Good morning, investors. Jobs are always top of mind. It’s how people make a living and provide for their families.

That’s why jobs have always been such a critical component to a growing economy.

When more companies are hiring, things usually feel like they’re moving in the right direction.

The data suggest that dynamic is starting to fray.

Investors have learned to fear a cooling labor market but it might be time to retire that habit.

The latest data suggest slower hiring is undermining neither growth nor profits.

Rather, the numbers reflect an economy generating more output with fewer workers — a productivity-driven expansion that is unusual by historical standards but nonetheless bullish for asset prices.

Through the second half of 2025, the labor market softened and aggregate hours worked flattened. Typically, that combination would foreshadow a slowing economy, as many on Wall Street warned repeatedly last year.

Yet this time real GDP accelerated, rising at a 4.3% annualized pace in the third quarter.

Productivity surged too, climbing at nearly a 5% annualized rate.

This shift presents a particularly juicy set up for corporate America:

To translate, companies can now grow earnings without relying on aggressive hiring or price hikes.

It helps explain why forward earnings and revenues for the S&P 500 ended the year at record highs, despite moderating payroll gains.

The consumer side of the calculus has proven just as counterintuitive.

Real disposable income has moved sideways for months, yet spending has remained elevated — a divergence that could be chalked up to demographics, according to veteran market strategist Ed Yardeni.

“It’s a ‘Gen-Shaped Economy,’ with retired Baby Boomers keeping consumer spending aloft irrespective of the labor market,” Yardeni said, arguing that weaker payroll growth no longer carries the same signal it once did.

By his calculations, boomers hold $85 trillion in household net worth, with nearly one-third of that tied up in equities.

As long as asset prices remain elevated, in Yardeni’s view, that wealth can support consumption even in the face of a cooling labor market.

In this cycle, the stock market appears to be reinforcing demand rather than responding to it.

No wonder the weaker jobs picture hasn’t dragged on growth.

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🏦Big banks kick off earnings season this week. With stocks at records, JPMorgan, BNY Mellon, Bank of America, Wells Fargo and Citi all report results this week, among other names. (Yahoo Finance)

🤖Walmart is teaming up with Google’s Gemini. The companies will work together to make it easier for shoppers to discover and buy items with the AI tool. Walmart struck a similar deal with OpenAI in October. (CNBC)

💳 President Trump wants to cap credit-card interest rates. He called for a one-year cap of 10%, effective January 20, to address affordability concerns. The average US credit card interest rate is currently 19.6%, with store cards averaged 30.1%. (Barron’s)

📊 The Donroe Doctrine trade is here. Hedge funds are seeking to capitalize on President Trump’s interventionist foreign policy in Venezuela and the broader hemisphere, tapping debt and niche instruments like arbitration claims. (WSJ)

I sat down with Cullen Roche, the CIO of Disciplined Funds, to discuss the macro outlook, the $38 trillion government debt pile, the disinflationary trends of the next decade, and more.

Tune in on YouTube, Spotify, or Apple Podcasts.

🗓 January 12, 1964: Jeff Bezos is born, and he went on to found Amazon at the age of 30 out of his garage in Bellevue, Washington.

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