This week, the price extremes I wrote about last week continued to intensify. Silver has been the clearest example. Prices were up roughly 40% to start the year, only to fall nearly 27% in a single session. I previously said certain parts of the market were beginning to break. Now they look broken.

In a more traditional market structure, a move like this would typically mark the peak of a cycle. A steep climb followed by a sudden correction usually produces a chart that looks like a mountain, followed by a prolonged bear market. Technically speaking, silver’s chart has broken, which historically would imply heightened volatility followed by a slow grind lower. But markets today do not behave the way they used to. Prices can rally sharply, collapse just as fast, and then make new highs shortly after.

The reason is speculation. The explosion in short-dated options has turned silver into a volatility trade rather than a store of value. Many participants are no longer buying silver or gold as long-term investments. They are buying out-of-the-money calls and puts, attempting to generate wealth from short-term price swings. If options with expirations every few days did not exist in precious metals, price behavior would almost certainly be far less extreme. Instead, volatility itself has become the product.

This also explains how quickly the selloff accelerated. Once the narrative shifted, positioning flipped and leverage came out all at once. Market makers unwound hedges, margin requirements increased, and overextended traders were forced to liquidate. That process feeds on itself, which is why declines can feel disorderly. The persistent distortions around weekly expirations, particularly on Fridays, are not coincidences. This was the setup heading into the week after a meteoric run.

The immediate trigger for the sell-off was a classic sell-the-news event. President Donald Trump nominated Kevin Warsh as the next Federal Reserve Chair, replacing Jerome Powell. Markets had been expecting Kevin Hassett. Prediction markets gave Warsh roughly a 30% chance versus 70% for Hassett. The prevailing narrative in gold and silver had been that a Hassett appointment would signal a loss of Fed independence. That outcome did not materialize.

Wall Street preferred Warsh. Historically, he has been vocal about inflation, critical of the size of the Fed’s balance sheet, and supportive of Fed independence. He is more of a free-market thinker and has argued that quantitative easing itself contributes to inflation. He even resigned from the Federal Reserve Board years ago after disagreements over balance-sheet expansion.

The market reaction was telling. The dollar strengthened, commodities sold off, and interest rates did not move meaningfully higher. This was effectively a vote of confidence in policy stability. The prior weakness in the dollar had pushed capital out of U.S. equities and into emerging markets and international growth assets. Whether Warsh ultimately governs independently remains to be seen. As The Wall Street Journal noted, many on Wall Street believe Warsh said what was needed to get the job and may chart his own course once in office. Trump himself has warned how much people change once they have the job. My expectation is that Warsh will support lower rates as long as inflation remains contained.

The past three months have been difficult for large-cap growth stocks. The Invesco QQQ Trust is down about 1% over that period, but the damage beneath the surface has been far more severe. The iShares Expanded Tech-Software Sector ETF is down roughly 21%. After a strong 2025, lower-quality growth has corrected sharply, with the ARK Innovation ETF down about 15%. Semiconductors have been the outlier. The iShares Semiconductor ETF is up approximately 13%.

Markets are drawing a clear distinction between where AI shows up first as revenue and where it shows up first as cost. Software, which powered the market for nearly two years, has again come under pressure. Microsoft provided the most visible example. Despite delivering a fundamental double beat, the stock suffered its seventh-largest single-day decline ever, wiping out roughly $400 billion in market capitalization. This was not a rejection of Microsoft’s execution or relevance. It was a continuation of how markets are treating the largest AI spenders. Many software stocks now look optically cheap, but they are being discounted for a reason.

The Autonomy Shift: Understanding AI Agents

That brings us to AI agents. An AI agent is software that does not just answer questions. It takes action. You define an objective, set guardrails, and the system observes, reasons, and executes tasks autonomously across systems. The key distinction is autonomy. These systems do not wait for prompts. They operate continuously. AI agents are likely to reshape how businesses function behind the scenes, from customer service and logistics to finance, software development, and research.

This shift is why markets expect pressure on traditional software economics. That concern may ultimately prove overblown. Many software companies are developing their own embedded agents that run within their platforms. These systems are more secure, auditable, and compliant with regulatory requirements. At the same time, there will be malicious agents and bots attempting to steal data or compromise systems. Two-factor authentication, hardware security keys, and even alias-based login systems are no longer optional. They are becoming basic requirements for operating securely in this environment. Personally, I would not want an uncontrolled AI agent operating inside my business. I would only trust agents deployed by large, established platforms such as Salesforce, Microsoft, Workday, or ServiceNow. As a result, companies are more likely to increase security budgets than switch vendors. Churn rates will be critical to watch. If they spike, then this thesis is wrong.

For value investors, software may represent some of the most compelling long-term opportunities. But this is not a value-driven market. It is a market driven by fear, speculation, and the search for the next high-volatility trade. Perhaps we begin to move incrementally back toward more traditional market behavior under Warsh. I am not predicting normalization, but this week represented a step in that direction.

Private markets, however, remain in full boom mode. Anthropic is reportedly closing a $20 billion funding round at a valuation near $350 billion. Its core product, Claude, is designed to be agent-capable, with the ability to reason across multiple steps. This emphasis on constrained autonomy is what makes the platform attractive to enterprises and regulated industries.

If AI agents displace large numbers of workers, particularly younger ones, the backlash will be swift. Regulation will focus less on AI models themselves and more on autonomous agents. From a market perspective, this is the real risk. Any future recession may not resemble traditional downturns defined by two quarters of negative GDP growth. Productivity and profits could rise even as consumer demand weakens. These are the dynamics I will be watching most closely going forward.

Sources

• CME Group: Revision of Comex Silver Futures margin requirements, 11% notional increase (January 28, 2026).

• The Wall Street Journal: Analysis of Kevin Warsh nomination for Federal Reserve Chair (January 30, 2026).

• Financial Times: Anthropic $20B funding round at $350B valuation report (January 28, 2026).

• Market Data: Silver 27% single-session decline; Microsoft $400B market cap loss following fundamental double beat.

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