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The Week Markets Couldn't Decide Anything
What a week.
Monday: Markets closed (Presidents Day)
Tuesday-Wednesday: 3-day rally, "AI fears waning!"
Thursday: Oil spike, geopolitical risk, rally over
Friday: Supreme Court nukes tariffs, markets rally again
Net result for the week:
$SPY ( ▲ 1.26% ) : +0.6%
$QQQ ( ▲ 1.57% ) : +0.8%
$DJI ( ▲ 0.69% ) : Flat
So... up? Down? Sideways?
Yes.
Welcome to 2026.
Where every day brings new chaos and the market shrugs, rallies, sells off, then rallies again.
But this weekend, a story dropped that explains EVERYTHING happening right now.
And it's not about tariffs or AI or inflation.
It's about jobs.
Or more accurately: the complete lack of them.
The Economy Grew. Jobs Didn't.
Here's the headline that should terrify you:
2025 US GDP growth: 2.2%
2025 US job growth: 181,000 total jobs
Read that again.
The economy grew 2.2%.
But we only added 181,000 jobs for the entire year.
For context:
A "normal" year adds 2-3 million jobs.
2025 added 181,000.
That's 15,000 jobs per month.
In an economy of 160 million workers.
This is called a "jobless expansion."
The economy grows. Companies make money. GDP goes up.
But nobody's hiring.
Where Did The Jobs Go?
Three culprits:
1. AI Spending Replaces Hiring
Companies spent massively on AI in 2025.
AI boosted GDP by 0.4 percentage points (Oxford Economics estimate).
But:
Spending on AI chips, data centers, and software doesn't create jobs.
It REPLACES them.
One AI agent can do the work of 10 customer service reps.
One AI coding assistant replaces junior developers.
One AI logistics platform scales freight 300% "without increasing headcount" (remember the CH Robinson selloff?).
Companies are investing in technology instead of people.
2. Immigration Crackdown
Net immigration 2025: ~160,000
Net immigration "normal" year: 1.1 million
That's 940,000 fewer workers entering the labor force.
Can't add jobs if you don't have workers to fill them.
3. Post-Pandemic Overhiring Correction
Companies hired like crazy 2021-2023.
Now they're realizing they have too many people.
So they're cutting, not adding.
The result:
Job postings at lowest level since 2020.
Unemployment still low (4.3%) because people aren't being FIRED en masse.
They're just not being HIRED.
But Consumer Spending Is Still Growing?
Here's the weird part.
Consumer spending = 70% of GDP.
Consumer spending is STILL growing.
How?
Answer: Stock market wealth.
High-income households benefiting from AI stock gains are spending.
For every $1 increase in stock wealth, consumers spend an extra $0.05 (Oxford Economics).
Translation:
Your neighbor who owns Nvidia stock is buying stuff.
Your neighbor who lost their job to AI isn't getting hired anywhere.
This creates a bizarre economy:
GDP up. Stocks up. Spending up.
Jobs flat.
It's a consumption boom funded by asset prices, not wages.
And that's fragile.
What This Means For Markets
Remember this week's chaos?
Tuesday-Wednesday: "AI fears waning, buy the dip!"
Thursday: "Oil spiking, consumer weakening, sell!"
Friday: "Tariffs struck down, rally!"
None of that mattered compared to this jobs story.
Because if the economy is growing WITHOUT creating jobs...
And consumer spending relies on stock market wealth...
What happens when stocks stop going up?
Spending stops.
GDP contracts.
Recession.
The entire expansion is built on asset prices, not fundamentals.
This Week's Clues Were Everywhere
Let me connect the dots from this week's news:
Walmart's conservative guidance (Thursday):
"Consumer might be weakening ahead."
Why? Because job growth is dead. People without paychecks eventually stop spending.
Software stocks still down 22% YTD:
"AI is replacing our business model."
Why? Because companies are spending on AI INSTEAD of hiring people who'd buy software.
Fed minutes showing division:
"Some want cuts, some want holds/hikes."
Why? Because they're seeing the same disconnect: growth without jobs, spending without wages.
Supreme Court striking down tariffs (Friday):
Market rallied on "lower import costs."
Why? Because if consumers ARE weakening, at least stuff will be cheaper.
It all ties back to jobs.
The Fed's Dilemma
Fed Governor Michael Barr gave a speech this week.
Key quote:
"AI adoption could usher in a 'jobless boom.' In the short term, AI may deeply disrupt labor markets and harm some workers."
Translation:
The Fed sees what's happening.
GDP growing without job creation.
AI spending replacing hiring.
Consumption driven by asset prices, not wages.
Their problem:
Do they cut rates to help the labor market?
Or hold rates to fight inflation (PCE came in hot Friday at 0.4% monthly)?
They're stuck.
Cut rates → Inflation stays hot.
Hold rates → Jobs stay weak.
That's why the Fed is divided.
That's why markets are volatile.
That's why this week went up, down, sideways, and nobody knows what's next.
What Friday's Data Told Us
PCE inflation: 0.4% monthly (hotter than expected)
GDP growth: 1.4% Q4 (way below 2.9% forecast)
That's the WORST combination:
Slowing growth + Rising inflation = Stagflation risk
Add in jobless expansion:
Slowing growth + Rising inflation + No job creation = Even worse
Market's response?
Rally on tariff news, ignore the economic data.
Because tariffs are fixable.
Jobless expansion driven by AI? That's structural.
Where Do We Go From Here?
Nobody knows.
Bullish case:
AI productivity boom eventually creates NEW jobs (just different ones).
Consumer spending stays strong (stock market keeps going up).
Fed cuts rates by summer (inflation cools).
Soft landing achieved.
Bearish case:
AI destroys more jobs than it creates.
Stock market rolls over (consumer spending dies).
Fed can't cut (inflation stays sticky).
Recession hits mid-2026.
Most likely:
Something in between with a lot of volatility along the way.
Which means:
More weeks like this one.
Up. Down. Sideways. Chaos.
Headlines driving moves.
Economic data confusing everyone.
How To Trade This
When the economy is growing without jobs...
When consumer spending relies on stock prices...
When the Fed is divided...
When tariffs get struck down one day and oil spikes the next...
You can't predict what happens next.
But you can do two things:
1. Trade quality stocks only
If jobs aren't growing and consumers are fragile, stick to companies that survive ANY environment.
Not speculative junk.
Not meme stocks.
Blue chips. Dividend payers. Real businesses.
2. Generate income regardless of direction
Sell puts on stocks you'd own anyway.
Sell calls on stocks you already own.
Collect dividends while you wait.
Stack interest on cash reserves.
Profit whether markets go up, down, or sideways.
Because that's the environment we're in.
The Week Ahead
Next week brings:
More earnings (consumer discretionary, retail)
Fed speakers (reacting to hot PCE data)
Trump's response to Supreme Court ruling (will he find another tariff avenue?)
Jobs data revisions (could reveal even weaker hiring than reported)
More volatility coming.
More uncertainty.
More headlines.
Same strategy:
Trade quality. Generate income. Don't predict.
If you want to understand how to trade through economic confusion, jobless expansions, AI disruption, and market chaos using the Ark Options Strategy, I'm running a free 90-minute workshop.
What you'll learn:
How to sell puts on quality stocks and get paid to wait for your entry price
How to generate income whether stocks go up, down, or sideways
Why "jobless expansion" creates opportunity for options sellers (elevated volatility = rich premium)
Risk management when headlines change every 12 hours
The five-pillar income system that works in ANY market environment
How Warren Buffett used this on Coca-Cola.
How you can use it on Apple, Microsoft, Costco, and other quality names.
How to profit from uncertainty instead of being paralyzed by it.
This week was chaos.
Next week will probably be chaos too.
The question is:
Will you keep trying to predict it?
Or will you learn to profit from it?
See you in the workshop.
– Pete
DISCLAIMER
This newsletter is educational and informational only. Not financial advice or investment advice. Options trading involves substantial risk of loss. All analysis represents the author's opinion and interpretation of market events, not predictions. Economic analysis, jobs data interpretation, AI impact discussion, and Fed policy commentary are opinion, not fact. Individual stocks mentioned (Nvidia, Walmart, etc.) are educational examples only, not recommendations. Consult a licensed financial advisor before making investment decisions. Past performance does not guarantee future results.
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