Dear Reader,
This is Dylan Jovine with Behind the Markets.
Happy Thursday. Today is Thursday, March 12th. What a great day it is to be alive.
I want to share something with you today that I found genuinely fascinating.
Deutsche Bank put out a report with a headline that stopped me in my tracks: "Lessons from 250 Years of Disruption."
I'll admit it, I'm a bit of a nerd when it comes to this stuff. Historical context, financial markets, human nature — I love it. And the question they set out to answer is one everybody's been asking: is AI going to destroy the labor market?
They went back to 1795. Both the UK and the US. And here's what they found.
If AI were to destroy the labor market in aggregate, it would be the first major innovation in history to do so. Since the start of the first Industrial Revolution, unemployment has been driven by recessions — not new technology. Every single time.
Think about what that means. It means for AI to cause mass joblessness, something would have to happen that has literally never happened before in 250 years of economic history.
Their most likely scenario? AI shifts jobs around — just like every technology before it — but the end result is adaptation and new jobs we didn't even know we needed yet.
And frankly, I think I already know what the next wave looks like. It's something I've been spending a lot of time on lately.
The first wave of AI was about building the brains — teaching machines to think and speak.
What's coming next is putting those brains into physical bodies.
Robots that walk, work, and interact with the real world.
Some people are calling it Embodied Intelligence, or "E.I."
And I believe it could be the biggest wealth-creating opportunity of the next decade.
I put together a full report on the best ways to play it, and why the window to get in early is closing fast.
Get my full report here.
Deutsche uses the Ford assembly line as an example. When Ford automated production of the Model T, there was real anxiety about it. Charlie Chaplin made a whole movie about workers being swallowed by machines. People genuinely believed they were going to be automated out of existence. Sound familiar?
But here's what actually happened. Mass production made cars dramatically cheaper. Cheaper cars unleashed a surge in demand. That surge in demand grew the industry so fast that it created far more jobs than automation had taken away — not just in auto manufacturing, but in suburban home building, tourism, and a whole range of commerce that didn't exist before.
The technology that was supposed to kill jobs ended up creating an entirely new economy.
Now, that said — something genuinely unprecedented is happening in the markets right now, and I think it's worth paying attention to.
For two decades, tech and software have moved together. Winners and losers, sure, but more or less in the same direction. That's changed. For the first time in the history of tech, we're seeing a real split within the sector — and software is getting hammered.
US Software and Services was the third most expensive industry group in January. It's now tenth. No other industry group has been hit that hard this year. And for what it's worth, every single Mag Seven stock has underperformed the S&P so far in 2026.
What's happening is investors — myself included — are saying: if AI makes it this easy to create software, some of these software vendors are simply going to get replaced.
The question hanging over the whole sector is whether these companies can absorb AI into their own tool sets and come out stronger. Some will. Some won't.
I keep thinking back to March 2000, when the tech bubble burst. The S&P was basically flat from March through September of that year. The bear market didn't really start to bite until later. We could be walking into something similar here, especially given how stretched valuations still are.
But here's the headline I keep coming back to from that Deutsche Bank report. If AI destroys the labor market, it will be the first technology in history to do so. Recessions destroy labor markets. New technologies, over time, build them back up.
History doesn't always repeat. But it rhymes an awful lot.
Anyway, that's all I have for you today. Have a wonderful Thursday. I'll see you tomorrow.
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