February 27th Market Overview

Happy Friday

Ugly way to close out the month. Inflation came in strong on PPI, bank stocks got wrecked, and Jack Dorsey just told the world that AI is coming for half his workforce. Gold had its best month in over a decade off it’s bounce and the Nasdaq is limping into March down over three percent in Feb.

I think we're watching sentiment shift in a real way and not just the normal end-of-month noise. Going over more of this in premium newsletter this weekend and Sundays deep dive.

Let’s dig in...

Today's Big Picture

1. Rate Cuts Are Off The Table

Wholesale inflation came in way hotter than expected this morning. Core PPI printed at 0.8 for the month, more than double the 0.3 Wall Street was looking for. Services prices drove the move, which tells me companies are starting to pass tariff costs through to the end consumer. I don't see how Powell justifies a cut with core PCE now tracking toward 3.2.

2. AI Disruption Is Hitting Balance Sheets 

Jack Dorsey fired half of Block's $XYZ workforce today because AI can do their jobs. That announcement sent the entire software and lending sector lower. BDCs tied to software companies started cutting dividends with BlackRock TCP Capital slashing its payout from 25 cents to 17 cents and Apollo's MidCap Financial cutting from 38 to 31 cents. The disruption has moved from theory to real money leaving real balance sheets.

3. Gold Snaps Back After January's Crash 

Gold gained around $516 per ounce in February, the largest single-month dollar gain ever recorded. Context matters though. The metal hit $5,602 in late January then crashed $380 in 28 minutes after Trump nominated Kevin Warsh as Fed Chair. Silver fell over 30% from its highs in the same washout. February was the snapback. Gold has still nearly doubled from $2,800 in early 2025, driven by central bank buying (China alone has bought for 15 straight months) and a wave of ETF inflows that hit a record $19 billion in January. Goldman raised their year-end target to $5,400.

Market Overview

Index Performance

Stock Spotlight

Block $XYZ ( ▲ 16.96% )  
is cutting over 4,000 employees because Dorsey believes AI can do their jobs. He told workers at other companies to expect the same. Stock had its best day in years on the news.

Dell $DELL ( ▲ 21.6% )  
beat earnings with AI server revenue more than quadrupling year over year. They guided for $50 billion in AI server revenue next fiscal year. Analysts are watching a memory chip shortage that could slow things down.

Netflix $NFLX ( ▲ 14.22% )  
walked away from the Warner Bros bidding war after Paramount Skydance $PSKY raised its offer to $31 per share. Netflix said it will spend $20 billion on original content this year instead.

Flutter Entertainment $FLUT ( ▼ 13.76% )  
missed revenue estimates. CEO blamed a weak second half of the NFL season. Kalshi and other prediction markets are pulling bettors away from traditional sportsbooks. Stock has lost over a third of its value since January.

Big Name Updates

Nvidia $NVDA ( ▼ 4.44% )  
fell for a second straight session despite strong earnings earlier this week. The chipmaker pledged $30 billion to OpenAI's latest raise. Investors are starting to ask how long companies can keep spending at this rate on AI infrastructure.

Amazon $AMZN ( ▲ 0.67% )  
committed $50 billion to that same OpenAI round and announced a partnership to build developer tools on OpenAI's models. Stock barely moved.

CoreWeave $CRWV ( ▼ 20.61% )  
disappointed with first-quarter guidance. Capital spending will double to $30-35 billion in 2026. CEO said Q1 margins will be the low point and expects them to build from there.

Other Notable Company News

Paramount Skydance $PSKY ( ▲ 20.93% )  
won the bidding war for Warner Bros. Discovery $WBD at $31 per share, backed by Larry Ellison.

Goldman Sachs $GS ( ▼ 7.63% )  
led the bank selloff. The KBW Bank Index had its worst session since April.

Monster Beverage $MNST ( ▼ 1.51% )  
beat earnings on strong volume growth. Multiple firms raised price targets.

Eli Lilly $LLY ( ▲ 1.99% )  
keeps pulling ahead of Novo Nordisk in weight-loss drugs.

Rocket Companies $RKT ( ▲ 2.22% )  
beat estimates as mortgage rates fell below six percent for the first time in three years.

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Sector Watch

Bond Market

The 10-year yield fell below four percent for the first time since November. That happened on the same day wholesale inflation came in hot. Bonds rallied anyway because investors are more scared of the stock market than they are of inflation right now.

• Mortgage rates slipped below six percent for the first time in three years

• Long bonds are having their best month in a year

• The 60/40 portfolio is doing its job again after two years of not working

Policy Watch

Fed 
January PPI came in at 0.5 month over month versus 0.3 expected. Core PPI was the real shock at 0.8 versus 0.3 expected, driven almost entirely by services inflation. The next PCE print lands March 13, days before the March 18 Fed meeting. Traders expect another pause.

Separately, the Fed is fighting two DOJ subpoenas tied to US Attorney Jeanine Pirro's investigation into Chair Powell. The probe centers on whether Powell made false statements about Fed headquarters renovations during Senate testimony last summer. The arguments are sealed.

Geopolitics 
US-Iran nuclear talks ended in Geneva with no deal. Next round moves to Vienna with technical teams joining.

• The US deployed additional combat assets to the Gulf this week

• State Department authorized evacuation of non-essential personnel from the Jerusalem embassy

• Trump told reporters he'd "love not to" attack Iran "but sometimes you have to"

• Oil hit six-month highs on the escalation

Embassy evacuations and military deployments in the same week. That's not posturing.

Fiscal & Trade
Over 100 companies including FedEx $FDX and Dollar General $DG filed lawsuits seeking tariff refunds after the Supreme Court struck down IEEPA tariffs. Total refund liability could exceed $170 billion. Trump said it "has to get litigated."

Manufacturing construction spending fell for the 11th straight month. The reshoring push isn't producing new factories right now.

Defense & AI
Anthropic CEO Dario Amodei said his company will not hand over AI models for unrestricted Pentagon use despite threats to invoke the Defense Production Act. OpenAI's Sam Altman said he's working on a separate Pentagon deal that could resolve the standoff.

What to Watch

Berkshire Hathaway Earnings 
Greg Abel publishes his first annual shareholder letter tomorrow alongside quarterly results and the full 2025 report. First one without Buffett. I'm reading every word.

OPEC+ Meeting 
The oil cartel meets Sunday. They're expected to resume output hikes, but that decision carries more weight now that Iran talks have broken down and crude is at six-month highs.

PCE Inflation Print
Lands March 13. After today's hot PPI, analysts expect core PCE around 3.1 to 3.2. That would be the highest reading in over a year.

Buyback Wave
February saw $233 billion in buyback authorizations, the largest February on record. Salesforce authorized $50 billion, Walmart $30 billion. Corporate America is buying the dip hard. Year-to-date authorizations already ahead of last year's pace.

Thanks for reading - you are now the more informed 🙂

- John

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