Cover:
-Robots are nearing their anticipated takeover, transitioning from science fiction to reality. At the 2025 CES, humanoid robots, notably Boston Dynamics’ Atlas, captured attention, supported by chip manufacturers like Nvidia and Intel. As Wall Street embraces the potential of artificial intelligence (AI) and autonomous robots, significant advancements are underway. Unlike traditional models and consumer products, new robots leverage AI to learn tasks such as packaging, assembly, and household chores. However, mass production remains elusive, with costs uncertain; for example, the NEO robot for home use is reserved at $20,000, while Tesla's Optimus robot for commercial use might also hit that price once production stabilizes at a million units annually. Although robots are operational in factories and warehouses, their home integration is still developing, requiring human support during early learning phases. Despite long-term maturity anticipated in the industry, investors see potential as robots contribute to existing trends in AI chip demand, data connectivity, and US manufacturing growth. Estimates suggest robotics could generate $25T in revenue by 2050, heralding the third Industrial Revolution.
Interview:
-Cardinal Health has once again raised its fiscal-year earnings outlook, now anticipating adjusted earnings between $10.15 and $10.35 per share, surpassing its previous forecast of at least $10 and exceeding analyst expectations of $10.02, according to FactSet. This updated guidance follows a prior adjustment made last month at the JP Morgan Healthcare Conference, where the company indicated a range of $9.65 to $9.85 per share. The announcement led to an 8.7% increase in stock price, reaching $224.92, while other drug distributors like Cencora and McKesson also saw significant stock rises. CEO Jason Hollar noted that all operating segments performed effectively by simplifying their strategies. The pharmaceutical and specialty solutions segment, which is the largest by revenue, generated $60.7B in the quarter, benefiting from sales growth both from existing and new clients, pushing segment profit up to $687M from the previous $531M in 2024.
Tech Trader:
-On Tuesday, software, media, and information company stocks, including Salesforce, Reddit, and Thomson Reuters, experienced a significant decline. This downturn was triggered by the launch of new artificial intelligence tools from start-up Anthropic, which many investors viewed as a potential threat to companies that do not manufacture physical goods. Despite concerns, the fears may be exaggerated; while these AI tools demonstrate substantial potential in office environments, they are not yet fully developed and may pose risks to the firms that adopt them. Moreover, these AI agents rely on existing software and information sources, suggesting that they will not entirely replace those systems.
Once the market calms, numerous firms in the affected sectors may present attractive investment opportunities, with private equity firms likely to take interest.
The Trader:
-Artificial intelligence has significantly impacted the stock market, with investors recently expressing concerns that it has morphed from a protective force into a potential liability. This week witnessed the Dow Jones Industrial Average surpassing 50,000 for the first time, despite widespread software industry failures. Notable companies like Thomson Reuters, PayPal Holdings, and Verisk Analytics experienced record losses, plummeting over 15%. Other firms, including Oracle and S&P Global, also faced declines. While some analysts, such as John Belton from Gabelli Funds, argue that companies with loyal customer bases and proprietary data will ultimately benefit from AI, a shift in investor sentiment indicates growing skepticism. Mark Hackett from Nationwide noted that the market has transitioned from viewing AI as uniformly beneficial to scrutinizing investment returns, leading to penalties for companies perceived as overspending.
-Rising fears over artificial intelligence have negatively affected US stocks and emerging markets (EM) that have benefited from US corporate spending on AI, with the iShares MSCI Emerging Markets ETF falling 2.5% this week. The iShares MSCI Taiwan, South Korea, and China ETFs also experienced declines of 1.6%, 4.7%, and 5%, respectively. Despite the AI trade's US focus, emerging markets, particularly in Asia, play a significant role in supporting AI growth due to their tech-heavy infrastructure. Stacie Mintz from PGIM highlights this potential in regions like China, South Korea, and Taiwan. Beyond East Asia, India emerges as a promising non-AI emerging market, set for a recovery after a challenging 2025, with earnings expectations for the iShares MSCI India ETF projected to rise 16% in 2026 and 15% in 2027. However, India is not immune to AI-related market fluctuations, as major companies like Infosys and Tata Consultancy Services have seen declines of 4.8% and 3.6%, respectively. Kunal Desai from GIB Asset Management emphasizes that India's market fundamentals, which are driven by domestic consumption, infrastructure investment, and service-led growth, position it favorably, especially following recent trade agreements with the EU and the US that lower tariffs on Indian goods.
Features:
-The emergence of private credit "cockroaches," particularly in the software sector, signals potential challenges for the industry, which comprises over $1T in loans to riskier companies. These loans are often sold through non-publicly traded private credit funds and publicly traded business development companies (BDCs) such as Ares Capital and Blue Owl Capital. While private credit has been widely popular and perceived as low-risk during favorable economic conditions, warnings from JPMorgan Chase CEO Jamie Dimon highlight growing concerns, especially after recent declines in publicly traded software stocks, which have dropped an average of 20% this year. A significant portion of private-credit funds, approximately 20%, is typically allocated to the software sector, leading to a notable selloff in the $350B BDC market. Concerns arise as even established software companies like Salesforce face setbacks, prompting fears for smaller, highly leveraged firms in the sector. This situation poses serious risks for alternative asset managers involved in private credit, marking one of the toughest tests for the sector since its post-financial crisis inception.
-Over the past two years, exchange-traded funds (ETFs) have substantially benefited Bitcoin, amassing nearly $60 billion since early 2024 when the SEC permitted direct crypto holdings. This convenience has allowed Main Street investors to purchase Bitcoin easily, driving its price up from $44,000 in January 2024 to over $126,000 by October 6, 2025. However, following a recent decline in Bitcoin's price by over 40%, now around $68,000, there has been a significant outflow from Bitcoin ETFs, with approximately $1B withdrawn in the past week alone. While Bitcoin ETFs still hold around $101B in assets, persistent outflows could cause further price declines due to increased selling pressure. Reports indicate that many ETF holders are facing losses, with an average buy-in price of about $83,000, resulting in an average loss of 18%. Additionally, the iShares Bitcoin Trust ETF posted a negative return of 18% over the past year, with actual investor losses averaging 23%, highlighting a troubling trend for those invested in Bitcoin ETFs.
Europe:
-The U.S. administration's critical remarks towards Europe have surprisingly benefited the euro, which recently hit near 10-year highs. The euro is currently up 14% against the dollar and 9% versus the Chinese yuan over the last year, though this appreciation poses challenges for Europe. Notably, while the euro's rise has been a mixed blessing, leading to a significant 30% increase in the iShares Europe exchange-traded fund, it has not adversely affected the EU's trade balance, which remained stable from January to October 2025, despite higher euro prices and U.S. tariffs. European exports primarily consist of less price-sensitive luxury items, such as semiconductor technology and high-end vehicles. Furthermore, European assets are seen as a safer investment alternative amid uncertainties in U.S. policies and potential downturns in tech stocks. The EU economy has shown resilience, with GDP growth at 1.3% and unemployment at a record low of just over 6%, while inflation has decreased to 1.7%, potentially prompting interest rate cuts from the European Central Bank. Analysts note a surge in domestic demand, suggesting that Europe is currently in a favorable economic position.
Emerging Markets:
-No update
Commodities:
-Secretary of State Marco Rubio hosted the inaugural Critical Minerals Ministerial in Washington, D.C., aimed at stabilizing the supply of critical minerals essential for modern economies, such as rare earths and lithium. Despite this initiative, critical mineral stocks are declining, indicating that government efforts alone cannot boost stock prices. Vice President JD Vance highlighted the challenges of consistent investment amid erratic pricing and foreign market pressures. The meeting proposed measures like enforceable price floors to prevent predatory pricing. However, shares of leading companies like MP Materials and USA Rare Earth fell significantly, likely due to fears of increased competition from eased funding for mining projects. Although stocks had risen significantly over the past year, the lack of new developments discussed could have led to investor concerns, suggesting that policy changes may not be enough to sustain stock prices, emphasizing the need for companies to prove their execution capabilities on mining projects.
Streetwise:
-Walt Disney recently appointed Josh D’Amaro as its new chief executive, noted for his extensive theme park experience and enthusiasm for the brand. However, corporate activist Nelson Peltz expressed concerns about D’Amaro's limited entertainment background, suggesting this may lead to another flawed leadership transition. Currently, Disney's Experiences division, which includes parks and cruises, generates significantly more operating profit compared to its Entertainment division. D’Amaro will be supported by Dana Walden, the new chief creative officer. The current CEO Bob Iger has not been as well-received by Wall Street as his predecessor, and expectations for future leadership stability seem cautious following Bob Chapek's troubled tenure.