Wealth Advisers Whopped, Investment Banks Beaten, Market Disrupted

I Don't Know

People look to me and say

"Is the end near, when is the final day?"

What's the future of mankind

How do I know, I got left behind

-Osbourne, Rhoads, Daisley (Ozzy Osbourne), 1980

Disruption, Continued

The S&P 500 was trading higher for the Tuesday session more than an hour after the opening bell had chimed its last chimes down at 11 Wall Street and up at Times Square. In fact, the S&P 500 held onto Monday's gains all the way into what some might consider lunchtime. What came next seemed to catch many traders and investors off guard. We knew that the trading volumes experienced both on Friday and Monday were too low. Hence, nothing had been confirmed, with the exception of perhaps a likely increase in volatility.

The disruption of the "software as a service" industry began in earnest a week ago when Anthropic released an AI (artificial intelligence) driven tool that would relieve junior to mid-level attorneys of some of their more laborious research-related tasks. By "relieve" I mean everything from freeing them to focus on more important tasks to freeing them up so that they can stack canned vegetables on the overnight shift at their local Walmart  (WMT) .

That tool, "Claude Cowork" can navigate computer interfaces and perform a number of multi-step tasks simultaneously, which to be blunt, renders human labor somewhat obsolete. I throw no punches. I was a "human" floor trader in my day, one of those guys wearing the colored jackets, waving their arms in the air while hollering at each other. I've seen this movie before. It does not end well for humans unless they adapt. I can't think of even five former floor traders who adapted to that changed environment and are still relevant in any way on Wall Street.

Between the New York Stock Exchange and the American Stock Exchange, there were more than 7,000 of us, when including assistants. Gone. Disappearing as well were all of the coffee shops, lunch counters, pizzerias, restaurants and bars that traders visited during after a hard days' work. An entire ecosystem was disrupted, but it was confined to an economically important, but quite local area of downtown New York City.

Spreading Like Chicken Pox

So, floor traders went the way of blacksmiths. Flash forward to winter 2026 and attorneys come under fire as does the software entry itself in an odd sort of financial cannibalism. On Tuesday, it was the tax planning and wealth management industries that would become the "fish in the barrel." A new AI-driven tool, launched by tech startup Altruist would "help" wealth advisers create tax strategies and plan investment for clients, while creating things like pay stubs, and account statements for business customers.

Are financial planners. wealth advice and tax specialists the next grouping? That group is not about to disappear. Will their ranks shrink? While the quick answer would be "yes" with fewer entering that business at junior levels, the handwriting on the wall says that white collar work in general is already being disrupted and this disruption will spread across the entire US and global economies. Wanna help your children? Don't send them to college for accounting or any other static occupation with no shot at a future.

Teach them that whatever they do, unless they can land a cushy civil service job with a pension, they will have to be entrepreneurial throughout their careers. They will have to adapt to changing environments multiple times in order to get from point A to point Z over the fifty-plus years that they will have to create a living for themselves.

So, it was that wealth advisors took a beating on Tuesday and led the headline equity indices lower. Raymond James Financial  (RJF)  was hit for 8.8%. Charles Schwab  (SCHW)  was ripped for 7.4%. Shares of LPL Financial  (LPLA)  tumbled 8.3%. Even the money-center / investment banks were slapped around. Wells Fargo  (WFC) , Morgan Stanley  (MS) , Bank of America  (BAC) , and JP Morgan Chase suffered losses of 2.9%, 2.5%, 1.8% and 1.2% respectively.

Kick in the Pants

Meanwhile, back at the ranch, the consumer-driven side of the US economy showed evidence reflecting pressure forced by labor market weakness. December Retail Sales, which were expected to show strength as had the November data, disappointed. At the headline level, US retail sales for the "holiday" month printed at growth of 0.0% (m/m) versus expectations for growth of 0.4% and down from growth of 0.6% the month prior. Ex-autos, December Retail Sales also hit the tape at growth of 0.0%, with the street looking for a 0.4% print and down from November's 0.4% tag that itself was revised down from 0.5%.

Especially hurt in December were sellers of furniture, electronics, appliances, and clothing. That's right, clothing sales printed at -0.7% for the month that everyone buys pajamas, dress shirts, sweaters and the like for family members. Not good. My fun index was still up 0.4%, but that's misleading at that time of year. Reminder: The fun index consists of purchases related to sporting goods, hobbies, books and music. In short, these are strictly discretionary purchases, things consumers like, but do not need. People buy junk in a panic in December.

Making Matters Worse...

The New York Fed released their "Quarterly Report on Household Debt and Credit" on Tuesday. The numbers are alarming. Delinquency rates across all loans increased to 4.8% of all U.S. households, which is the highest level for that metric since 2017. If you think that wasn't too bad, sit down. I have more.

The share of credit card loans that are at least 90 days delinquent increased to 12.7%, the worst percentage for that item since 2011. The share of auto loans in serious delinquency reached 5.2%, which is closing in on a record set in 2010. I have more. A whopping 16.3% of student loans became delinquent during the fourth quarter of 2025, which is the highest percentage for that number on record. Those numbers have been kept since 2004.

Details show that as one might have expected, these defaults were significantly higher among lower income and younger borrowers.

Hence...

There was a rush into Treasury debt securities as it became way too obvious that the Federal Reserve was yet again behind the eight ball and had missed their golden opportunity to get ahead of this economic deterioration by reducing short-term rates aggressively. The U.S. Ten-year Note paid just 4.14% by day's end, down seven basis points. The yield on the U.S. Thirty-Year Bond ran at just 4.78% by late Tuesday, down 8 basis points. You don't have to be a genius, in a disinflationary environment to understand what has to be done. Or maybe you do...

Unreal

Speaking publicly on Tuesday morning, even after the release of this data, and showing what I believe is an almost complete lack of cognitive ability in her field, Cleveland Fed Pres Beth Hammack said, “Rather than trying to fine tune the funds rate, I’d prefer to err on the side of patience as we assess the impact of recent rate reductions and monitor how the economy performs. Based on my forecast, we could be on hold for quite some time.”

Cleveland, unfortunately, holds policy voting rights for 2026. If the economy is to succeed in fighting its way past the present labor market weakness that may not be so temporary, it will have to overcome illogical opposition at the central banking level. Hammack served as co-head of global financing at Goldman Sachs  (GS) , so she should know better. She does not have the luxury of being a career academic to hide behind in order to explain real-world ignorance. If January payrolls kick some tail this morning, I'll apologize. If they don't, she should... to all of you.

Marketplace

While the S&P 500, Nasdaq Composite, Nasdaq 100, KBW Bank Index, Philadelphia Semiconductor Index, Russell 2000 and S&P Midcap 400 all lost ground on Tuesday, somehow winners beat losers by a rough five-to-three margin at the NYSE. Losers did beat winners at the Nasdaq, but just by this >< much. Advancing volume also took a majority share of the action across names listed at both exchanges. Breadth was, in actuality, slightly positive for the day. Six of the 11 S&P sector SPDR exchange-traded funds closed out the day in the green and defensives did outperform cyclicals, but not significantly so. There was no new technical damage done to markets on Tuesday.

January Employment Situation (8:30 a.m. ET)

Non-Farm Payrolls: Expecting 68,000, Last 50,000.

Unemployment Rate: Expecting 4.4%, Last 4.4%.

Underemployment Rate: Expecting 8.5%, Last 8.4%.

Participation Rate: Expecting 62.3%, Last 62.4%.

Average Hourly Earnings: Expecting 3.7% y/y, Last 3.8% y/y.

Average Weekly Hours: Expecting 34.2, last 34.2 hours.

Other Economics 

(All Times Eastern)

7:00 - MBA 30 Year Mortgage Rate (Weekly): Last 6.21%.

7:00 - MBA Mortgage Applications (Weekly): Last -8.9% w/w.

10:30 - Oil Inventories (Weekly): Last -3.455M.

10:30 - Gasoline Stocks (Weekly): Last +685K.

1:00 p.m. - Ten-Year Note Auction: $42B.

The Fed 

(All Times Eastern)

10:15 - Speaker: Reserve Board Gov. Michelle Bowman.

7:00 p.m. - Speaker: Dallas Fed Pres. Lorie Logan.

Today's Earnings Highlights

(Consensus EPS Expectations)

Before the Open:  (CVS)  (.99),  (HLT)  (2.02),  (HUM)  (-3.99),  (MCD)  (3.05),  (SHOP)  (.51),  (TMUS)  (2.00)

After the Close:  (APP)  (3.07),  (CSCO)  (1.02),  (IFF)  (.83)

At the time of publication, Guilfoyle was long JPM equity.