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Friday, September 4, 2026 |
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The Last Page.
The last page, first.
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How This Week’s Jobs Story Actually Ended
August added 162,000 jobs, nearly three times the guess. This letter spent the week betting on a softening labor market, and today argued otherwise.
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The story
August added 162,000 jobs, blowing past the 58,000 consensus and Wells Fargo’s bullish 80,000 case both. Unemployment held at 4.1 percent.
This letter spent the week betting on a softening labor market. Today’s number argues the opposite: the strongest report since spring.
Three days ago this letter led with a revision that erased 79,000 jobs from the record. Today added more than double that back in a single month.
Dow futures fell within minutes, the market’s own tell that a strong report raises hike odds instead of lowering them. BofA Securities already said it would take a shock to change its hike call. This morning delivered the opposite of one.
Warsh had already said his eye was on inflation, not the jobs count. A beat this size still hands him the easier version of that argument, a hike he can call obvious instead of political.
If you carry adjustable debt, September 16 just moved from likely to close to certain. If you were hoping for a pause, this morning took that off the table.
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58,000
What the consensus expected.
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80,000
Wells Fargo’s bullish case, the high end of the forecasts.
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162,000
What actually showed up, more than double even that.
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Best case
SEPTEMBER 16, 2026. The Fed hikes a quarter point, and nobody is surprised. Today’s 162,000 made the decision easy instead of political.
The three dissenting presidents from July stand down, outvoted by a labor market too strong to argue with. Bessent’s Treasury keeps buying long bonds, but the argument against Warsh gets much harder to make with a report this clean. Layoffs stay rare, hiring stays broad across sectors, the kind of report that ends arguments instead of starting them.
If you hold a savings account, the rate finally moves in your favor again. A strong labor market paying for itself, for once, instead of costing someone else’s job. The kind of morning this letter has been waiting all week to write.
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Worst case
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SEPTEMBER 16, 2026. The Fed hikes anyway, but the debate shifts to a labor market running hot enough to reheat inflation on its own. Warsh gets his hike and a new problem in the same afternoon.
Wage growth, not the headline number, becomes the thing traders actually watch next. A labor market this strong leaves the doves less room to argue for any pause down the road.
If you run a small business, the forecast you planned around a week ago just flipped. Adjustable-rate debt about to reset behaves like it always does when the Fed sees a reason to keep going. A forecast, flipped in a week.
That whiplash is the real story underneath today’s number.
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How it ends
You get Warsh hiking on September 16 unless the September 10 inflation report undoes what this morning just did.
This letter spent the week betting on a Fed hiking into a softening labor market. That premise just broke. August added 162,000 jobs, nearly triple the consensus and double even Wells Fargo’s bullish case. The hike call survives, but the reason underneath it just changed completely.
BofA already said it would take a shock to move off its hike call. This morning was the opposite of a shock.
The one real hinge left sits eight days out. The September 10 inflation report, ahead of the September 16 decision, is the last data point that could still change the outcome.
Three regional presidents already dissented for a hike in July, when the case was weaker than this. A report this strong does not give the doves much left to stand on. Nobody at this desk is calling the debate over, but the weaker side just lost its best argument.
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The hinge is the September 10 inflation report, five days from today. A cool reading keeps today’s number from fully deciding things. Anything hot or in line locks in the hike Warsh already looked ready to make.
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The Last Page.
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