Markets continued to punish companies and sectors perceived to be most negatively exposed to AI disruption. Last week it was software companies, but this week it was financial services companies and office real estate.
“Los Angeles-based Altruist on Tuesday announced an innovation for its AI-powered platform, Hazel, that can produce personalized tax insights and strategies for wealth advisors. The new capability can read and interpret 1040 filings, paystubs, emails and other account statements, to provide tax analysis and insights to advisors and their clients.”
https://www.investors.com/news/charles-schwab-wealth-managers-tumble-ai-tax-tool-altruist-hazel/
Markets were quick to shoot first and ask questions later on this announcement, selling financial services companies for fears of disruption to current wealth management business models.
Office real estate companies were sharply lower on Thursday as investors considered potentially weaker demand for office space due to AI disruption.
“Investors worry that AI could sound a death knell for the sector. That point was driven home in an essay that went viral earlier this week in which OtherSide AI co-founder and CEO Matt Shumer said entry-level, white-collar jobs will be gutted thanks to AI. The impact will be bigger than Covid, he wrote. The essay garnered 30 million views in 24 hours, Shumer claimed.
Those remarks follow Elon Musk’s comments on a podcast last week in which he said that office towers once filled with workers will one day be replaced with AI.”
Meanwhile, in the present day, we received two critical economic reports this week that were better than expected. First, the official January jobs report published by the US Bureau of Labor Statistics showed US payrolls rose by 130,000 jobs in January versus an expected 55,000.
The unemployment rate was expected to remain steady at 4.4%, but instead fell to 4.3%.
Then on Friday the January inflation report was released. Prices in January rose less than expected and the annual inflation rate fell to 2.4% versus remaining at 2.5% as forecasted.
Have a great weekend.
Jack C. Harmon II, CFP®, CIMA
Principal, Harmon Financial Advisors
Registered Principal, Raymond James Financial Services
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