I hope you all had a great start to the year, and the best wishes for a ‘Perfect February’ that happens every 10 years or so. Fun fact…if we had 13 months, every month would have 28 days (and one would have 29 in the leap year, I vote that it’s not January).
Your summary with links, if you’d like to curate your content:
AI faces a prove-it moment as markets demand profits over hype; Meta/Microsoft/Alphabet earnings showed tolerance for capex only if bottom lines deliver, triggering Nasdaq top and 17% YTD software plunge. Anthropic’s Claude Cowork (AI coworker for docs/workflows/plugins in legal/finance/marketing) and Opus 4.6 (financial analysis/spreadsheets/code) sparked $285B+ software selloff and $1T wipeout, hitting Thomson Reuters (-20%) and AMD (-17%); rotation to staples/energy amid MAGA stimulus/debt worries.
Japan’s election spotlights PM Sanae Takaichi’s yen comments, but corporate reforms drive gains: Palantir (US AI/big data, Gotham/Foundry platforms, Japan ties via SOMPO/Fujitsu) and Sumitomo Electric both tripled post-US election despite rout. Topix metals rerated to 20-yr high on dividends/buybacks; yen/JGB yields volatile, but reforms endure, offering hedged value vs US bonds.
Peter Thiel (PayPal co-founder/CEO, Facebook investor, Palantir chair, Founders Fund, $20B net worth, “Zero to One” author, Trump backer) leads the PayPal Mafia network. Alumni like Elon Musk (Tesla/SpaceX), Reid Hoffman (LinkedIn), Max Levchin (Affirm) founded/funded YouTube, Yelp, Airbnb, etc., creating a blueprint for tech scale via contrarian bets.
US firms announced 108k January job cuts (highest since 2009 recession, +118% YoY), with hiring plans at 17-yr January low; Amazon (16k), UPS (30k), Dow (4.5k), Peloton/Nike lead. Amazon plans $200B AI data centre/chip spend despite cuts, but stock fell 7% on profit fears.
Bitcoin plunged below $65K (lowest since Oct 2024, -50% from peak), erasing Trump deregulatory gains amid $1.4B liquidations, $1B+ ETF outflows, and AI/tech spillover. Macro hits: tariffs, Fed hawkishness, and gold unwind amplify defensive positioning and lack of conviction buyers.
Microsoft Q4 (Dec 2025): revenue +17%, op income +21%, GAAP net +60% (non-GAAP +24%), yet stock dropped 10% ($360B wipeout) on $37.5B capex jump (AI/cloud) and Azure growth at 39% vs 40% expected. AI lowers coding barriers, threatening SaaS (Salesforce/Adobe) as firms build custom apps on Azure; Microsoft is positioned as an essential cloud host.
This Week’s Roundup
RSA
South Africa’s JSE All Share Index …… capping a volatile week down …. amid global risk-off and commodity weakness; resources led losses (….) while industrials held firmer. Look at the bright side, the JSE is still up 35% y-o-y.
Novus Holdings (NVS) cratered 15.23%, Randgold (RNG) -12.64%, MTN Zakhele -9.43% as top losers; 174 decliners vs 151 gainers.
USD/ZAR hit …. (…) pressured by metals slump.
SARB repo steady at 7.75%; inflation at 3.4% Sep (within 3-6% target), SACCI business confidence at 6-month high (121.1 Sep), boosted by tourism/gold exports/vehicle sales
USA Markets & Economy
US equities extended losses amid AI fears and Fed caution: Nasdaq …. (tech drag), S&P …., Dow ….
Graph: Nasdaq
Global ex RSA/USA
There comes a time in every tale or narrative where a person, product or idea has to show up, prove themselves or go away. That time is probably here for AI. Enough of the spin… show us what you can actually do and, more importantly, make money doing it.
This is not a neat crossroads, and markets last week showed just how messy they could be.
Last week’s divergent responses to Meta Platforms Inc. and Microsoft Corp.’s earnings (see Cobie’s insight on Microsoft below) showed that concern has moved beyond productivity to an attempt to identify whose profits will be hurt by artificial intelligence. Hence, this week’s titanic market rotation.
Traders and investors want to see strong results and are prepared to tolerate huge expenditures on AI if the bottom line is good. But if earnings disappoint, big capex is assumed to have been wasted.
Alphabet Inc.’s fourth-quarter report followed a familiar script, with a slight twist. Revenue at Google’s parent beat expectations, but plans to raise capital spending sent the shares sliding in after-hours trading. They oscillated widely from there, but traders ultimately didn’t find the numbers reassuring. Still, it’s only really been a smallblip in a stellar run, so far.
Meanwhile, it looks like the Nasdaq has topped out:
Graph: Nasdaq
The downturn over the last week for software stocks, however, is much more pronounced. The sector is down by more than 17% year-to-date. It turns out that AI can be bad even for software groups; the catalyst for Tuesday’s bloodbath was Anthropic’s latest AI tool.
That tool is Claude Cowork, Anthropic’s new AI “coworker” / automation assistant that sits on top of the Claude models. It acts as a virtual assistant that can read documents, navigate folders, draft and edit work, and run end-to-end workflows rather than just chat. It uses sector-specific plugins (legal, finance, data/analytics, marketing, etc.) so it can review contracts, generate marketing copy, analyse data and automate many SaaS (Software as a Service) type tasks (repetitive workflows).
Investors suddenly realised this kind of agent could replace many single-purpose software tools, not just augment them. The launch and its legal/workflow plugins triggered an estimated USD 285bn+ selloff across global software and services stocks and helped wipe out close to USD 1tn over two days as the fear spread.
The company on Thursday also unveiled Claude Opus 4.6, which it says can scrutinise company data, regulatory filings and market information to come up with detailed financial analyses that would normally take a person days to complete. Opus 4.6 is also meant to be better at a range of other work-related functions, including making spreadsheets and presentations, as well as software development.
The new Super Bowl ads (focusing on Claude’s ‘no ads’ approach) aren’t helping
Thomson Reuters Corp is one of the casualties, and it plunged by as much as 20% — its biggest decline on record — on concern that the AI tool would deprive it of its large business in software for legal workflow. Any businesses at risk of being disrupted by AI can expect similar treatment. The graph below is the share over a long period of time, which highlights just how much the share fell…
Perhaps less attention has been paid to which companies might find their business models under threat from AI, partly because it’s such a new and evolving technology with little visibility about the eventual winners and losers.
The build-out of AI demands of the massive data centers have powered a rally in memory-chip makers, but have brought a valuation hangover to earlier winners not doing so well in this boom. Advanced Micro Devices Inc. led the Wednesday selloff with a post-earnings slide of 17%.
With unease around AI still unresolved, investors are looking elsewhere for value and finding it. Shares of companies with little direct tech exposure, from consumer staples to energy producers, are enjoying a rare moment in the sun. But it’s less a vote of no confidence in tech than a search for businesses that stand to benefit from a firmer economy.
MAGA (Making America Germany Again) enthusiasts are predicting that consumers will soon benefit from the One Big Beautiful Bill Act stimulus to the tune of $135-140 billion (0.6% of disposable income) – spoiler alert, that adds to already horrific debt numbers. Last year’s shutdown should also “boost” first-quarter growth by 0.5-1%. All this sets the stage for front-loaded GDP growth in 2026. Let’s pin this and wait and see. Short-termism is still around in spades.
Land of the Rising Earnings – how Palantir and the PayPal mafia fit in
Japan had an election on Sunday, and attention naturally focuses on the charismatic new Prime Minister Sanae Takaichi, who looks likely to win a fresh mandate, and whose words have sent the yen on a switchback journey over the last week.
But for investors, something even more exciting is going on in the stock market, and it looks as though it can endure regardless of the result.
Years of corporate governance reforms to jolt the country’s old-line industries into life are suddenly having an effect. It’s even matching the intense hype around some of the central players in the US technology boom.
That showed up on Tuesday in good results from Palantir Technologies Inc., one of the most exciting and controversial players in Silicon Valley, and Sumitomo Electric Industries Ltd., a rather dull Japanese group that makes wires.
Palantir has fallen 28,4% from its high, but Sumitomo has continued to gain ground up 12%. Both were still impacted by Wednesday’s rout, but this is most likely collateral damage rather than what we saw at Reuters (above).
Amazingly, these two disparate companies’ share prices have both tripled since the US election.
Palantir Technologies is a US software firm founded in 2003 by Peter Thiel, Alex Karp, and others, specialising in big data analytics and AI platforms.
Core Platforms:
The HQ is in Denver, CO, grew 55% YoY in US commercial (Q2 2024 data); expanding AI for predictive ops. Often in headlines for gov contracts (e.g., NHS, Ukraine) and valuation debates amid AI hype. Palantir Technologies has deep ties to Japan through Palantir Technologies Japan K.K., a joint venture co-founded in 2019 with SOMPO Holdings (major insurer), which serves as its flagship partner.
Another key partnership is Fujitsu: $8M contract (2021) for supply chain/customer service; expanded to distribute Foundry/ERP Suite; 2025 AIP licensing for genAI integration in manufacturing/ finance/ gov.
Peter Thiel is a German-American entrepreneur, venture capitalist, and political activist.
Co-founder and first CEO of PayPal (sold to eBay for $1.5B in 2002); first outside investor in Facebook; chairman of Palantir Technologies (co-founded 2003, inspired by PayPal’s fraud detection for counter-terrorism via CIA backing). Also founded Founders Fund VC (2005, backed SpaceX, Airbnb); net worth ~$20B+. Contrarian tech thinker/author (“Zero to One”). Known for libertarian views, Trump support, and “PayPal Mafia” ties.
The PayPal Mafia is an informal network of PayPal’s early founders, employees, and alumni from its 1998-2002 era (pre-eBay acquisition), who went on to dominate Silicon Valley by founding or funding massive tech companies.
Key Members & Impact:
Coined by Fortune (2007 mafia photo above), their tight-knit exits created a “family” blueprint for explosive scale via contrarian bets and mutual backing.
Back to Japan:
There are many reasons for the sudden renaissance of a Japanese metal-basher, Sumitomo, but the main one is that investors are finally prepared to trust the nation’s companies, and buy them because they’re cheap, rather than shun them as perpetual value traps. The Topix non-ferrous metals index, which includes Sumitomo, had been trading below book value for many years. Suddenly, it has hit its highest multiple in almost two decades.
Companies have aided this change of sentiment by at last heeding shareholders and paying out cash rather than hoarding it. Dividends-per-share have been rising sharply, as have stock buybacks.
Share prices remain vulnerable to moves in the yen. International investors have long priced Corporate Japan as if it’s one big exporter that needs a cheap currency.
The yen has plainly been a driver of the massive moves in the last few days. Weekend comments from Takaichi that there were benefits from a weak yen sharply sent it lower. She has walked them back somewhat; if she gets the big mandate she hopes, she will need to say more. It will be a big surprise if she doesn’t, as the odds that her party wins at least the 233 seats needed to control the lower house have surged in the last two weeks.
The bond market will also drive her agenda. Yields on longer-dated Japanese Government Bonds have undergone a historic surge in recent weeks. As Japan has massive debt outstanding, it’s possible to read this as an incipient fiscal crisis, as Takaichi promises expansion. It can also be read as a belated normalisation.
Much of what has been happening to Japanese bonds reflects catch-up to other G7 markets. Bank of Japan action curbed yield increases until a couple of years after other G7 Central Banks. Compared with, say, the US, most of the moves could be seen as ‘mean reversion’ and has happened.
The gap between Japanese 30-year and US 10-year bonds is “more or less the same” as it was five years ago. Takaichi has warned that the rise in yields won’t necessarily be capped, and the gap could narrow further, but an LDP victory is surely now priced in, and “you get paid an extra 3% to own 30-year Japan when currency hedged into US.”
Political excitement shouldn’t obscure the change that has been wrought in Corporate Japan — that will continue, whatever the election result.
US companies announced the largest number of job cuts for any January since the depths of the Great Recession in 2009. Companies last month announced 108,435 job cuts, a 118% increase from a year earlier. The report on Thursday also showed hiring intentions slid 13% from a year earlier to 5,306—marking the weakest total for any January in back 17 years.
Generally, one sees a high number of job cuts in the first quarter, but this is a high total for January. It probably means most of these plans were set at the end of 2025, signalling employers are less-than-optimistic about the outlook for 2026.
Almost half of the job cuts announced in January were tied to three companies—Amazon, United Parcel Service and Dow. Amazon announced plans to cut 16,000 corporate positions while UPS said it would shed as many as 30,000. Chemical maker Dow intends to eliminate about 4,500 positions, while Peloton Interactive and Nike also announced mass dismissals.
Amid all those employee terminations, Amazon said it plans to spend $200 billion this year on data centres, chips and other equipment. Its stock subsequently dropped 7%. The company’s investors, like those of other free-spending tech giants, are increasingly worried that colossal bets on artificial intelligence will shrink profits while it waits for investments to pay off. Or worse.
Even by Bitcoin standards, the recent selloff has been gut-wrenching.
The deregulatory Trump bump has now been fully erased. Bitcoin tumbled below $65,000 as the unwinding of leveraged bets and broader market turbulence deepened a selloff that’s wiped out all of the gains since the crypto-friendly Republican returned to the White House.
The token fell as much as 11% last Thursday to $64,944, the lowest since October 2024. The rout has erased nearly half of Bitcoin’s value since it reached a record four months ago and has spread to other tokens, related exchange-traded funds and companies.
Without conviction-based buyers willing to lean into the selling, each wave of ETF redemptions and liquidation cascades amplifies the magnitude of each leg lower and reinforces the defensive positioning that’s keeping organic demand on the sidelines.
What’s behind this rout
Author: Dawn Ridler
Q4 earnings are now in full swing, so far 165 companies reported, with 79% beating estimates by an average of 9.4%. This is, by all accounts, a decent showing. Despite this, stocks have become volatile even if good numbers are released. The reason for this is that the market has become more concerned with the payoff from AI investing activities than with who is in the AI race. This certainly was the story of 2025, but now that the market knows who the players are, the big question remains … who will be the winners and the losers?
What makes the current volatility memorable is that due to the size of tech counters, a sell-off today in Dollar terms carries a far larger value than in the past. This, nonetheless, is headline-grabbing. Microsoft saw a sell-off of roughly $360 billion after the stock dropped by 10%.
Microsoft
This is the worst one-day drop in the stock since 2020. Now, to put this into context, here are some of their numbers:
For the end of December 2025. Revenue was up 17% y-o-y, Operating Income increased by 21%, and GAAP Income increased by 60% (non-GAAP by 24%).
In anyone’s books, these results should be satisfactory. But the stock fell by 10% on the news. The reason for this is twofold. Firstly, the company, in order to keep up with its peers, is going to spend $37.5 Billion, an increase of two-thirds on Capex. This cash is aimed at making them a more AI-centric organisation. The second reason is that Azure and cloud growth were only up by 39% and not the 40% that the market was expecting. Microsoft Azure is the cloud computing platform for the company and a key building block for them as they build a future organisation.
Microsoft is in an enviable position in that they have built a subscription service by being the world’s prime operating software provider.
Without Microsoft, many PC’s simply won’t work, and hence consumers pay for their licences regardless of whether they like it or not. This service has become increasingly cloud-based through time to the point where Microsoft almost in it’s entirety runs in the cloud today. The future of software development is becoming less about the quality of one’s programmers and more about whether an operator like Microsoft can house other applications. At the same time, AI is busy changing how code is written and deployed. Whereas this historically required a development team, today it is increasingly AI-driven. Not completely, but developers will increasingly play an oversight role rather than being used for hard-coding applications.
But company applications need to run on something. You can’t write the code, package the application and load it onto your PC. You need the web to connect it to the world, a cloud-based service which houses the application and provides data storage and computing power. And this is where Azure comes in and will invariably face competition. The market is looking for growth here. So even though the numbers on paper look amazing, the market, almost perversely, needs even more.
Up to now, companies that wanted to create their own applications would either need to write them internally or use a third-party developer. This is where SAAS (Software as a Service) sits. These are companies which plug a specific corporate need with an application which users subscribe to. Salesforce is a good example. It provides a CRM and customer platform delivered via the cloud. But what if a company can now use AI to write their own CRM system, mould it to their own specific requirements and then house it on Azure?
Here is another one: Adobe. It’s the bedrock for PDF handling. But what if an application can exist that can replicate their service? The company, as an add-on service, has an AI assistant which will summarise content for an extra fee per month. Why not upload the same content into an AI browser and ask it to summarise? It works out cheaper.
SAAS is in trouble, and what the potential magnitude of this is, only time will tell.
Microsoft, being the quality company it is, needs to ensure that its cloud and deployment tools will allow users to build what they feel is appropriate. The coding barrier has fallen, and Microsoft finds itself possibly becoming even more valuable than before.
Author: Cobie Le Grange
EXCHANGE RATES and other Indices:
The Rand/Dollar closed at R16,03 (R16.15, R16.10, R16.50, …R16.91, R17.13, R17.36, R17.13, R17.27, R17.31, R17.25, R17.38, R17.50, R17.22 , R17.35, R17.33, R17.37, R17.58, R17.65, R17.44, R17.61, R17.74, R18.15,R17.76, R17.72, R17.90, R17.58, R17.89, R17.99, R17.92, R17.77, R17.95, R17.88)
The Rand/Pound closed at R21,82 (R22.11, R21.97, R22.13, …R22.57, R22.68, R22.74, R22.56, R22.69, R22.76, R22.96, R23.34, R23.37, R23.19, R23.22, R23.35, R23.55, R23.73, R23.84, R23.53, R23.84, R23.84, R24.09, R23.88, R23.76, R24.22, R24.08, R24.49, R24.22, R24.35, R24.05, R24.18)
The Rand/Euro closed the week at R8.93 (R19.14, R19.04, R19.20, …R19.68, R19.86, R19.99, R19.96, R19.98, R20.02, R20.06, R20.26, R20.33, R 20.22, R20.30, R20.35, R20.38, R20.61, R20.62, R20.44, R20.56, R20.64, R21.04, R20.86, R20.61, R20.93, R 20.70, R20.91, R20.74, R20.68, R20.24, R20,37)
Brent Crude: Closed the week $68,05 ($69.32, $65.88, $63.34, …$63.71, $63.19, $62.42, $63.94, $63.61 $64.66, $65.04, $61.27, $62.14, $64.28, $69.67, $66.57, $66.80, $65.52, $67.38, $67.73, $66.08, $66.07, $69.46, $68.29, $69.21, $70.58, $68.27, $67.39, $77.27, $74.38, $66.56, $62.61, $65.41)
Bitcoin closed at $68,553 ($81,301, $89,295, $90,585, … $90,809, $86,334, $94,990, $101,562, $109.936, $112,492, $106,849, $111,888, $124,858, $109,446, $115,838, $115,770, $110,752, $108,923, $114,916, $117,371, $118,043, $113,608, $118,139, $118,214, $117,871, $108,056, $107,461, $103,455)
Articles and Blogs:
Holiday checklist NEW
Next year – Action Plan NEW
Next year – Vision, Mission etc NEW
Medical Risk Mitigation
Next Year – Consolidation
Abdication or diversification?
Carbo-loading your retirement
Spoiled for choice
Who needs a plan anyway
8 questions you need to ask about retirement
What to do when interest rates drop
How to survive volatility in your investments
What to do when interest rates drop
Difficult Financial Conversations
Financial Implications of Longevity
Kick Start Your Own Retirement Plan
You matter more than your kids in retirement
To catch a falling knife
Income at retirement
2025 Budget
Apportioning blame for your financial state
Tempering fear and greed
New Year’s resolutions over? Try a Wealth Bingo Card instead.
Wills and Estate Planning (comprehensive 3 in one post)
Pre-retirement – The make-or-break moments
Some unconventional thoughts on wealth and risk management
Wealth creation is a balancing act over time
Wealth traps waiting for unsuspecting entrepreneurs
Two Pot pension system demystified
Cobie Legrange and Dawn Ridler,
Rexsolom Invest, Licensed FSP 45521.
Email: cobie@rexsolom.co.za, dawn@rexsolom.co.za
Website: rexsolom.co.za, wealthecology.co.za