16 indicators from FRED · Updated daily
The February payroll print of -92K is a five-alarm fire that the market isn't taking seriously enough. This is the first negative print since the pandemic, and it's happening while unemployment ticks up to 4.4% and tech sector employment continues its 12-month contraction. Despite this deterioration, inflation remains stubbornly above target at 2.4% YoY, handcuffing the Fed's ability to provide relief. Technology stocks are priced for perfection in an economy that's showing clear cracks — this disconnect won't last.
February's -92K payroll miss marks a sharp reversal from January's +126K, with the 6-month trend declining from +76K to negative territory. Unemployment rose to 4.4% from 4.3%, now 40 basis points above year-ago levels. JOLTS data shows job openings ticked up to 6.95M in January, but this is still down from 7.43M a year ago, while the quits rate remains stuck at 2.0%, signaling worker caution.
The Information sector shed another 11K jobs in February, down 64K from a year ago — a 2.2% contraction that's accelerating. While this eases wage pressure for survivors, it signals weak demand for technology services and continued cost-cutting at major tech firms. The broader Professional & Business Services category is also contracting YoY, down 88K jobs, suggesting enterprise customers are pulling back on consulting and implementation spend. Tech companies can hire top talent more easily now, but they're not — that's the real warning sign.
CPI jumped 0.9 points to 327.5 in February, keeping YoY inflation stuck at 2.4% — well above the Fed's 2% target. Core CPI increased 0.7 points to 333.5, showing inflation remains broad-based beyond volatile food and energy. The 6-month CPI trend from 323.3 to 327.5 suggests inflation is re-accelerating after the late-2025 pause. With unemployment still below 4.5%, the Fed has limited room to cut rates without reigniting inflation pressures.
Technology multiples face a brutal squeeze: rates can't come down meaningfully with inflation at 2.4%, but growth is decelerating with negative payrolls. The Nasdaq's 25x forward P/E assumes both rate cuts AND growth acceleration — we're getting neither. High-multiple software names trading above 10x revenue are particularly vulnerable to compression. The only tech stocks that can sustain current valuations are those with pricing power to offset inflation — everyone else faces a reckoning.
CFO surveys show IT budgets flat to down 5% for 2026, with "optimization" remaining the watchword. Seat expansion has stalled as headcount contracts, and net retention rates are compressing across the sector. Only vendors with clear ROI or AI-driven productivity gains are seeing new deals close.
Security remains the last budget standing, but even here we're seeing longer sales cycles and more pricing pressure. The rise in state-sponsored attacks provides a tailwind, but enterprise customers are consolidating vendors. Platform players win, point solutions struggle.
Cloud optimization is extending into its third year as enterprises scrutinize every workload. Consumption models face headwinds as customers implement aggressive cost controls and FinOps practices. New AI workloads provide some offset, but not enough to return to 2021-2023 growth rates.
AI infrastructure spend remains robust, with hyperscalers maintaining capex despite the macro deterioration. However, traditional datacenter, automotive, and industrial semi demand is weakening. The AI semi trade is crowded and priced for perfection — any disappointment in GPU allocations will hit hard.
Transaction volumes are slowing as consumer spending moderates, while buy-now-pay-later delinquencies tick higher. Rising unemployment directly impacts payment volumes and credit quality. Fintech valuations haven't adjusted to the new reality of higher capital costs and slowing growth.
Digital ad spending is the canary in the coal mine — CPMs are falling as advertisers pull back. E-commerce growth is decelerating to mid-single digits as consumers cope with persistent inflation. Streaming services face subscriber churn as households cut discretionary spending.
Telehealth adoption has plateaued as return-to-office solidifies and COVID urgency fades. Regulatory uncertainty around prescription delivery and reimbursement rates clouds the outlook. Only companies with clear paths to profitability will survive the funding drought.
Defense spending remains robust given geopolitical tensions, but broader government IT modernization faces budget pressures. Federal contractors benefit from multi-year contracts providing stability. Space and satellite plays see continued government investment despite macro headwinds.
1. **Stagflation Scenario** — If unemployment rises above 5% while inflation stays above 2.5%, the Fed faces an impossible choice. Tech multiples would compress violently as both growth slows and rates stay elevated.
2. **Credit Event** — Commercial real estate or leveraged loan defaults could freeze capital markets, hitting unprofitable tech companies that need continuous funding.
3. **AI Spending Pause** — Any slowdown in hyperscaler AI capex would devastate semiconductor stocks and reveal how narrow market leadership has become.
We're defensively positioned with overweights in profitable software with pricing power (NOW, CRM), cybersecurity platforms (CRWD, PANW), and defense contractors (PLTR, BAH). We're underweight high-multiple unprofitable growth, consumer discretionary tech, and semiconductor names beyond AI leaders. Cash levels at 15% — ready to deploy when multiples properly reflect the deteriorating macro reality. The next quarter will separate the true compounders from the story stocks.
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*Atlas Macro Outlook is published monthly by Project Gold Eagle. Analysis based on U.S. Bureau of Labor Statistics data. This is not investment advice.*
Data from FRED (Federal Reserve Economic Data). Gold Eagle Valuation, Inc. · Not investment advice.