Invictus here. During Friday’s sell-off, I wanted to review the major economic factors to see whether the market is foreshadowing a slowdown or worse. The TL:DR: The United States is still growing, but at a slower pace. Compared with the 1990s, growth has become increasingly dependent on a narrower range of economic activity, which may leave us more vulnerable than headline GDP figures suggest. Let’s dive in:

At first glance, the numbers seem reassuring. Real gross domestic product continues to expand (3.4% SAAR), consumers keep spending, and businesses keep investing. But beneath those headline figures lies a potentially troubling development: an unusually large share of recent economic growth comes from information-processing equipment and software.

That raises an important question: Is today’s economy as fundamentally robust as the American economy of the 1990s was, or is it running on fewer cylinders — and therefore more fragile and susceptible to shock? Let’s take a look at the various components of GDP and compare what we’re seeing today against what we saw in the ’90s.

All data comes from BEA table 1.5.2, Contributions to Percent Change in Real Gross Domestic Product, Expanded Detail, and BEA table 1.5.5, Gross Domestic Product, Expanded Detail. I uploaded those tables (Q1 1990-Q3 2026) to ChatGPT for its analytical capabilities and, frankly, to save me countless hours in Excel.

As the chart below shows, an unprecedented amount of economic activity is coming from a single sector:

Two Expansions, Two Very Different Economies

Consider two periods: the five years from 1995 through 1999, and the eight quarters ending in September 2026.

BEA data show annualized real GDP growth averaged about 4.17% during the late-1990s expansion. Over the latest eight quarters, it has averaged 2.34%. The U.S. economy is obviously growing more slowly today. Let’s look at the components of that growth and assess how robust it is. Are we seeing a multi-pronged expansion, or are we vulnerable to a sudden slowdown in one area? If that area slows, how disruptive might it be to the economy as a whole?

Will weakness in the economy’s strongest component produce a meaningful slowdown or recession?

In the late 1990s, investment in information-processing equipment and software contributed an average of 0.68 percentage points to quarterly annualized GDP growth. During the most recent eight quarters, that contribution increased to 0.81 percentage points. In other words, technology-related investment is contributing more to GDP growth today, even as overall growth has slowed considerably.

Measured relative to total growth, the contrast is striking:

The table below, comparing the mid-90s to today, illustrates how the composition of GDP has shifted:

Let’s perform a simple thought experiment to highlight the issue: Subtract the contribution of information-processing equipment and software from overall GDP growth. 2

From 1995–1999, the rest of the economy contributed about 3.49 percentage points to annualized growth. During the latest eight quarters, that figure was just 1.53 percentage points. That’s a decline of approximately 56%.

This is not to say the “ex-IT” economy is contracting; it is to say its contribution to overall growth is substantially smaller than it was in the ’90s. Other BEA figures reinforce the concern. Residential investment contributed positively during the late 1990s but negatively during the latest eight quarters.3

Consumer spending remains an important source of growth, but it contributes far less. These are all among the important legs supporting the chair that is the US economy. A couple appears wobbly.

The late-1990s economy had multiple powerful engines. Today’s economy appears to lean more heavily on fewer of them.

The AI question matters because the current technology investment boom is not necessarily self-sustaining — certainly not indefinitely. Companies are spending enormous sums on compute capacity, data centers, networking equipment, and software in anticipation of future demand and productivity gains.

Those expenditures contribute to GDP today. Whether they eventually generate adequate financial returns is a separate question. If expected returns disappoint, businesses may scale back investment, and we have already seen signs of this. Reduced spending would directly weaken GDP growth and could indirectly affect employment, construction, suppliers, and consumer spending, with economic consequences that could extend well beyond the technology sector.

This is not a prediction that the AI boom will collapse; I have no idea how this story unfolds (though I do have thoughts). Nor is it proof that the investment is irrational. Transformative technologies often require substantial capital expenditures before their full economic benefits emerge. But an economy unusually dependent on a particular investment cycle is exposed to that cycle’s fortunes — and I believe we are seeing fraying begin.

The late 1990s were hardly free of speculative excess. The dot-com bubble eventually burst, and a recession followed in 2001. Nor were all the 1990s equally strong. The early decade included a recession and a sluggish recovery. Our comparison deliberately focuses on the powerful expansion of 1995–1999.

An important distinction also exists between concentrated growth and systemic fragility. Today’s households, banks, and corporations may, at least for now, possess financial strengths that help cushion an investment reversal. The US consumer continues to defy expectations and has been remarkably resilient. GDP contribution figures alone cannot settle the concentrated growth v systemic fragility question.

Still, I believe the historical comparison is instructive. Even during an extraordinary technology boom, the late-1990s economy saw stronger contributions from the rest of its economic activity than today’s does.

The question isn’t whether the American economy is growing; it is. My question is whether that growth rests on a sufficiently broad foundation to continue organic expansion for the foreseeable future. BEA data suggest today’s expansion is slower and more concentrated in information-processing equipment and software than the late-1990s expansion. That does not establish that a recession is imminent. It does suggest that a reversal in technology investment could be especially consequential.

A healthy economy requires more than a single powerful engine. The data today suggest we have become overly dependent on that single driver of economic expansion…

FOOTNOTES:

1. This is not to say that artificial intelligence accounts for 35% of economic growth; it does not. The BEA categories encompass considerably more than AI. But they capture important components of the extraordinary investment boom surrounding computing infrastructure and software.

2. Lots of AI Capex has shifted from other sectors of investment into technology because it’s the new hotness, and managers tend to chase performance. If the AI CaPex boom wasn’t happening, much of this pending capital would flow to other sectors, making this an imperfect counterfactual…

3. Despite mortgage rates comparable to those of the late 1990s, today’s housing market is burdened by home prices that have risen far faster than household incomes, making homeownership substantially less affordable. Compounding the problem, millions of existing homeowners are reluctant to sell and surrender the exceptionally low mortgage rates they locked in years ago, which is suppressing both housing inventory and transaction volume. Nonresidential structures show a similar reversal.

Data: U.S. Bureau of Economic Analysis, National Income and Product Accounts, Table 1.5.2, revised October 29, 2026. Comparisons use averages of quarterly annualized GDP growth contributions. Information-processing equipment is line 31; software is line 38. Percentages comparing contributions with total GDP growth are descriptive ratios, not exact cumulative growth shares.

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• Americans Are Losing The Long Game: How the United States abandoned the future. As the Trump administration uses its second term to try to flex the sinews of American might, the sources of American power have never seemed less well understood. The sense of purpose and destiny, and the vision and confidence of previous generations, have been replaced by confusion, division and a loss of moral clarity. Many truths once held to be self-evident are now questioned. (NOEMA)

​• Binance: Situation All FUD Up: FT Alphaville: CZ had been tweeting all month about the inevitability of bugs in crypto software and the virtues of SAFU, Binance’s emergency reserve. You won’t believe what happened next. (Financial Times) See also Attacker Gets Away With Up to $3 Billion From Binance (Citation Needed)

• 100 mph, Snapped: A Snapchat filter sparked a trend of kids filming themselves driving as fast as they could. The deadly fallout forced a reckoning, forming the base of a successful legal strategy now holding social media companies to account. The decade-old suit, just settled, introduced the legal approach now being used to hold social media companies accountable. (Businessweek)

• Your phone knows you’re at the doctor, and data brokers are profiting from it: Privacy and legal experts want more states or Congress to ban advertisers from tracking Americans’ locations via their phones. (Washington Post)

• Here Are the U.S. Attorneys Who Are Carrying Out Trump’s Grievance Agenda: Together, they have pursued cases against the president’s enemies and protesters and amplified false claims of widespread election fraud, often citing thin evidence. (New York Times) see also Former Federal Prosecutors and Human Rights Leaders Launch New Organization to Ensure Criminal Accountability for Public Officials in the United States:  “I’ve spent my career working in countries where the rule of law has collapsed, but I never thought I’d see it erode here so quickly. Now, senior officials openly engage in corruption, while federal agents beat and kill innocent people with impunity. The rule of law is on life support, but it’s our collective responsibility to make sure it doesn’t die.”  Rule of Law Project)

• The shocking rise of rib remodelling: ‘I wanted that hourglass shape’ It involves the fracturing of a patient’s ribs, before they spend three months laced into a corset. Some of those who have had this cosmetic procedure say it is like being ‘hit by a bus’. Why is it becoming more popular? (The Guardian)

• America waged war on drunk driving. Now, a new epidemic is taking hold: Janet Genao was heading south on Interstate 15 in 2019 when she was struck from behind by a man high on marijuana and driving more than 100 miles per hour. James Harold Genao’s car was flattened and she died at the scene in Riverside County. She was one of at least 28,000 people killed in crashes involving drivers with drugs in their system from 2014 through 2024, an analysis by the Chronicle found. (San Francisco Chronicle) see also The Deadly 1.5-Mile Corridor That Shows the Fatal Flaw in America’s Road Design: Six lanes, pitch darkness and crosswalks a half-mile apart: How American urban-planning is failing walkers. Pedestrian deaths rose 72% in the U.S. between 2009 and 2024 while falling in most other developed countries. The Journal on one stretch of road that explains why. (Wall Street Journal)=

• In U.S. Gas Talks With Kremlin, Hidden Financing for Alaska Project Emerges: Interviews and documents show a Russian energy giant secretly funded a U.S. firm behind the Polar LNG plan to tap Alaska’s natural gas, and the deal has come up in talks to end the war in Ukraine. (New York Times)

• The Unhidden Hand: How Russia’s Greatest Returns From 2016 Came From the President It Helped Elect: Russia’s larger gains came over the 10 years after November 2016, when the man Moscow helped elect dismantled U.S. defenses against foreign election interference, cast doubt on the U.S. commitment to NATO, and withheld assistance to Ukraine while it fought for its existence. These acts did not require collusion with Russian intelligence or a conspiracy hatched in Trump Tower, only an alignment of interests. The hand that mattered most was never hidden, and it did not belong to the sponsor but to the supported party—Trump. (Lawfare) see also Hackers Sympathetic to Russia Are Hitting Utilities and Factories: Cyberattacks causing physical damage are on the rise in NATO countries, and the hackers carrying them out don’t always understand what they’re doing. ​Ryan Gallagher on a string of head-scratching incidents across Spain, from crematorium ovens on down, that turned cyberattacks into physical ones. (Bloomberg)

​• How Iran Battered U.S. Bases and Caused Billions in Damage: Satellite imagery shows hundreds of damaged buildings at more than two dozen installations, in the fullest accounting of the destruction yet (Wall Street Journal)

Video of the day: Exposing the entire 2016 Trump-Russia sellout in 12 minutes  (emptywheel)

Be sure to check out our Masters in Business this weekend with Rich Steinmeier, Chief Executive Officer of LPL Financial Holdings Inc. (Nasdaq: LPLA), the largest independent broker-dealer in the country. 32,000 advisors and $2.4 trillion in brokerage and advisory assets. CEO since October 2024.

Downloadable list of Flock camera locations

Source: Flock Surveillance Map

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This week, I speak with Rich Steinmeier, Chief Executive Officer of LPL Financial Holdings Inc. (Nasdaq: LPLA), the largest independent broker-dealer in the country, with 32,000 advisors and $2.6 trillion in brokerage and advisory assets.

He earned a BS in economics from Wharton and an MBA from Stanford, and began his career as a consultant at McKinsey. In 2006, he joined Merrill Lynch to bring the brand to the mass-affluent market, running the Financial Advisory Center through the financial crisis; that call-center business became Merrill Edge after Bank of America acquired the firm. He moved to UBS, where, as chief digital officer, he built out the firm’s digital and robo-advice strategy. He joined LPL in 2018, running business development, and was named CEO in October 2024. Earlier this year, LPL closed its $2.7 billion acquisition of Commonwealth Financial Network.

We discuss how running a call center through 2008 taught him to lead under stress: name the risks, explain how you are mitigating each one, and be as transparent as possible even when the news is bad.

A list of his favorite books is here; A transcript of our conversation is available here Tuesday.

You can stream and download our full conversation, including any podcast extras, on Apple Podcasts, Spotify, YouTube, and Bloomberg. All of our earlier podcasts on your favorite pod hosts can be found here.

Be sure to check out our Masters in Business next week with Ann Berry, founder and Managing Partner of Threadneedle, an operating and capital advisory platform providing strategic guidance, operating support, and capital to high-growth private companies and investment platforms. She is also General Partner of the Threadneedle Opportunity Fund, investing in data analytics, AI, and web3 companies at the seed stage alongside Alexis Ohanian’s venture firm, 776. Berry also hosts After Earnings, Morning Brew’s interview podcast with public-company CEOs/CFOs.

Current Reading

The Toyota Way, Second Edition: 14 Management Principles from the World’s Greatest Manufacturer

On Writing: A Memoir of the Craft by Stephen King 

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• The Sane Asylum: A love letter to a new kind of company: Brie Wolfson: The people of Silicon Valley are unwell. If you work at a frontier lab or decacorn, you’ve got it bad. You haven’t seen your kids, your girlfriend’s annoyed, invites from friends to hang out are waning, even weddings are on hold. This is the time to make your mark and make your money, after all. (Colossus)

• What America is Living Without: There are stories many of us tell ourselves about what we were given from birth, what we can attain and what we deserve — master narratives of our place in society. My parents sacrificed so I could get a good education, and now I should be able to have the kids, the house, the life I’ve worked hard for. Or I just got a promotion; that success should erase some of my worry. We tell these stories to help explain our lives to ourselves, and in order to understand our own trajectories. But that story is getting harder to tell. While by some measures, members of the middle class now earn more than those of prior generations, the Brookings Institution recently found that one-third of the American middle class still can’t afford essentials. (New York Times) see also Laid Off: and Considering an OnlyFans “It became obvious pretty quickly that it’s really a marketing business.”​ Melanie Ehrenkranz’s newsletter on the job market’s less discussed exit ramps. (Laid Off)

• They Were the Military’s ‘Quiet Professionals.’ Now They’re Talking. Veterans’ complaints about the rules of engagement have reached Pete Hegseth and a generation of new recruits. Wesley Morgan on the special-operations veterans turned podcasters relitigating the war on terror, episode by episode. (New York Times)

​• She Was the DEA’s Premier Crypto Detective. The Clues Led Straight to Her Own Family: Wired opens with a cartel money mule in a sweltering Miami strip-mall lot, waiting for a bagman and a package of cash.To escape the chaos of her Russian childhood, Lili Infante became an American law enforcement prodigy. She pioneered the DEA’s investigations of the dark web—never suspecting who she’d find hiding there. (Wired)

​• How Elon Musk Turned on Ukraine: reliable alternatives exist to Musk’s satellite network, and Ukraine cannot survive for long without it. Simon Shuster and Isaac Stanley-Becker: on October 11 a confidential memo went out to Ukrainian officers urging them to brace for the loss of Starlink. (The Atlantic) see also The people vs. Elon Musk: The midterm elections pit voters’ discontent with Trump and Republicans against unprecedented spending by the superrich. (Philadelphia Inquirer)

• The Retirement Machine: AI, high earners, and the hidden risk to global stock markets: The monthly retirement savings of tens of millions of Americans provide a prop to the equity market. Could it be vulnerable? ​In aggregate the 401(k) system has become a large, systematic source of equity demand that runs regardless of price. (Schroders)

• Will Books Survive? 34 Insiders, Experts, and Icons on the State of Literature in an Age of Uncertainty Authors, publishers, critics, BookTokkers, and literary luminaries get real about the world of books in 2026—and why they’re not giving up on readers just yet. ​Colin Groundwater: on the surface the numbers aren’t looking good, so GQ asked the people who make books. (GQ)

• Jev Meets the Trolley Problem: It seems like everyone, myself included, is excited by the possibilities of Jev and the Jev-like models: fast, cheap, general decision making. Sometimes dozens or even hundreds of times cheaper and faster than an LLM like Claude, purportedly with the intelligence of a (lower-tier) frontier model. These models don’t output words, they output choices, with meaningful probabilities attached so you can understand how confident the model is in its choice. People are calling this new breed of model ‘decision models’. So naturally, I decided to ask Jev and its ilk to decide the Trolley Problem. (Zach Landes)

​• Inside the Billionaires’ War Against California’s Proposed Wealth Tax: Erin Griffith: every Tuesday for months, two dozen of the world’s richest people or their advisers have gotten on a conference call to plan the fight against Proposition 40. (New York Times) see also Billionaires Stave Off the Pitchforks With Payouts to One Kid at a Time: The Journal on Musk, Dell and the rest funding Trump accounts for children. (Wall Street Journal)

​• Amy Poehler Is Playing Her Greatest Role Yet: Herself: Ellen Gamerman’s cover profile for WSJ. Magazine’s Innovators issue. With an award-winning podcast and a new TV series on the way, the actress and comedian is in the midst of a career renaissance. (Wall Street Journal)

Video of the day: The Invisible Cars of the Genuinely Rich (Yours Turns Every Head) (The Stoic Economist)

Be sure to check out our Masters in Business this weekend with Rich Steinmeier, Chief Executive Officer of LPL Financial Holdings Inc. (Nasdaq: LPLA), the largest independent broker-dealer in the country. 32,000 advisors and $2.4 trillion in brokerage and advisory assets. CEO since October 2024.

Wall Street’s AI Debt Machine Is Starting to Choke on Supply

Source: Bloomberg

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As the market melted down today, I did a deep dive into the underlying data. Some of these are more significant than others, but all were surprising:

1. INTEL (INTC): Today, Intel suffered its worst trading day in 52 years, falling 29.4%. The steepest one-day decline since 1974 came about due to a disappointing profit forecast.

2. Energy is Crushing: As measured by the iShares US Energy ETF (IYE), it’s up 55.3% YTD. That is 5X the S&P500, which is now up 10.7%. Everyone on TV has been busy discussing AI, while Energy quietly kicked major ass.

3. Small Caps Jumped Ahead of SPX/NDX: As the chart above shows, the Russell 2000 jumped ahead of both the Nasdaq and the S&P 500. Through today’s close, the Russell 2000 gained 15.2%, versus 10.7% for the S&P 500 and 12.4% for the Nasdaq Composite.

4. Many Records but…: The S&P 500 had 28 record closes in 2026 — most recently, 7,818.9 on October 6. But that is fewer than 2025 (39), 2024 (57), and way fewer than 2021 (70).

5: Median is kinda Mean: Even odder: The index made a record while the median stock fell 6%. Between the August 13 and October 6 records, the index gained 0.26%, but only 128 of 500 members rose as the median stock fell 6.36%.

6. Consumer Discretionary is Weak: The sector that correlates most closely with negative sentiment is having a rough year: Consumer discretionary was the weakest sector, down 3.6% year-to-date — even as the SPX gained over 10% this year.

7. Equal Weight: The S&P 500 Equal Weight (RSP) is beating the market-cap-weighted S&P 500 by over 300 basis points.

More in the coming days…

Previously:
5 Steps to Take Right Now (October 12, 2026)

What Is Driving Rates Higher and Bonds Lower? (October 6, 2026)

The post 7 Surprising Market Data Points (after today’s selloff) appeared first on The Big Picture.

​• Everyone Wants an Affordable America. Good Luck Agreeing on What That Means: Hanna Horvath on the affordability pitch every candidate is making a week before the midterms, and why nobody means the same thing by it. On the growing sense that our financial futures are out of our control, why it’s changing how we vote, and what happens when people stop believing they can get ahead. (Your Brain on Money)

​• Insurers Find Greater Use for ETFs: Matt Toledo on insurance company balance sheets moving into ETFs. Exchange-traded fund usage has reached a record high among general account investors that are using the vehicles for several purposes. (Chief Investment Officer)

​• Polymarket’s Top Trader Is Sports Gambler ‘Swiss Tony’: Chris Cook: FT analysis finds the best-performing account on Polymarket is a pseudonymous sports bettor who has made $12 million. (Financial Times)

​• Can We Make a Dent in the Housing Crisis? Two Projects Say Yes.: A critic’s notebook on two handsome complexes in Queens and Brooklyn, Rockaway Village among them, that show progress as the Mamdani administration and cities nationwide grapple with affordable housing. Two handsome complexes in Queens and Brooklyn show signs of progress. (New York Times)

• Bob Woodward spills his ‘Secrets’ In a new memoir, the legendary reporter names a parade of confidential sources who enabled monumental scoops in The Washington Post and his blockbuster books. (Washington Post) see also ​Bob Woodward Thought Jeff Bezos Had His Back. Now He Feels Disillusioned.: Peter Baker’s six takeaways from a new memoir by Mr. Woodward, the star Washington Post reporter, including his disappointment with the newspaper’s billionaire owner. From the new Woodward memoir, including his disappointment with the Post’s new owner. (New York Times)

• Is the Music Business Collapsing?: The major labels made seven big mistakes—and are now paying the price  Ted Gioia opens with a global company that hit the wall, and works his way to the record labels. (The Honest Broker)

​• ChatGPT Keeps Telling People 404 Media Can Solve Their Tech Support Problems: Jason Koebler keeps getting emails from banned Instagram users because the chatbot keeps sending them his way. Because big tech doesn’t do customer service, we are being inundated with AI-generated emails begging us for help. (404 Media)

​• No, Donald Trump Is Not Receiving Bad Advice: Mike Brock on the Republican reflex, from Tillis to Cruz to Wicker, of blaming the advisers for every decision the party dislikes while crediting the man for everything it likes. Historians of imperial Russia have a term for it: naive monarchism. Blaming the advisers allows Trump’s defenders to disagree with him without mentioning his name, and at face value, the excuse serves as an indictment (Notes from the Circus)

• A New Ice Age Was Beginning. Then Humans Started Burning Fossil Fuels: Ancient plants reveal that the vestiges of the North American ice sheet started expanding a few thousand years ago, but that climate change caused it to reverse course. (Wired)

​• Erling Haaland Conquered the World’s Biggest Sport. Then He Came for America.: The Journal on the 6-foot-5 striker’s summer in America, which began with a furry traveling companion carried up the stairs of the flight home. Norway’s scoring machine on terrifying his opponents—and the surreal World Cup summer that turned him into much more than a soccer star. (Wall Street Journal)

Video of the day: Psychology of Discipline (And How to Trick Your Brain Into Craving It) (PsychToons)

Be sure to check out our Masters in Business this weekend with Rich Steinmeier, Chief Executive Officer of LPL Financial Holdings Inc. (Nasdaq: LPLA), the largest independent broker-dealer in the country. 32,000 advisors and $2.4 trillion in brokerage and advisory assets. CEO since October 2024.

UST yields: higher, near average

Source: Goldman Sachs

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Full transcript below.

~~~

About this week’s guest:

Nitin Nohria is former Dean of the Harvard Business School, where he is still a professor. He is the author of The CEO: The Role, the Reality, the Responsibility

For more info, see:

Professional Bio

LinkedIn

Previous At the Money

~~~

Find all of the previous At the Money episodes here, and in the MiB feed on Apple Podcasts, YouTube, Spotify, and Bloomberg. And find the entire musical playlist of all the songs I have used on At the Money on Spotify

Nitin Nohria: Preparing for a Career in the Age of AI

Barry Ritholtz in conversation with Nitin Nohria, former dean of Harvard Business School and author of The CEO: The Role, the Reality, and the Responsibility. Bloomberg Radio.

BARRY RITHOLTZ: In the age of artificial intelligence, how should students prepare for this job market? Let’s bring in Harvard Professor Nitin Nohria. He’s former dean of the Harvard Business School. His new book is The CEO: The Role, the Reality, and the Responsibility. He’s also executive chairman at Thrive Capital, which is the venture firm run by Joshua Kushner. So let’s start with AI. If artificial intelligence is attacking that entry rung of the career ladder, how should recent college grads build the skills and judgment that used to come from those entry-level jobs?

NITIN NOHRIA: First, students should continue to use their time during their education to be even more determined to cultivate critical thinking — the capacity to interrogate themselves. When I teach cases now, one thing I’ve started to do is to ask students, “Tell me what AI said about this case.” Actually, not just tell me — read to me what your AI agent said to you about this case. Because I want them to know you can use these tools. In fact, you’ll be required to use these tools when you get to work.

NITIN NOHRIA: And then I ask them the second question: What did you agree with? What did you disagree with? What further questions did you ask to get your thinking to be improved? I think this form of critical reasoning — where we rely upon AI to inform ourselves, but then we interrogate it deeply, and we learn how to think alongside it — this is a capability that they will be required to have, and I think the best students will prepare themselves this way.

BARRY RITHOLTZ: So your preference is, rather than just become a very inch-wide, mile-deep domain expert, really have the broad meta-skills — critical reading, critical thinking, and a more intelligent form of learning and working with AI. Is that the takeaway?

NITIN NOHRIA: I think so. My view increasingly is that you should think of AI very much like in the Marvel comics. Each person can develop their own superpower. You don’t need a Marvel suit; AI becomes the equivalent of your Marvel suit. But you have to tune it to yourself, right? It’s not like all Marvel heroes have the same superpowers. You will develop your own superpowers, and that’ll be your distinctive edge. How you use this extraordinary capacity to distinguish yourself, to make yourself special — that will be the new edge that people will have to find.

BARRY RITHOLTZ: So, undergraduate: does the major a student takes really matter? We saw such a push towards STEM, but now it seems a lot of those technical skills are getting commoditized. How should a student be thinking about what they should be studying, how they develop judgment and communication skills? How important is the major?

NITIN NOHRIA: In the same metaphor that I used — you have to find what your unique Marvel superpower is — expertise could be one of them. It is not the case that expertise disappears. If you end up being the person who has dug deep into computer science, and you can therefore answer questions about the right way to program using AI, about the right way to create safety — all of the questions that are now being worked on by the leading researchers at the top labs — that’s not something that I, who doesn’t have that same level of intuition, experience, and expertise, will be able to do.

NITIN NOHRIA: For others, it may be writing. For others, it may be history. So I do think that a major will continue to be important. But then there will be people who take interdisciplinary majors — like Social Studies at Harvard — who say, “I’m not going to differentiate myself on expertise, because that will be for some people. I’m going to be the generalist.” And I think that being a generalist is going to be deeply important in this world too.

BARRY RITHOLTZ: Yeah, no doubt. So let’s talk about that first job, which, when I was coming up, was described as the all-important first job. Is that still the case? Should people think about that first gig out of college as something that’s a little bit of an experiment, to figure out what they like and what they’re good at? Or should it be a commitment to the company, to the industry, to their bosses — just jump in with both feet? Or somewhere in between?

NITIN NOHRIA: In my experience, having taught for now almost 40 years — I teach mostly business school students, who are graduate students, but I’ve also had interaction with lots of undergraduate students — I find that students are of two types. There are people who, somewhere very early in their life, know exactly what their life’s mission is. I’ve always said to those people: get on with it. Find a place, commit, dig deep, because you already know what you want to do. Don’t waste time flitting around running experiments. The experiment of your life is already known. Now you have to find a way to deliver on it.

NITIN NOHRIA: And there are other people — and I will put myself in that category — who didn’t have a clue about what I wanted to do when I joined an undergraduate institution. Didn’t even have a clue when I went to graduate school, and had to discover through experimentation what it was that I was going to be good at. For those people, I say: don’t be afraid of experimentation. Don’t get anxious that you don’t know exactly what you want to do. But when you get the signal that this is what you want to do, listen hard. Your body, mind, and heart will tell you that this is what you were meant to do. And when that happens, lock in and pursue it with all your heart. But don’t get impatient if you don’t know very early on what it is that you want to do, and cut yourself some grace.

BARRY RITHOLTZ: Really interesting advice. So, you’re executive chairman of a venture capital firm. I’ve played around in that space over the years, and one of the things I’m kind of fascinated by is how often startups — really very new companies — pivot from the initial idea to a variation, to a derivative of the original technology, and sometimes to something entirely different. How should students and new grads think about those career pivots? How should they think about, “Hey, is this just tough and I have to fight my way through? Or am I really more interested in this adjacent area of practice?”

NITIN NOHRIA: For entrepreneurs, there’s a level of persistence and a willingness to pivot as needed, because there’s such a determination to come up with the right solution for a problem that may initially have presented as A, but over time looks like it’s its adjacency. A colleague of mine, Amar Bhidé, did research at Harvard Business School on hundreds of entrepreneurs, and he found that in 80% of the cases, as you said, where they ended up was a distant cousin at best of what they started with — even when they were successful. And I think that’s not very different from people who pursue careers.

NITIN NOHRIA: Even if you’re not an entrepreneur, where you start may not be where you end up in your career. You may start as a consultant because that feels like the right way to gain some experience. You may start as a journalist, and you could end up in very different places. So I think people should remain permanently open to exploring adjacencies that they’re drawn to — and certainly to recognizing when what they’re doing is a dead end and it’s not going to actually yield anything. It’s the hardest thing for people to do sometimes, to recognize a dead end. But I also say to people: don’t be too quick to allow irritations or frictions to be seen as a dead end.

NITIN NOHRIA: So I say to people, if you’re unhappy, allow yourself to be unhappy for at least three to six months before you decide that this is a dead end. Because if you switch every time you experience unhappiness, you’re just never going to have the persistence to work through the things that you have to work through in almost any job or any career.

BARRY RITHOLTZ: That persistence reminds me of a quote I’ve heard about so many different areas, and I want to see how much it applies to a career: it should be treated as a marathon, not a sprint. True?

NITIN NOHRIA: One hundred percent. And yet, as you know, a marathon is not run at the same pace.

BARRY RITHOLTZ: Sure.

NITIN NOHRIA: If you see the great runners in a marathon, they try and set the pace early. So sometimes you want to actually set the pace early. In the middle of the race you might slow down, but you’re always trying to set a pace. At times you want to run with the group; at times you want to run alone. So yes, a marathon is a long race, but it’s not run at the same cadence throughout. I think that’s what a good career looks like as well.

BARRY RITHOLTZ: Tell us about experiential learning. How should universities and students design higher education so that students really get the most out of their four years or so in college, and are best prepared for a career?

NITIN NOHRIA: I’m a huge proponent of experiential learning — but, full disclosure, I’m very biased in this regard. I think the case method that we taught by at Harvard Business School was an opportunity for students to confront experience in the classroom. In many ways, I used to think of it as the best flight simulation that you could have in business. We can’t possibly put you into a hundred business situations in the real world, but we can give you 90 minutes of simulation of different business problems. And in each case, you have to act as the protagonist. You have to think about the problem with no solution given.

NITIN NOHRIA: So that’s one form of experiential learning. But then, in my time as dean, we asked every one of our students to travel abroad, to get involved in real company situations. I think the only way to test whether the ideas that you’re learning play out in practice — how you apply your judgment — is through experiential learning. And I believe that in an age of AI, where the knowledge you have available will be at your fingertips, learning how to apply it in practical, experiential contexts will be the one profoundly powerful way of cultivating the kind of critical thinking and judgment I started our conversation with.

BARRY RITHOLTZ: You know, I was speaking with Bob Michele — he’s the head of fixed income at J.P. Morgan — and he has this quote that he tells his interns: the way to differentiate yourself is mastering AI tools the way my generation had to master the spreadsheet. Good advice?

NITIN NOHRIA: Very good advice.

BARRY RITHOLTZ: Alright, our last two questions — and because you were dean at the Harvard Business School, these are going to be a little tailored to that. What is the prestige trap? What is the issue with chasing brand-name employers? Is that a sound strategy?

NITIN NOHRIA: Brands are brands because they reflect something real. I don’t think brands can sustain themselves if they don’t reflect real opportunities. So if you go to Goldman Sachs, there is something that you will learn at Goldman Sachs that’s important. Or if you go to JPMorgan Chase in banking. If you go to consulting firms like BCG, Bain & Company, McKinsey — these are brands that carry cachet because they’re important. If you are interested in media, you go to Bloomberg or Disney. These are good places to go because the brands carry something.

NITIN NOHRIA: But I think increasingly, I find at Harvard Business School that many of our students have learned that there’s a lot to be learned in places that are not brands. So the courage that people now have to start in places that aren’t already established brands has dramatically increased. And the reason that increases, I think, is that these people have come of age where great companies have been built in front of their eyes. Who knew what Facebook was going to be? Who knew what Google was going to be? In the span of 10, 15 years, extraordinary brands have been built. And so I think our students have become much more comfortable saying that while a brand provides some assurance of a good learning experience, I can also get a great learning experience if I put myself in a setting where there’s a lot more risk — but if it succeeds, it can succeed in an extraordinary way.

BARRY RITHOLTZ: And the question I’m very curious about: you’ve not only taught decades of students at Harvard, at the business school and elsewhere as well. I’m curious — what career paths of alumni from the Harvard Business School really surprised you?

NITIN NOHRIA: I think the thing that has constantly surprised me is when our students decide to stake out their own entrepreneurial journey. Fifty percent of our business school students, by the end of their careers, will have chosen an entrepreneurial path. And it can be anything from opening their own small consulting firm, to at some point deciding to start their own investment shop, to buying a small company, or even sometimes returning to their family company and deciding, “I want to run this company.”

NITIN NOHRIA: So it’s interesting. In the end, people want to have the opportunity to feel like, “I am reporting to no boss. I have ownership over what I’m building.” And yet some people will do it as soon as they graduate from the school; some people will do it 25 years later. What has constantly surprised me is: what’s the trigger that finally causes someone to say, “Okay, I now need to have the opportunity to be an entrepreneur”? And it’s amazing the different ways in which people arrive at that decision.

BARRY RITHOLTZ: Really fascinating stuff. Thank you for being so generous with your time, Professor Nohria. We have been speaking with Nitin Nohria, author of the new book The CEO: The Role, the Reality, and the Responsibility, and former dean of the Harvard Business School. You’ve been listening to Bloomberg’s At The Money.

~~~

Find our entire music playlist for At the Money on Spotify.

The post At the Money: Preparing for a Career in the Age of Artificial Intelligence appeared first on The Big Picture.

• It’s Never Been Easier To Beat This Market: Instead of trading against high powered algorithms preying on every market inefficiency 24/7, there’s another path. (A Teachable Moment)

• A Punishing Housing Market Is Squeezing Renters: Higher mortgage rates and slowing residential construction are again giving landlords the upper hand. (New York Times) see also FICO’s monopoly on mortgages is finally loosening. Homebuyers aren’t the only ones who stand to benefit. (Slate)

​• The ‘Buy, Borrow and Die’ Wealth Strategy Has Become a $5 Trillion Market: Rachel Louise Ensign on a Deloitte study of the booming market in loans against stock, to billionaires and the lesser rich alike: borrow against the shares, never sell, let the step-up at death erase the gain.  (Wall Street Journal)

• Home Depot Is Thrust Into Trump’s Crosshairs: A frozen housing market — and a long, complicated history with undocumented workers — has made life for the world’s largest home improvement retailer very complicated. (Bloomberg)

• One Engineer Trained a 3.8B Parameter LLM from Scratch for $998: Hugo Vergnes beat GPT-2’s CORE score on rented B200s. The recipe is public, the architecture is documented, and the entire run costs less than a used GPU. Here is exactly how he did it. ​(GoPenAI) see also Post-Noise Notes on the Anthropic S-1: Anthropic is a bank with a money-losing AI side gig. (Paul Kedrosky)

• ‘Elonville’: US residents say Musk’s xAI offered to buy homes if they don’t sue over datacenter noise: Real estate agents have been going door to door in Southaven, Mississippi, on behalf of xAI, Musk’s AI company that was folded into the SpaceX entity in February, touting a deal to purchase houses as long as the owners agree to not join a lawsuit against the company over the power plant’s noise. (The Guardian)

• Ukraine knows the secret to defending Taiwan: Kyiv’s use of unmanned boats shows how low-cost weapons can threaten a stronger navy.​ Catarina Buchatskiy and Mark Montgomery: in May 2022 Ukrainian engineers turned a fishing boat into a drone. The playbook that followed is the one Taipei needs. (Washington Post)

• Why We Think We Know More Than We Do: Breaking down the famous “Dunning-Kruger effect” with David Dunning himself (Nautilus) see also ‘There’s nothing quite as frightening as someone who knows they are right’ Michael Faraday onm how blind certainty is human nature’s most dangerous trap (Times of India)

• Measles is thought of as a childhood illness, but more Pa. adults are getting sick: Two-thirds of measles cases in Pennsylvania have been among adults, a mirror opposite of how measles has typically spread. The state has the worst outbreak in the nation. (Philadelphia Inquirer)

• The Limits of Trump’s Midterm Trickery: The Trump administration has attempted to undermine the widespread use of mail-in voting; demanded that states hand over voter rolls; threatened to prosecute state and local election officials; refused to rule out the idea of deploying troops or federal agents to polling places; and publicized the dramatic arrests of small numbers of people accused of voting or registering to vote as noncitizens. Many of these efforts have made little headway—either because of the administration’s incompetence, the stubborn lack of factual evidence behind President Trump’s claims of voter fraud, the federal government’s lack of legal authority, or the refusal of courts to go along with Trump’s plans. (The Atlantic)

Video of the day: How Did Humans Invent Computer? (Neon Rush)

Be sure to check out our Masters in Business this weekend with Rich Steinmeier, Chief Executive Officer of LPL Financial Holdings Inc. (Nasdaq: LPLA), the largest independent broker-dealer in the country. 32,000 advisors and $2.4 trillion in brokerage and advisory assets. CEO since October 2024.

Among the 20 largest IPOs since 2010, the average max drawdown during the first year was 60%

Source: LinkedIn

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• I went to Mexico to test-drive the cars Americans can’t buy: Mexico is a showroom for electric cars, with a growing fleet of sleek new vehicles from Chinese brands unavailable to Americans. (Washington Post free)

• Homeownership Helped Make America. It’s Slipping Away for Millions. The 30-year fixed hit 7.4% on October 8, the highest since November 2023 and up more than a point in a year. Barron’s on the financial tool that made middle-class workers kings of their own castles. Homeownership rates surged in the 1940s and 1950s. But high home prices and interest rates are putting the American dream at risk. (Barron’s) see also The Superrich Are Buying $100 Million Mansions Just to Tear Them Down: In March 2023 William Lauder paid $155 million for Rush Limbaugh’s Palm Beach estate, a 24,000-square-foot house with a Versailles-style salon and a Biltmore-style library. The Journal on the teardown economy at the very top. (Wall Street Journal)

• This is a very interesting time for trashy credit (and all those who love it): C-C-Crunch time for credit hedge funds that went hard into junk bonds. (Financial Times Alphaville)

• The Market’s Most Reliable Warning Light Is Flashing Red:  For the last three years, junk stocks beat quality stocks by the widest margin ever. The opposite normally occurs. (RCM)

• A $300 Billion ‘Debt Wall’ Is Looming Over Private-Equity Backed Companies: Software firms account for about a third of the risky corporate loans due in 2028 and 2029 (Wall Street Journal)

• Powerful executives cozied up to Trump. Now they fear a reckoning. Firms that aligned with the president are preparing for a political pendulum swing — and a potential barrage of investigations. ​(Washington Post) see also Midterm Elections: What a Blue Wave Would Mean for AI, Healthcare and Other Industries: Kalshi bettors give Democrats 91% odds of taking the House and 65% for the Senate. Barron’s on what either flip would mean sector by sector. (Barron’s)

• Cops left the force. They kept tracking people with a powerful camera network. Police kept access to Flock’s vast surveillance system long after they left the force. Some used it to track the locations of romantic partners. ​(Washington Post)

• Neutrinos Are Everywhere. Now What? Dr. Francis Halzen, the recipient of the Nobel Prize in Physics, sheds some light on the mysterious, subatomic particles that whiz through us everyday. (New York Times)

• Deep-Red Districts Are Now House Battlegrounds. These Are the Races to Watch.: Mariana Alfaro, Anna Liss-Roy and Eric Lau: Democrats need to net only three seats, and Cook Political Report says the competitive map is reaching into districts once considered GOP locks. (Washington Post)

• What Is ‘You Can See Everything’ Really About? Derek Thompson’s reading of the Nathan Fielder film: a strange new genre of rom-com, pairing a performance artist obsessed with knowing the truth about people and a world-famous liar. You Can See Everything is a film about the tension between two modes of deception. Holmes uses deceit to tell big lies, and Fielder uses conceit to tell strange truths.  (Derek Thompson)

Video of the day: Gillette Is (Finally) Getting What They Deserve… (Bagholder Association)

Be sure to check out our Masters in Business interview with Robin Wigglesworth; he is editor of FT Alphaville, the Financial Times’ finance blog, which he runs from Oslo with a team of writers in London and New York. He also co-hosts The Story of Money, the FT’s financial history podcast, with Gillian Tett, and writes the Substack Buy The Dip. His new book, “A Fabulous Debt: The Epic Story of How Bonds Built the Modern World” was just published to outstanding reviews.

Polls in the past week suggested that the race was tightening, and prediction markets continued to give him him a 20% chance

Source: Bloomberg

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Last week, I mentioned the long, distasteful history of governments deliberately underreporting inflation data.

It drew surprising pushback — especially given the chronological list I shared:

1944-45: Mitchell Committee
1953: Postwar Basket Revisions.
1961: Stigler Committee
1972-75: Core Inflation
1983: Owners’ equivalent rent
1995–96: Boskin Commission
2017: Chained CPI as fiscal policy
2000: Fed changes its target to PCE
2004: Fed changes its target to Core PCE
2020–26: Annualizing
2025: Suspending CPI

Those are the major historical changes designed to underreport inflation; I tried — but failed — to find similar actions that overreported inflation.

Hence, I characterize the focus on Core as a deliberate attempt to mislead an audience.1

~~~

To those who waived off the hot October 14th CPI print of 3.7%, including Food & Energy, and chose to focus instead on the much milder Core of 2.6% — here is my Core CPI challenge: You may focus on Core inflation, so long as you limit your consumption to only the goods included in the Core PCE/CPI.

Until the November 10 CPI release, you must avoid consuming any headline goods (same for the recent 6.3% PPI versus 5% Core PPI). You only have to wait until November 13 to consume food, beverages, travel, heat, electricity, etc.

What is in the Core? 

You can buy all the new and used cars and trucks you want, plus tires and replacement parts! Just no gas or diesel. Shop for Clothing, jewelry, watches, and shoes, too — walking is healthy! I can’t say I know how you’re gonna process the transaction without energy.

Computers, smartphones, televisions, audio equipment, and software; medical goods, prescriptions/over-the-counter drugs, recreational goods, toys, sporting equipment, musical instruments, books, pet products, textbooks, school supplies, shampoo, toothpaste, cosmetics, razors, and perfume. Buy home furnishings, mattresses, carpets, appliances, and household supplies. And Bicycles — you can carry your new mattress home on a bike! Just no E-Bikes.

Tap water! Fasting and exercise can be very healthy!

Do you smoke? Tobacco is in the core — so is Alcohol for when you get bored of tap water…

~~~

That is my Core CPI challenge for any pundit discussing inflation: Skip the full headline inflation reading to discuss inflation ex-food and energy, and you must exclude food and energy until the next print.

Below you will find a handy set of inflation report calendars to let you know when you can buy gas, use electricity, or eat again…

Previously:
The Long History of Underreporting Inflation (October 19, 2026)

The History of Inflation ex-inflation (September 23, 2005)

__________

1. In the event of a sudden and unexpected weather calamity, of course, you can disregard that lone print. But I mean a major earthquake or a Hurricane Sandy — not “Gee, it got cold in February…”

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