Show Notes
US markets open mixed as fresh data shows the labor market cooling, and investors reassess where the AI boom is headed next. ADP reported that private employers shed 32,000 jobs in November, versus expectations for a gain of 10,000, with companies with fewer than 50 workers cutting 120,000 positions, and weakness was noted in manufacturing, information, and construction. The report reinforces the notion of a K-shaped economy. It has traders pricing in roughly a 90% chance of a 25-bp Fed cut at next week’s meeting, even as Wall Street strategists remain broadly bullish on 2026, with S&P 500 targets clustered between 7,100 and 8,000.
At the same time, the fulcrum of the AI trade may be shifting. Alphabet’s Gemini is gaining ground on OpenAI’s ChatGPT, with Sensor Tower data showing global monthly active users up about 30% for Gemini from August to November versus roughly 5% growth for ChatGPT, prompting talk that investors now favor Google’s diversified ad and search cash flows over OpenAI’s capital-intensive model. Microsoft (MSFT) is reportedly cutting AI software sales quotas, raising new questions about enterprise adoption speed and monetization. Guests on the show argue that the next phase of leadership could shift from AI “winners” like Nvidia (NVDA) to AI “enablers” in power, construction, and data center infrastructure, as AI-related capital expenditures are forecast to exceed $7 trillion globally by 2030.
On the consumer side, Macy’s (M) and Dollar Tree (DLTR) both beat on revenue and earnings and raised full-year guidance. Still, Macy’s stock is under pressure after management issued cautious Q4 commentary, stating that shoppers will remain “choiceful,” implying full-year declines in sales and profit compared to 2024. Reimagined Macy’s stores and luxury banner Bloomingdale’s posted standout growth, highlighting continued strength among higher-income shoppers, while Dollar Tree’s results underscore how stretched lower-income households are, prioritizing essentials over discretionary items. In trending tickers, Delta Air Lines (DAL) warned of a $200 million profit hit from the historic government shutdown, Marvell Technology (MRVL) jumped on an earnings beat and a multibillion-dollar deal for Celestial AI, and American Eagle Outfitters (AEO) rallied after a beat-and-raise quarter powered by sharper merchandising and buzzy celebrity campaigns.
Takeaways:
ADP shows private employers cutting 32K jobs in November, with small businesses hit hardest and markets pricing in a December Fed rate cut
Gemini usage is growing faster than ChatGPT as investors debate whether Alphabet’s AI model is more sustainable than OpenAI’s spending-heavy approach
Microsoft reportedly lowers AI software sales quotas, fueling questions about near-term AI monetization
Macy’s and Dollar Tree both beat and raise guidance, but Macy’s cautious holiday outlook and K-shaped consumer trends weigh on sentiment
Delta flags a $200M shutdown hit, Marvell buys Celestial AI, and American Eagle pops on better merchandising and upgraded guidance
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