Five for Friday – September 25, 2026
Valuations, Labor Market, AI, Sentiment, and Work
1. Profit
Maybe the most essential thing to know about today’s stock market is that the S&P 500 has returned 150%+ over the last six years…all while getting “cheaper.” Corporate profits have been so strong that stock valuation metrics like price/earnings (P/E) have declined for the S&P 500 (a trend expected to continue into 2027). That makes today’s market look different from the later stages of the dot-com boom, when stocks rose to prices that couldn’t be justified by business outlooks. Unlike past “bubbles,” recent market gains haven't been in spite of fundamentals, but largely because of them.
2. Jobs
Recession isn’t a big worry today (strong economic growth, tight credit spreads, etc.), but keeping tabs on leading indicators is still worthwhile. This is particularly useful for the labor market, where strength or weakness effect both consumer spending (~70% of the U.S. economy) and Fed policy. The upturn in average weekly hours worked is a classic leading indicator for manufacturing. The 12-month high in temporary services employment is another optimistic sign. Since businesses often cut temp workers before laying off permanent employees (and hire temps before committing to new full-time staff), the category is a timely early signal.
3. AI
On one hand, AI is getting cheaper, and fast. Anthropic and OpenAI’s new generations are about 40% and 50% less expensive than their predecessors, while the token cost of processing text that an AI model reads or generates is at 1-year lows. On the other hand is Meta’s Muse, an agentic AI that shot to the top of the App Store and sent Meta’s stock to its sixth-best day in a decade. It raises (and begins to answer) a question I’ve been chewing on for months now, which is: if “intelligence” becomes a commodity (if the difference between frontier and mid-tier models are negligible for most users) – then what company wins? The answer seems to be some combination of who can do well enough at the cheapest price and who has the ecosystem, product development chops, distribution network, etc. to implement “the best.” Regardless, the combination of “cheaper” and “more useful” should help drive adoption (Jevon’s paradox), which is a tailwind for AI infrastructure plays and the overall AI ecosystem.
4. Sentiment
Markets often peak when sentiment crests into euphoric froth, so it makes sense to monitor investor attitudes and actions in the middle-to-later stages of a bull market. Right now, it’s hard to see too much on that front that warrants caution. The A.A.I.I. sentiment survey, a widely followed dataset, saw the largest percentage bearish since early 2025, while the proprietary sentiment model of Baird Strategas sits at just its 55th percentile – not overtly negative, but also not the jubilation that market tops are often built on.
5. On this day
100 years ago, Henry Ford established a 5-day workweek. And while employees benefited, the move was not entirely altruistic. Ford argued that, “People who have more leisure must have more clothes…eat a greater variety of food…and require more transportation in vehicles." In other words, he wanted a middle class that could afford Model Ts. By giving workers more time off without cutting pay, he helped catalyze the rise of the modern consumption economy while demonstrating that productivity growth and living standards can rise simultaneously.
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