September 4th Market Overview

Happy Friday

Strange way to end the week. Jobs came in at 162,000 for August, nearly triple what economists had penciled in, and stocks went slightly red on it.

Good news reading as bad news never stops feeling backwards to me, but that's the deal while inflation is still hot an war headlines keep cooking. I'll take a strong labor market and an annoying Fed debate over the alternative any day. I hope you enjoy your long weekend.

Let’s dig in...

Today's Big Picture

Hiring came in hot and the Fed lost its easy excuse

Employers added 162,000 jobs in August, roughly triple what economists expected. June and July were both revised up, and July flipped from losses to gains. Six month hiring is now running at its best pace in more than two years. The strongest argument against raising rates was a soft job market, and that argument is gone.

Diesel set a record and that bill lands everywhere

Diesel reached $5.85 a gallon nationwide, past the 2022 peak, with California at $7.70. A year ago it was $3.71. Two supply shocks are stacked on each other. The war has choked fuel out of the Strait of Hormuz, and Russia extended its diesel export ban through September after drone strikes on its refineries. Trucking, farming and construction pay it first, then it moves into the price of everything they haul and build.

The AI buildout is running on borrowed money still

S&P Global went through the credit side of the data center boom and found spending climbing faster than they expected, every time they look. Financing is getting more complicated and harder to see through, and the returns are years out. Credit quality at the companies borrowing to build is slipping. That same buildout is adding construction jobs and widening the trade gap, so it is carrying a lot of this economy right now.

Market Overview

Index Performance

Stock spotlight

Tesla $TSLA ( ▼ 5.96% )  
drew a federal safety investigation into how it certified the Cybercab, a car with no steering wheel. Regulators opened it Thursday, the same day Tesla held the Austin launch, with public rides starting tonight.

Lululemon Athletica $LULU ( ▼ 17.34% )  
cut its full year outlook after second quarter revenue came in at $2.42 billion with comparable sales down. Next quarter guidance is well under what Wall Street wanted. Nike veteran Heidi O'Neill takes the top job next week and walks straight into the cleanup.

DocuSign $DOCU ( ▲ 3.12% )  
beat on earnings and revenue and raised its full year revenue and margin forecasts. The stock was left for dead earlier this year on fears AI would eat software subscriptions, and it has taken most of that back since late June.

Big name updates

Volkswagen $VWAGY ( ▲ 0.43% )  
approved another 50,000 job cuts, which would take the overhaul to around 100,000 positions. Shares rose on the news. Investors have wanted that cost base cut for years.

Blue Chips
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Fannie Mae $FNMA ( ▲ 0.17% )  
and Freddie Mac $FMCC can now accept mortgages scored by VantageScore, after the head of the housing regulator said the incumbent credit scorers had been overcharging Americans. Credit score stocks sold off on it.

Franco-Nevada $FNV ( ▼ 1.37% )  
and Kinross Gold $KGC fell as gold slid to a session low near $4,419 and headed for a second straight losing week.

Other notable company news

Oura, the smart ring company, filed to go public.

TotalEnergies $TTE ( ▼ 0.54% )  
said not a single product tanker moved out of the Strait of Hormuz in August. That is the supply picture behind the diesel record.

Silvercorp Metals $SVM ( ▼ 5.07% )  
and Eldorado Gold $EGO fell with the rest of the gold complex.

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Sector Watch

Bond market

Short paper took the hit. The two-year yield reached its highest level since January 2025, while the 10-year held near 4.77 and the 30-year sat near 5.23. Mohamed El-Erian said the global bond selloff has further to run, because nobody in Washington has any appetite for shrinking the deficit. T

Policy watch

Fed

Kevin Warsh has stopped telling markets what the Fed plans to do next, so every data release now carries more weight than it used to. Christopher Waller said Thursday he leans toward holding this month.

• Odds of an increase moved to roughly six in ten after the jobs number, up from a coin flip a day earlier.

• Challenger data showed planned job cuts over the first eight months of the year at their lowest in four years, with hiring plans the strongest since 2023.

• Apollo's Torsten Slok said there is still no evidence AI is replacing workers, which cuts against the story everyone has been telling about this labor market.

Fiscal and trade

Trump said he will stop trading with countries the US runs a deficit against unless the Fed lowers rates, and called an embargo better than tariffs. The legal footing here is the part to pay attention to.

• A 1977 emergency powers law does allow a president to impose embargoes. The Supreme Court ruled in February that the same law does not cover tariffs.

International

• The yen sits near 155.89 per dollar after reaching its strongest level since February. Traders are weighing both government intervention and a Bank of Japan increase this month.

• European gas is near a three year high with storage only two thirds full heading into winter.

What to Watch

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Consumer prices, September 11

This is the number that settles the meeting. Warsh has been clear that inflation, not jobs, drives the call.

Russia's diesel export ban

It runs through September. If Moscow extends it into peak demand season, pressure at the pump does not ease anytime soon.
Thanks for reading - you are now the more informed 🙂

- John

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