Week in Markets: Inflation Cools, Jobs Were a Mirage, Big Tech Loses $1.35T

Inflation cooled to 2.4%. The labor market was an illusion. And Big Tech lost $1.35 trillion.

Last week we asked whether BTC would hold $65K or retest $60K. It held. Bitcoin stabilized around $68,600 after the worst crash since FTX, but the real story was elsewhere. A cooler-than-expected CPI print revived rate cut hopes. A blockbuster NFP headline masked the worst annual revision in years. And the AI trade, once the unstoppable force of 2025, began cracking under the weight of $660 billion in capex commitments.

Macro Pulse

The Jobs Mirage

The January nonfarm payrolls report, delayed two weeks by the government shutdown, finally landed on Wednesday, February 11.

The headline was strong. +130,000 jobs against a consensus of 70,000 and a revised prior of 48,000. Unemployment ticked down to 4.3% from 4.4%. Healthcare added 82,000. Construction added 33,000.

But the real story was buried in the footnotes.

The Bureau of Labor Statistics released its annual benchmark revision alongside the report. Total job creation for 2025 was slashed from 584,000 to 181,000. That is a downward revision of 403,000 jobs. Over two years, the revision erased 1.03 million positions from the record.

The labor market was much weaker throughout 2025 than anyone thought.

Federal government employment dropped by 34,000, reflecting the first wave of deferred resignation departures. Average hourly earnings rose 0.4% to $37.17, keeping wage growth elevated.

Markets reacted with confusion. The headline beat initially boosted the dollar and weighed on rate cut expectations. Then investors digested the revisions and reversed.

Inflation Cools

Two days later, Friday February 13, the CPI report erased any remaining ambiguity.

Headline inflation at 2.4% was the lowest since May 2025. Core CPI at 2.5% was the lowest since April 2021. The sticky component, shelter, finally decelerated to +0.2% monthly and 3.0% annually. Energy fell 1.5%.

This was the print the market had been waiting for.

Rate cut odds surged. CME FedWatch showed an 83% probability of a June cut, with March odds ticking sharply higher. The 10-year Treasury yield dropped to 4.04%, its lowest level since November.

Federal Reserve

The Fed held rates at 3.50-3.75% at its January 28 meeting. Two dissents: Miran and Waller preferred a 25bp cut. The December dot plot signaled just one cut in 2026.

With CPI at 2.4% and the Fed at 3.5-3.75%, the real rate spread is widening. The case for accommodation builds with every data point.

FOMC Meeting Minutes, scheduled for Wednesday February 18, will provide more context on the January discussion and the path forward.

Sources - Macro Pulse: BLS Employment Situation Summary | BLS Consumer Price Index | CNBC: CPI Inflation Report January 2026 | Wolf Street: Annual Benchmark Revisions | Federal Reserve FOMC Statement | CME FedWatch Tool

Geopolitics

US-Iran: Hormuz Standoff Deepens

The Strait of Hormuz remained a flashpoint.

On February 9-10, the US Maritime Administration issued an urgent advisory to American-flagged vessels: stay "as far as possible" from Iranian waters when navigating the strait. This followed the February 3 incidents where IRGC gunboats attempted to board the Stena Imperative and a Marine F-35C shot down an Iranian drone near the USS Abraham Lincoln.

On February 15, US forces intercepted the Iran-linked tanker Veronica III in the Indian Ocean. The vessel carried approximately 1.9 million barrels of Venezuelan oil and had tried to "defy President Trump's quarantine," according to the Pentagon.

Nuclear negotiations continued in Oman. Iran's Foreign Minister Araghchi called the first round "a good start," and Iran's top security official Ali Larijani visited Oman on February 10-11 for follow-up discussions. But Iran drew firm red lines: missiles and regional activities remain off the table. The US demands full enrichment cessation, Iran demands sanctions relief. A second round is planned but no date confirmed.

Ukraine-Russia: Geneva Talks Ahead

The week brought cautious progress.

On February 5, Russia and Ukraine exchanged 157 prisoners each, the first POW swap in five months. 139 Ukrainians had been held since 2022, many captured during the defense of Mariupol.

Both sides confirmed a third round of peace talks for February 17-18 in Geneva. Russia's delegation will be led by Vladimir Medinsky, who led the March 2022 Istanbul talks. Ukraine's Rustem Umerov returns as chief negotiator.

The atmosphere was strained. Zelenskyy publicly stated that the US "too often" pushes Ukraine for concessions rather than Russia. The Trump administration's June 2026 deadline for a peace agreement looms over every session.

Tariff Escalation

Trump signed a new directive on February 13 expanding reciprocal tariff measures against all trading partners with barriers against US exports, with implementation set for April 2026. This builds on the existing tariff framework that has pushed the weighted average effective tariff rate to 13.5%, the highest since 1946 according to the Tax Foundation.

The US-China trade truce from October 2025 continues to hold. Discussions are underway for a Trump visit to Beijing in April, with expectations to extend the truce by up to one year. Chinese ports handled 40% more containers year-over-year in early February, the fastest growth in 12+ months.

Middle East

Israeli forces killed at least 9 Palestinians in Gaza during the week, bringing total deaths since the US-brokered October 2024 ceasefire to 601. Israel has violated the ceasefire more than 1,600 times.

In Lebanon, 11 rockets struck Safed and an army base on February 14, killing one Israeli soldier. Israel responded with widespread airstrikes killing 10 people.

Sources - Geopolitics: CNBC: US warns ships to avoid Iranian waters | The National: US intercepts Iran-linked oil tanker | Al Jazeera: Iran-US talks in Oman | CBS News: Ukraine-Russia 3rd round peace talks | Al Jazeera: Zelenskyy says US pushes Ukraine | Tax Foundation: Trump Tariffs

Markets Overview

US Indices

Equities closed the week lower despite the CPI relief.

The CPI print barely moved the needle on Friday. The S&P added just 0.05%, the Nasdaq fell 0.22%. The data was good, but it could not overcome three days of selling driven by AI fears.

The standout was the Russell 2000. Small caps surged 4.35% on the week as rate-sensitive sectors benefited from rising cut expectations. The rotation from mega-cap tech to small caps accelerated.

The AI Reckoning

Big Tech hemorrhaged $1.35 trillion in market cap over the week.

Apple, Amazon, Meta, Alphabet, and Broadcom declined between 2.3% and 8%. Enterprise software has now lost roughly $2 trillion in market cap since the late-January rout. The market is not asking whether AI will matter. It is asking whether $660 billion in 2026 hyperscaler capex will ever generate returns.

The fear is spreading. Charles Schwab dropped 10.8% on the week. Morgan Stanley fell 4.9%. Workday lost 11%. Analysts flagged AI-driven disruption risk in real estate, trucking, wealth management, insurance, and logistics. What started as a chip stock correction is becoming a broad repricing of AI economics.

Energy was the counterpoint. The sector is up 12% year-to-date on the oil price surge and capital rotation away from tech. Real assets, gold, metals, mining, outperformed across the board.

Earnings

Coca-Cola (KO), Tuesday, February 10:

Revenue missed. EPS beat. The bigger news was the CEO transition: Henrique Braun will succeed James Quincey. The stock fell 1.4%.

Earnings season is winding down. The focus now shifts entirely to NVIDIA on February 25.

Commodities

Gold continues to hold above the $5,000 psychological floor. The structural drivers remain intact: central bank buying (China's PBoC extended purchases for 15 consecutive months), geopolitical hedging, and rate cut expectations reducing the opportunity cost. JPMorgan targets $6,300, Wells Fargo $6,300, Goldman $5,400.

Silver surged 4.97% on Thursday to $78.90 before pulling back to $78.06 on Friday. More volatile, less directional than gold.

Oil found a bid from Hormuz tensions and the Veronica III interception but remains capped by global demand uncertainty and the strong dollar headwind fading.

Dollar & Volatility

DXY: ~96.97, down from 97.52 last week. The dollar has been in structural decline, down nearly 9% year-over-year. The CPI undershoot reinforced rate cut expectations and added pressure. A break below 96 would mark the lowest level since early 2024.

VIX: 20.60, elevated but not in panic territory. The index surged 18% over a three-day stretch as AI fears cascaded through sectors before settling on Friday.

10-Year yield: 4.04%, the lowest since November. CPI-driven bond rally pulled yields to two-month lows.

2-Year yield: ~3.46%, reflecting rate cut expectations building in the front end.

Sources - Markets: CNBC: S&P 500 closes after inflation report | Morningstar: Big 2026 Sector Rotation | Fortune: Gold Price Feb 13 | Fortune: Silver Price Feb 13 | Trading Economics: Crude Oil | Trading Economics: DXY | Advisor Perspectives: Treasury Yields

Crypto Landscape

Price Action

Bitcoin stabilized this week but did not rally.

After the February 5 flash crash to $60,062 (W07), BTC entered a consolidation range between $65K and $69K. The week opened near $69,259 (Feb 8 close). A dip to $65,084 on February 12 tested conviction. The CPI print on Friday the 13th triggered a sharp 6% intraday spike, briefly pushing BTC above $68,855. Some exchanges showed BTC touching $70,897 intraday on February 16, but it pulled back to close around $68,600.

The week was not a rally. It was a stabilization. BTC ended roughly where it started, trading in a wide but flat range.

ETH remains stuck. Trading around $1,970 on Sunday, down from $2,090 earlier in the week. It failed to reclaim $2,000 with conviction.

Bitcoin dominance sits near 60%, reflecting capital concentration in BTC as the "safer" crypto bet during the recovery phase. Altcoin season remains suppressed.

ETF Flows: Mixed Signals

The week opened with a glimmer. February 10 saw +$166.5M in inflows, extending a back-to-back pattern started Friday February 7 (W07). ARK 21Shares led with $68.5M, followed by Fidelity ($56.9M) and IBIT ($26.5M).

But the momentum did not hold. Mid-week saw net outflows before a modest $15.2M inflow on Friday. The weekly net was approximately -$360M, marking the fourth consecutive week of outflows. Year-to-date redemptions are approaching $1.9 billion.

Two consecutive weeks of net inflows would be the first structural bullish signal. We are not there yet.

Derivatives (Centralized Exchange Data)

Open Interest remains depressed at ~$44 billion, well below the ~$61 billion seen before the early-February crash. BTC futures OI dropped more than 20% in notional exposure over recent sessions. Funding rates have stabilized and are no longer showing the negative readings from early February. Leverage has been substantially flushed from the system.

On-Chain (Blockchain Data)

Exchange balances remain near 1.8 million BTC, the lowest level since 2017. BTC continues flowing off exchanges, reducing available sell-side pressure.

For context, the prior week's crash (W07) triggered $8.7 billion in realized losses according to Glassnode, the second-largest in Bitcoin history behind 3AC. February 5 alone saw $3.2 billion in single-day realized losses. In response, whale wallets (1,000-100,000 BTC) accumulated over 70,000 BTC in early February. That accumulation phase preceded this week, but the supply rotation from weaker hands to conviction holders continued through W08.

Sentiment

Fear & Greed inched up from 9 to 12. Still deep in extreme fear territory, near the lows seen during FTX and Luna. One month ago, the index sat at 41 (Neutral). The collapse in confidence has been faster than the collapse in price.

Historical precedent: readings below 15 have marked bottoms in every prior cycle. But precedent is not guarantee.

High-Impact News (This Week)

Regulation: Coordination Improves

The CFTC on February 12 appointed 35 members to its new Innovation Advisory Committee, including CEOs of Coinbase (Brian Armstrong), Ripple (Brad Garlinghouse), Gemini (Tyler Winklevoss), and Crypto.com (Kris Marszalek). Of the 35 members, 20 are tied to crypto companies. The committee will advise on modernizing rules for digital assets.

The Federal Reserve published a working paper on February 12 proposing that cryptocurrencies be classified as a distinct asset class for derivatives margin requirements. The paper argues crypto risks do not fit neatly into existing categories and proposes two sub-classes: pegged (stablecoins) and floating cryptocurrencies.

Both developments build on the SEC-CFTC "Project Crypto" initiative announced January 29, which aims to harmonize digital asset oversight across agencies. The regulatory direction continues to improve structurally.

Sources - Crypto: CoinGecko: Bitcoin Price | MetaMask: Ethereum Price | CoinDesk: US Bitcoin ETFs Back-to-Back Inflows | CNBC: Bitcoin ETF Flows | CoinDesk: Bitcoin Biggest Realized Loss | CryptoSlate: Bitcoin Spikes 6% on CPI | CoinGlass: BTC Open Interest | Bloomberg: Bitcoin Whales Buying | The Block: Exchange Balances

Week Ahead

Key Events

Ukraine-Russia Geneva Talks (Feb 17-18)

Third round of peace negotiations. Any breakthrough would be positive for European equities and energy markets. A collapse raises the geopolitical risk premium. Expectations are low.

NVIDIA: The Verdict

Revenue consensus: ~$65.6 billion. EPS consensus: $1.52 (+71% YoY).

After GOOGL and AMZN spooked markets with $375B+ in combined capex guidance, NVDA earnings on February 25 will determine whether the AI trade survives or the rotation deepens. A beat with bullish guidance could lift the entire market. A miss sends the Nasdaq into free fall.

Jensen Huang called the $660 billion hyperscaler buildout "sustainable" on February 6. The market wants proof.

The Tariff Time Bomb

January CPI at 2.4% was likely "clean" of major tariff passthrough. Businesses have absorbed roughly 80% of tariff costs so far, using pre-tariff inventory as a buffer. That buffer is depleting.

Goldman estimates tariffs will add 0.3 percentage points to inflation in H1 2026. If passthrough accelerates in Q2-Q3, the current rate cut narrative could reverse sharply.

Key Takeaways

CPI at 2.4%, the lowest since May 2025. Core CPI at 2.5%, the lowest since April 2021. Shelter finally decelerating. Rate cut odds surged to 83% for June. The 10-year yield dropped to 4.04%.

NFP at +130K beat expectations but hid a brutal truth. The 2025 annual revision slashed total job creation from 584K to 181K. Over two years, 1.03 million jobs disappeared from the record. The labor market was weaker than anyone reported.

Big Tech lost $1.35 trillion in a single week. AI capex anxiety is no longer about chip stocks. It is hitting financials, real estate, software, and services. The Russell 2000 surged 4.35% as capital rotated from mega-cap tech to rate-sensitive small caps.

BTC held $65K and stabilized near $69K. After the Feb 5 crash to $60,062, BTC consolidated between $65K and $69K all week. Briefly touched $70K intraday on Feb 16 but closed ~$68,600, roughly flat on the week. ETF outflows continued for the fourth straight week (~-$360M net).

Gold vs BTC divergence widened. Gold held above $5,000 on central bank buying, rate cut expectations, and geopolitical hedging. BTC stabilized but remains ~45% below its October high. Gold is the institutional safe haven. BTC is still trading as a risk asset in capitulation.

Key Questions

Does NVDA save the AI trade on February 25? Consensus expects $65.6B revenue, $1.52 EPS. A beat stabilizes tech. A miss accelerates the rotation that has already wiped $1.35T.

Is the BTC bottom in at $60K? The case for yes: W07's $8.7B in realized losses was capitulation-level (second only to 3AC), Fear & Greed at 12 (historic lows), whale accumulation of 70K+ BTC in early February, supply rotation to conviction holders. The case for no: four weeks of ETF outflows (~-$360M this week), macro uncertainty, no clear catalyst until actual rate cuts.

Does the March FOMC deliver a surprise? CPI at 2.4% with the Fed at 3.5-3.75% creates a wide real rate gap. FOMC Minutes on February 18 will signal whether the committee is closer to acting.

When does tariff passthrough hit CPI? January was clean. But the 13.5% effective tariff rate, highest since 1946, is flowing through supply chains. Goldman's 0.3pp estimate for H1 2026 could turn the disinflation narrative on its head.

Hormuz: does it escalate? US-Iran talks in Oman are the diplomatic channel. Drone shootdowns and tanker interceptions are the military channel. Both are active simultaneously. Any disruption to the strait's 13 million barrels per day would send oil spiking and inject volatility across all markets.