Syz the moment

This may be an example of the Jevons paradox. When AI makes coding faster and cheaper, demand for software development can increase rather than decrease. As the cost of building software drops, companies start creating far more of it. That means software gets embedded in industries, products, and internal tools where development used to be too expensive to justify. The result is that businesses may end up needing more software engineers, not fewer. Source: Rohan Paul, Chart from citadelsecurities .com/news-and-insights/2026-global-intelligence-crisis/

Last week, negotiations between Anthropic and the US Department of Defense collapsed. Now CEO Dario Amodei is racing to repair the relationship before the company is locked out of the military AI supply chain. Why this matters 👇 Anthropic’s models are already used by US national security agencies and were among the first AI systems approved for classified environments. But talks with the Pentagon broke down after a major disagreement: How far should AI be allowed to go? The US military wants the freedom to use AI for any “lawful purpose.” Anthropic drew a hard line. Two red lines: • ❌ Mass domestic surveillance • ❌ Lethal autonomous weapons During negotiations, the Pentagon reportedly asked Anthropic to remove a clause restricting “analysis of bulk acquired data.” That clause was specifically designed to prevent large-scale surveillance use cases. Anthropic refused. Things escalated quickly. A senior defense official publicly called Amodei: “A liar with a God complex.” The next day, talks collapsed. Now the stakes are enormous. The Pentagon is considering labeling Anthropic a “supply chain risk.” If that happens: • Military contractors would be forced to cut ties • Anthropic could lose major government access • The AI defense market could shift dramatically Meanwhile, OpenAI signed its own agreement with the Pentagon. Amodei hinted at something deeper in an internal memo: “Much of the messaging from the Pentagon and OpenAI is just straight up lies or attempts to confuse the issues.” He even suggested Anthropic may be at a disadvantage because it hasn’t given “dictator-style praise” to Trump — unlike rivals. Whether you agree with Anthropic or not, this moment reveals something critical: The real battle in AI isn’t just about technology. It’s about who controls how the technology is used. And governments are moving fast. The companies that set their principles today will shape how AI power is deployed tomorrow. Source: FT

Feb 2026: Claude share has surged to ~70%. Absolutely insane growth of Anthropic. Their bet on coding and agents clearly paid off. Source: Yuchen Jin

World tech equities are underperforming other stocks by ~7 percentage points, one of the worst starts to a year in HISTORY. Tech relative performance is now tracking in the bottom 10% of years since 1973. Historically, the median outcome by year-end has been +4 percentage points of outperformance for tech. The last time tech underperformed this badly was during the 2000 Dot-Com Bubble. Is the tech bubble starting to pop? Source: Goldman Sachs, Global Markets Investor

Source: zerohedge

Source: TME, LSEG Workspace

Investors are currently facing major unknowns: 1/ A major conflict in the Middle East. In this context, we believe investors should not lose sight of what we think remains a positive backdrop for stocks; 2/ The pendulum around AI which continues to swing between fear and excitement; 3/ Uncertainties about tariffs. But in this context, it is key to NOT OVERREACT to headlines and to keep in mind that the overall context remains positive for stocks: 1/ Corporate earnings continue to strengthen within and beyond AI 2/ The Fed maintains a bias toward easing 3/ The U.S. economy appears to be on track for another year of solid growth. On the later, US economic news published yesterday were impressive, starting with the solid ADP and ending with the blowout Service ISM number. The ADP number was the day's first positive surprise, as private jobs surged 3x from January and beat estimates, as they rose to 63K, the highest since November. Then it was the Service ISM print which smashed expectations (a 6-sigma beat), rising the most since Sept 2024 to the highest level since July 2022. The stagflation narrative was crushed, as the ISM's Prices Paid index tumbled to an 11 month low while everything else rose. The Citi US eco surprise index jumped from 30 to 39 in one session following the unexpectedly strong economic data. This set of very positive data was good enough to offset some of the scary news on the war front and propelled risk assets higher yesterday. Source: zerohedge

MS: "While this is not an exhaustive study, based on 14 events over the last few decades (generally major, as well as some recent smaller Iran related incidents) the S&P 500 is generally range bound following the start of a conflict. The event causing the largest drawdown in this sample was September 11th, 2001." Source: TME, MS