To investors,
It seems many people are freaked out over the weak jobs report from last week, but I don’t think people quite understand what is happening right now. We are living through one of the most historic moments in technology history.
You may think that sounds like hyperbole, but I brought cold, hard facts to prove it.
Take a look at this chart from Aahan Menon — tech sector output is skyrocketing at the same time that tech sector employment is contracting.
Quite literally, we have never seen this happen at any point over the last 60+ years. Companies are becoming more productive, but with less people. It is the textbook definition of efficiency.
Now you may ask “how is this happening?”
Don’t worry, I got you covered. Let’s use Coinbase as the first example. CEO Brian Armstrong recently wrote:
“Approximately 40% of daily code written at Coinbase is AI-generated. I want to get it to greater than 50% by October. Obviously it needs to be reviewed and understood, and not all areas of the business can use AI-generated code. But we should be using it responsibly as much as we possibly can.”
Yup, he said 40% of daily code written at the company is being done by artificial intelligence. And he isn’t the only one. Eight Sleep CEO Matteo Franceschetti wrote in response:
“48% of the code from our data team is now AI-generated—and that share keeps climbing every week. Beyond engineering, teams across the company are rapidly adopting tools like Devin, making AI adoption our fastest-growing company-wide metric.”
These are public and private companies. They are software and hardware. One is worth hundreds of millions. The other is worth tens of billions. Each is publicly confirming that nearly half of the code written is coming from artificial intelligence.
No wonder we are seeing productivity spike upwards, while employment is falling. So this begs the question, “who is losing their job?”
The answer is very clear — the number of junior roles are declining and the number of senior roles are increasing. Alex Cheema shows junior roles are down 23%. Senior roles are up 14%.
This means the best engineers, which are usually the most senior, are the big winners from the AI revolution. That is an important data point because it proves that AI is making one group more productive at the expense of the less experienced group.
So open your eyes and ears. These companies are showing us how they are doing it. Too many people refuse to believe them. Eventually that will have to change.
This brings me to the broader US economy outside of the tech sector. Our friends at Boring Biz highlighted a recent report from Moody’s that said “33% of states in the U.S. are already in recession territory.”
It looks like Texas, California, Florida, New York and North Carolina are responsible for majority of the economic growth happening right now. Those also happen to be the states with significant tech activity, including Silicon Valley, Austin, Miami, El Segundo, the Research Triangle Park, and Silicon Alley.
It makes sense the economic growth is happening in these areas. But the fact we are not seeing growth in other states is less than ideal.
Add in the fact that the S&P 500’s Price-to-Book Value is now higher than the 2000 Dot Com Bubble and you already know the bears are out in full force screeching about the impending catastrophe in financial markets.
But before you throw up your hands and say the bears are right, Sam Badawi reminds us we have had three bear markets in the last five years.
And if that didn’t make you feel good, the Federal Reserve is about to juice the market with an interest rate cut too. They haven’t been the only ones this year.
“The Fed is about to join the global rate cut cycle: There have now been 88 rate cuts worldwide year-to-date, the most since 2020. This puts 2025 on track for the 3rd-fastest global cutting cycle on record, according to Bank of America.”
So my best advice is to stop listening to all the bears. They keep predicting a recession, yet the odds on Polymarket have fallen from 65% in May to only 8% today.
A big reason for these declining odds is the underlying business fundamentals are getting better. Companies are reporting record revenue, profits, and growth. These businesses are becoming more efficient and more productive, so they should be worth more money. And that is exactly what you are seeing in the stock market.
And you can’t have a recession if companies are getting stronger. So good luck to the pessimists out there. I hope they don’t actually believe all the nonsense they are spewing.
Have a great start to your week. I’ll talk to everyone tomorrow.
- Anthony Pompliano
Founder & CEO, Professional Capital Management
Why Bitcoin Will Hit $150,000 Sooner Than You Think
Jordi Visser is a macro investor with over 30 years of Wall Street experience. He also writes a Substack called “VisserLabs” and puts out investing YouTube videos.
In this conversation we talk about the bad jobs report, what will happen with inflation and the fed, when bitcoin will break out, artificial intelligence, Tesla, and why asset prices will keep going higher.
Enjoy!
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