This is not a fire drill

S2N spotlight

In the past I have touched on how AI is shaping things in business and our daily life. I have also expressed how I believe this revolutionary new AI era is going to have a dramatic impact on jobs.

I haven’t really censored my opinion like many big names have out of fear of sounding stupid. Probably because I am not a big name, and possibly because most already think I am stupid.

However, I feel a need to really dig in and make my point crystal clear.

There are a number of viral posts doing the rounds where the big names say that things are moving too fast and they now need to speak up.

I have been working with AI in some shape or form for 20 years now. Yes, AI has been around for a while, or machine learning, as I knew it in the form of neural networks, was my intro into this space. I was never an expert, but I worked with it and used it in my daily grind. I wasn’t a spectator; I have the scars to prove it.

On the 5th of February 2026, OpenAI released GPT-5.3 Codex, and Anthropic released Claude Opus 4.6. That is correct; the two most powerful AI models in the industry were released on the same day. I haven’t used Codex, but I have been using Claude Opus 4.6.

Let me simply say that the change from Claude Opus 4.5 to 4.6 is breathtaking. You are not here to read a technology review. But you have to understand the productivity boost that comes with a model that has 1 million tokens for context, combined with a better reasoning model. Opus 4.5 had a context window of roughly 200,000 tokens.

For all intents and purposes, programming/coding as a job for a human is dead. It is not just me saying this; the most respected voices in software and technology are saying it. This was one of the most respected, well-paid, and intellectually stimulating occupations for the last 30-40 years. Gone.

Of course Elon Musk this week took it a step further, in his typical style of overpromising and making science fiction sound like non-fiction. However, Musk is not just a dreamer. He is an iconoclast. He is an inventor. A relentless doer. He is someone we should listen to. Perhaps with a calculator to divide his hyperbole but not to dismiss him as a crackpot.

Using the current unemployment rate at 4.3% as the basis for your economic forecasts is probably up there with the largest mistakes known to man since the Fed said “inflation was transitory.”

At the moment the economy is riding the wave of near-unprecedented capital spending. If this is productive capital spending, then according to the principles of economics, it should be an enormous boon to the economy and trickle down into personal prosperity. I think this is where things get infinitely more complex.

Dario Amodei, the founder and CEO of Anthropic, sees unemployment reaching 50% in the very near future. I will work with that as my baseline. Yes, the reason we are going to shed so many jobs is because we will increase productivity like never before. For companies that remain in business, that is an important point. Bankruptcy will reach levels we have never seen before. However, the ones controlling the bots will make super profits like we have never seen, driving canyons between the haves and have-nots. An extremely toxic socio-economic potion.

The S&P 500 is, for all intents and purposes, trading at its all-time high. This is not a fire drill. I am continuously surprised by how slow the market is to acknowledge that things are unlikely to work out as fantastically as the markets are anticipating.

You can see below that the software company ETF has been getting a beating, which I think is a sign of things to come for the broader market. See this as a canary in the coalmine.

Trade Idea

If you look below, junk bonds have been trading like stocks and are at all-time highs. If you compare that to the safest investment, US Treasury Bonds, then I think you have a setup for a high-probability, risk-adjusted trade.

Short junk and buy short term treasuries.

S2N observations

30-day student loan delinquencies continue to spike as defaulted student loans count as defaulted again. In 2025, federal student loans that had been covered by the government’s forbearance policies since 2020 came out of forbearance. During the government’s forbearance programme, borrowers didn’t need to make payments, but their loans weren’t counted as delinquent. That’s over. Those federal student loans suddenly showed up on credit reports again, and delinquency rates exploded.

The big trade that many thought would be the next subprime crisis was student loans in the US. The can was kicked further down the road and has become politicised. If you asked me if I would get into or take on student debt in this current AI era, I am not sure I would recommend it.

The size of this problem is $1.66 trillion of outstanding student loans; $271 billion, or 16.4%, were 30-plus days delinquent in Q4. If the government writes these loans off there will be a cost.

S2N screener alert

It’s not every day you see these kinds of Z-scores. Silver dropped -6.

Gold dropped -5.

Platinum dropped -5.

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