mega-Cap Tech dominance. A hard landing recession would drag down cyclicals regardless of rotation.
LONG Tyler Kendall
Multimedia Editor
President Trump floated the idea of sending a "second armada" (aircraft carrier group) to the Middle East. Netanyahu is presenting intelligence on Iran's ballistic missile program, and Lissner notes that while a strike isn't imminent *today*, significant military activity is expected once that second carrier group arrives. "Second Armada" = Logistics, hardware, and munitions expenditure. The explicit mention of Iran's ballistic missile program suggests future kinetic action or enhanced defense spending on interceptors (Iron Dome/Arrow equivalents). This flow of military assets directly benefits defense prime contractors. LONG. Geopolitical risk premiums are being repriced higher with the movement of heavy naval assets. Diplomatic breakthrough (low probability given the rhetoric) or de-escalation.
LONG Katie Richards
Senior Strategic Advisor, Groundwork Collaborative
Richards highlights that job gains are "exclusively in sectors like Health Care." Outside of Health Care, there was actually a net reduction in jobs across the economy in 2025. In a slowing economy (masked by headline numbers), Health Care is the only sector with actual organic demand for labor. It is the ultimate defensive shelter. If the "1 million job loss" revision signals a recession, Health Care remains the most resilient allocation. LONG. A safety play against the underlying labor market weakness. Regulatory changes or "healthcare cliffs" mentioned regarding ACA subsidies expiring. 8:14