The narrative around the US economy is slowly shifting.
Friday's report on jobs showing that the US had 92,000 non-farm payroll positions in February and the unemployment rose to 4.4% in terms of the rate and added a January retail sales and a cautious tone.
We've heard from retailers all season that they might be turning into outright concern and geopolitics may be hitting the. wallet following the February 28th, the US Israeli attacks on Iran oil surge past $100 a barrel, buying the $120 level over the weekend.
Now with critical inflation data dropping this week and big earnings on deck, the market is suddenly whispering a dangerous word, and that is stagflation also out this morning we did hear from Kohl's in terms of earnings and shares turning higher after the opening. the company saw same store sales fall more than expected, but it's profit increased as its turnaround efforts continue.
Joining me this morning to weigh in on the market action is Christine Short, head of global corporate events research at Wall Street Horizon.
Christine, great to have you here.
Thank you so much for joining.
Thank you so much for having me.
Well, there's a volatile a lot of volatility across all asset classes.
So first and foremost, what do you make of the macro outlook.
Interesting because a lot as we were just discussing, a lot has changed just over the last few weeks during earnings we had a great earnings season, right?
And we know markets really trade on interest rates and earnings and earnings have been strong so we can't deny that and interest rates are falling, right?
We do expect to see another cut this year.
How many we're not sure right now, right?
So the fundamentals still look fairly strong, but of course we have news coming in.
We have everything from global tariffs announced a couple of weeks ago to the conflict in Iran making gas prices surge that we're not quite sure how long that's going to last.
There was some indication from the Trump administration that might be coming to an end, but these are all unknowns, right?
So we don't know how you mentioned Kohl's earlier and we've been tracking the retailers.
Season I'd say their tone was cautiously optimistic, but in the middle of those reports you had, like I said, global tariffs announced, so not all of the retailers that reported got to respond to that because that happened on February 21st.
A few had reported.
We did hear some responses, but again they were waiting to see how things shook out.
And then again now with the conflict with Iran and The New York Times reporting yesterday, gas prices have already surged 17%.
How is that going to offset these massive tax refunds we're expecting for US consumers of the retailers were banking on that right because usually those are treated as windfalls and people go out and spend, but now they know they're going to be spending more on gas that potentially out offset the benefit there and Christine you highlighted a lot of our concerns when it comes to the US.
Economy and there's so much uncertainty surrounding the conflict in the Middle East and I keep on saying we do not have a crystal ball.
So despite the fact that oil prices have pulled back from those highs we saw yesterday, it doesn't mean that those prices can't climb again and that could hit consumer wallets across the US.
So we're hearing this word stagflation.
How concerned are you? started to come up because of the jobs report as you mentioned on Friday we saw a drop of 92,000 in non-farm payrolls.
Unemployment ticked up to 4.4% historically.
That's still quite low, but it's contrary to the stronger, more resilient jobs picture that we saw in 2025.
So obviously one number doesn't make a trend.
We'll be tracking this, but it certainly has everyone a little queasy and added onto that, you mentioned retail sales dropped.
We also had the New York Fed survey of Consumers out yesterday and that showed that folks were getting a little nervous about their ability to find a new job if they were to lose those.
Added to that all these concerns about cutting 40% of their workforce because of AI.
You've got this report last week from Bloomberg that Oracle will possibly be cutting up to thousands, even tens of thousands of jobs.
So again, the sentiment isn't great and it hasn't been for a while, even though the fundamental picture is still.
Right, but how do people spend?
They spend based on how they feel.
It's psychological.
So if you think you're going to lose your job to AI or you know, companies are going to be cutting costs, then you're likely not, you're going to be a little bit tighter with your wallet, especially now you see gas prices increasing.
Raymond James had a really interesting note out that said if gas prices stay $20 higher than they were before the war, which they are right now, they're at over $90 I think this morning.
That would add about $150 billion to how much consumers have to pay for gas.
In Q4 we spent in the US $450 billion at the pump.
If you add $150 billion that completely wipes out the benefits of the One Big Beautiful bill tax advantage which would be $130 billion.
So again, people are going to be making decisions and again they usually do treat this as a.
But if they're spending more on, you know, to drive and they're probably going to hold back in other areas and Christine finally before you go, I do want to ask you about one sector because you mentioned AI so we have been paying attention to software names, especially before the conflict in the Middle East took the spotlight, especially given what we saw in the first two months of 2026.
So where do you stand right now?
AI route of February certainly had a lot of those software names, as you said, as well as other sectors that will be impacted by AI, but we've seen them come back.
We've got a couple names out this week.
We've got Oracle out this afternoon.
Of course the big story there is going to be how do revenues look?
Have they been able to make money off those big investments?
Obviously a large restructuring plan was announced in the last quarter report and again with these layoffs, we'll have to see if they make any more announcements on that.
Front.
We also have Adobe out later this week.
How is Firefly doing their AI for creatives?
They're now seen as this sort of AI cloud infrastructure and competing with potentially AWS and some other names.
And so we have two names to kind of give us an idea of how some of the big software names are doing later this week, a lot to keep our eyes on as we head into the rest of the week in terms of earnings as well as economic data.
Absolutely.
Well, thank you so much for joining us.
