While jobs data saw ‘very pleasant’ upside, remain careful on CPI

Yahoo Finance Video

Fri, February 13, 2026 at 2:30 AM GMT+9

January’s jobs report saw the US labor market grow by 130,000 non-farm payroll jobs last month while the unemployment rate ticked down from 4.4% to 4.3%. Investors are awaiting the release of last month’s Consumer Price Index (CPI) inflation data due out on Friday.

B. Riley Wealth chief market strategist Art Hogan and Yahoo Finance Senior Reporter Ines Ferré weigh in on the latest economic data.

To watch more expert insights and analysis on the latest market action, check out more Opening Bid.

Video Transcript

00:00 Speaker A

Is there more happening in the economy than some of these tech companies building an AI data center out there in the desert somewhere where there’s no homes? Like, I’m trying to figure out like, where else is the economy surprising?

00:15 Art

Well, I would tell you the economy is surprising in the number of healthcare workers that we needed to hire last year and certainly last month. So if you look at the non-farm payroll numbers, which was a very pleasant upside surprise, double what expectations were, unemployment ticked down. All of that’s very positive unless you take a step back and say where is it coming from? We got 5,000 manufacturing jobs, the first time we’ve seen a positive number in manufacturing jobs going all the way back to last November. So it’s not a broad labor market increase here. So I think there’s pockets of strength here, but I certainly think you have to be careful with what you look at in the economic data stream. Much more importantly to me will be does the CPI look anything like the PPI did last week when it comes out on Friday, and should we still be concerned about the stickiness of inflation? But in general, while the market is broadening out, and we have five sectors in the S&P 500 that are outperforming the index versus two last year, um the the the labor market is not reflecting that.

01:45 Speaker A

And Anj, where have you been seeing economic surprises?

01:50 Anj

Um, look, uh Art just mentioned inflation and I will say that I’m starting to hear a lot more talk about deflation. Um, Funstrat put out a note basically saying that this carnage that we’ve seen in the software space, that that basically indicates that AI is productive, that there are productivity gains to companies because of this. and you can think of it as an input cost that now costs less because companies spend so much on software and SAS. And that will mean deflation going forward. I think of it in the terms of jobs and the deflation in the job market perhaps because we have been hearing more and more from companies that are talking about productivity gains when it comes to engineering, etc. So, uh nevertheless, the bottom line is what they’re saying is is that expect to see some deflation and because of that perhaps a dovish fed.

03:00 Speaker A

Art, that if if the economy is poised to surprise the upside over the next few months, wh what’s the investing playbook for that? Because that is I think a different playbook than what we saw or what we have seen in the prior few months.

03:17 Art

Yeah, I think we’re making a significant transition that started in the fourth quarter of last year and uh well into this year where it’s not just about technology and communication services. And that’s played out both in the the playbook of small caps, the environment is finally right for small caps to outperform and they have significantly over the fourth quarter and into this year. Um, the the the environment is right for cyclicals, right? So when you whether you look at materials or if you look at industrials, cyclicals are doing better than some of those, you know, technology, artificial intelligence darlings were doing for the last two years. I think that’s important as well. So I think you can take your playbook from what is actually outperforming. The market’s broadening out. Don’t sleep on the small caps and remember cyclical cyclicals do well in the type of economic recovery we’re going through.

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