**** denotes well-worth reading in full at source (even if excerpted extensively here)
Economic and Market Fare:
The US has been strong - but not as strong as the rest of the world. Will September surprises upset this apple cart?
- the monthly birth-death adjustment has been out of sync with the accurate (but lagging) BLS Business Employment Dynamics (BDM) estimate of net new job creation from net new firm openings (Figure 2). The BDM numbers are based on the Quarterly Census of Employment and Wages (QCEW) so they are considered definitive.
- BDM data on jobs created by net new firm openings only go through end-2024, but historically they have tracked what is happening at continuously operating firms. Both have dropped sharply, which explains why there is such widespread expectation of a sharp downward benchmark revision based on QCEW on 9 September (Figure 3).
- It is possible to back out job creation from continuing firms in the monthly NFP survey. Continuing firms are those that appear in the BLS sample two months in a row; they drive the BLS sample estimates of employment growth, the birth-death adjustment is not based on any sample and is added to these sample-based estimates. Job growth at these firms has dropped sharply and has been close to zero or even negative in recent months (Figure 4). NFP growth from continuing firms dropped to a monthly average of 14k in the 12 months to July 2025 from more than 450k in the 12 months to early 2022, but the average birth-death adjustment only edged down to 94k from c.120k over the same period
Bottom line: sooner or later the BLS will have to come to terms with what are years of generously overestimated jobs numbers
The upcoming US recession
The first week of September brought a cluster of important U.S. releases that confirmed an economy heading towards a significant slowdown or an outright recession.
Bubble & AI Fare:
..... Based on valuations, there’s no denying we’re in a bubble. That’s noteworthy by itself, but it doesn’t tell us what will happen next. Tomorrow could be the day when valuations start returning to their historical norms. Or, valuations might become even more extreme, and the bull market could surpass all expectations before finally falling back to reality.
We believe that in this kind of environment, an active investment approach is preferable. Such an approach recognizes that as valuations increase, the risk/reward ratio worsens for investors, making adherence to technical analysis, risk tolerances, investment rules, and trading signals increasingly important. With this understanding of the growing risks, along with the potential for high short-term returns and the tools to navigate and limit downturns, we can continue to realize gains during strong bull markets and shift to a protective mode when a bear market begins.
We start by warning you about today’s high valuations. Then, we take a U-turn and explain why selling now might not be the best move. ........................
..................................... In August 1997, the CAPE ratio reached 32.77, matching the previous record high set just before the Great Depression. While some experts at the time warned that the market would crash, as it did in 1929, the bull market largely ignored these fears. From August 1997 to the peak of the dot-com bubble in 2000, the market increased by more than 50%. Moreover, the extremely high CAPE ratio soared past the former peak to 44.
Those who exited the market in 1997 were ultimately rewarded in 2003 when the S&P 500 traded at a price below their selling point. However, an investor with a strong set of trading tools could have participated in most of the 50% increase, mitigated a good portion of the ensuing decline, and ended up well ahead of those who moved to cash early.
............ An entire generation of wide-eyed investors and a string of clueless policy makers have conditioned themselves (and others) to assume there is no dip that the Fed can’t save, valuation be damned.
In such a seductively sunny backdrop, retail investors are increasingly jettisoning risk management (and risk managers) to passively ride this market wave on ETF-indexed surfboards with very little fear of drowning.
Meanwhile, a minority of market veterans (Grantham, Buffett, Dalio, etc.) bravely (but in vain?) continue to warn of historical market risk greater in scale than the Nikkei of ’89 or the DOW of ’29 as insiders (Bezos, Zuckerberg, etc) quietly dump billions in private shares in a topping market…
So, whose right or wrong in this bear-bull circus of hidden risks and open optimism?
.......................... Like so many current and past memes of market salvation (from electricity and railroads to dotcoms and mortgage-backed securities), the now omnipresent “AI” wave will eventually (and empirically) drown a large swath of trend-trusters and bubble victims who refuse to see the forest for the trees.
In line with the other oxymorons of late (from the not-so-patriotic Patriot Act to the not-so-genius GENIUS Act), Artificial Intelligence, by its very title, is a comical signal of ignored irony. ................
How will AI affect American workers? There are two major narratives floating around. The “techno-optimist” view is that AI will free humans from boring tasks and create new jobs, while the “techno-pessimist” view is that AI will lead to widespread unemployment.
As a sociologist who studies job insecurity, I’m among the pessimists. And that’s not just because of AI itself. It’s about something deeper – what scholars call “American exceptionalism.” While people commonly use this phrase to refer to anything that makes the U.S. unique, I use it narrowly to refer to the country’s approach to work and social welfare, which is quite different from the systems in other rich countries.
I suspect AI will “turbocharge” American exceptionalism in ways that make workers more afraid of losing their jobs. When fused with organizations’ adoption of new types of AI, workers’ fears may soon become reality, if they haven’t already. ...........
Charts:
1:
5:
Not the tightest ever. But yes, tight. Either way. Credit isn’t the forward looking indicator people think. Spreads were at all-time tights in mid-2007. Also, note, unlike stocks, credit has not gotten back to the tights hit early this year. A bit of a divergence
— The Spread Thread (@SpreadThread1) September 7, 2025
Left chart MS pic.twitter.com/fkdDBddW9w
(not just) for the ESG crowd:
But this time, it's the U.S. government pushing doubt
If you don’t follow climate policy closely, you may not know that the Trump administration is launching an effort to overturn one of the most fundamental pillars of American climate policy: the scientific finding that carbon dioxide endangers human health and welfare (the so-called “Endangerment Finding”). If successful, this move could unravel virtually every U.S. climate regulation on the books, from car emissions standards to power plant rules.
To support this effort, the Department of Energy hand-selected five climate contrarians who dispute mainstream science to write a report, which ended up saying exactly what you would expect it to say: climate science is too uncertain to justify policies to limit warming.
I’m guessing that the goal here is very much like what the tobacco companies did in the 1960s, 1970s, and 1980s. Their goal was not to win the debate that cigarettes were safe — they clearly understood they could not — but to muddy the waters enough to head off regulations on their business. ...................
Geopolitical Fare:
A festival of media concoctions.
The decades-long Ukraine crisis, since this current phase began with the U.S.–cultivated coup in Kiev eleven years ago, has occasioned more misinformation, disinformation, false-flag operations and propaganda than any other in our memories. This is inevitable, it seems to us as we survey the wreckage, if you have provoked a war while blaming the other side for starting it, if you are propping up a neo–Nazi regime in the name of liberty and democracy, if you are altogether destroying a nation—its people, its land, its resources—while claiming to save it. There is a lot of truth to obscure, to blur, to destroy. ..............
It should be that almost always they do what they promise, and they meet their goals. ..........
......... As a westerner this is mind boggling. My entire life rent prices have just increased and increased and increased. So have housing prices. One of my big criticisms of China for years was that they had overly-relied on housing bubbles to fund their growth and that it was causing significant discontent. Every young Chinese person mentioned it as a problem.
So then they just… went and fixed it? And yes, it’s been painful, and led to some softness in the economy, but when it’s done, the economy will be much stronger.
China faced a challenge during Trump’s first term: he slapped export controls on chips. They didn’t have a significant domestic industry. So they built one. They knew that if America had done this with one industry, they could do it with all, so they set a national goal to become self sufficient industrially: to be able to make everything they needed. As this was happening, they realized housing was too expensive, so they made that part of the solution, they rotated investment out of real estate into industry.
To a Westerner who has lived their entire adult life under neo-liberalism, this is mind-boggling. Wait, the government can “just do things?” And when it decides to do things, it succeeds? It isn’t just bullshit? ..............
Other Fare:
Speaking the truth and exposing lies is not enough.
***** J. CrewAnon and the Mainstreaming of Dissent
During a recent family vacation over lobster, I watched my “vote blue no matter who” aunt, herself a paragon of New England liberal sensibilities from a leafy suburb outside Boston, argue with her Fox News–watching, burn-it-all-down brother about recent goings-on at HHS. “Just because Fauci lied about Covid,” she said, “doesn’t mean all science is fake; there’s something worth saving here.”
Meet J.Crew-Anon: affluent, educated, professional, skeptical but not nihilistic. They still read the Times and the Journal, but also subscribe to multiple Substacks and are daily imbibers of less “safe” publishers, like Brownstone.org. They triangulate. They parse information with friends and peers, seeing fact-checkers as either dangerous or useless or both. They are more interested in steelmanning the opposition than shouting it down. Having left one echo chamber—the legacy media consensus—they are wary of entering a new one. They know the dangers of epistemic bubbles, and they prize conversations that test their skepticism rather than simply confirm it. They can be angry, but not anarchic. They have mortgages, careers, kids, PTA meetings—and a deep distrust of institutions that used to feel unshakable.
If this archetype sounds unfamiliar, it may be because your friends and colleagues aren’t comfortable enough yet to reveal the depth of their own skepticism. J.Crew-Anon thrives quietly, often hidden in plain sight, surfacing only when the cost of dissent has fallen low enough to make honesty safe.
What J.Crew-Anon represents isn’t entirely new. Up until the early 2000s, the United States had a vibrant anticorporate, antiauthoritarian left that acted as a watchdog against pharmaceutical, corporate, and governmental overreach. Ralph Nader’s consumer rights campaigns, feminist health collectives publishing Our Bodies, Ourselves, and ACT UP confronting the FDA and NIH during the AIDS crisis all carried the same distrust of official reassurances, and the same heated insistence that ordinary people could see through corporate spin.
That movement didn’t disappear, but it was blunted by the professionalization of NGOs, captured by the Democratic Party’s neoliberal consensus, and gradually domesticated into policy shops. But its sensibility never dissipated. What we are seeing now is its reemergence in unexpected form. J.Crew-Anon revives that watchdog instinct, this time distributed across suburbia, podcasts, Substack feeds, and social networks, rather than marches and union halls.
As of 2025, what was previously called the mainstream media is no longer mainstream. A growing swath of ordinary folks—educated, suburban, professional—have quietly lost confidence in legacy information outlets, and the institutions and industries they have long served.
...................................... They are educated, mid-career professionals—often suburban or urban upper-middle class. They still work demanding jobs, raise kids, join HOAs, shop at Costco, play pickleball. But they no longer believe that institutions have credibility. Instead, they filter information through group chats, endless online sources, and their own judgment. They are pragmatic, not utopian. Skeptical, not anomistic. They respect individual autonomy. They know institutions lie—but they also know truth exists and is worth salvaging. That balance—conditional trust, selective belief—makes them powerful.
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