Morning Bid: AI doom and tariff gloom

• A research note from Citrini Research circulated over the weekend, outlining worst-case economic scenarios from rapid AI deployment, intensifying investor anxiety in software and payments sectors already vulnerable to AI disruption
• Trump's steel and aluminum tariffs were implemented at 10% rather than the 15% announced Saturday, adding to global confusion about U.S. trade policy as the EU questions its bilateral deal and the UK considers retaliatory action
• Brent crude prices turned positive year-over-year for the first time in over a year ahead of Thursday's third round of U.S.-Iran nuclear talks, raising concerns for inflation watchers

Market Summary: AI Concerns and Tariff Confusion Roil Markets

Key Developments

U.S. stock markets fell over 1% on Monday as AI-related anxiety and ongoing tariff confusion weighed on investor sentiment. Selling pressure concentrated in software and payments sectors most exposed to AI disruption. Stock futures stabilized Tuesday ahead of Nvidia's earnings release.

Tariff Policy Uncertainty

President Trump's weekend tariff announcement created confusion as new duties reportedly began at 10% rather than the stated 15%. The EU questioned its bilateral trade pact with Washington, while the UK considered retaliatory action if existing agreements aren't honored. Markets await clarification during Trump's State of the Union address Tuesday at 9:00 PM EST.

Market Reactions

A viral research note from Citrini Research outlined worst-case scenarios for AI's economic impact, amplifying existing market nervousness. The report circulated throughout the weekend, reflecting broader investor concerns about rapid AI deployment.

Commodities: Brent crude oil prices rose ahead of Thursday's third round of U.S.-Iran nuclear talks. Year-over-year Brent crude turned positive for the first time in over a year, raising inflation concerns.

Asia-Pacific: Chinese markets returned from holidays with stocks up 1%; the yuan reached 2026 highs against the dollar. Japan's yen weakened following reports of PM Takaichi's concerns about BOJ rate hikes and China's export restrictions on 20 Japanese entities. Japanese and South Korean stock indexes both advanced.

Pharma: Novo Nordisk shares tumbled after its CagriSema obesity drug underperformed Eli Lilly's Zepbound in head-to-head trials, marking another setback in the competitive weight-loss drug market.

Key Events

• U.S. Conference Board Consumer Confidence (10:00 AM EST)
• Multiple Fed officials speaking
• U.S. 2-year note auction