Yesterday's strong August retail sales report pushed the Atlanta Fed's GDPNow to 5.1% for Q3 2026.
Restated, the economy is booming. Source: Jim Bianco
Productivity is falling below trend
"Despite $1.5tn spent in past 3 years, scant evidence yet of economy-wide productivity gains; in fact, total factor productivity is falling below trend, a measure highly correlated the past 50 years with consumer confidence; sometimes Main St knows what Wall St doesn’t" - BofA, Michael Hartnett Source: zerohedge
The Fed will hike rates next week and December, warns JP Morgan
Source: BofA
Japan projected to pay an all-time high 16.59 Trillion Yen ($108 Billion USD) in debt interest next year
Source: FT, Barchart
AI isn’t just replacing jobs. It’s creating them.
Since mid-2023, AI has generated roughly 1 million jobs in America—more than offsetting an estimated 200,000 AI-related losses, according to The Economist. Around 1% of US professional roles are now “AI jobs,” rising to 4–5% in computing and life sciences. But the biggest surprise may be outside software. AI infrastructure spending has increased by about $500 billion annually since 2022. Data-centre construction alone is running above $75 billion a year—creating demand for electricians, HVAC specialists, grid engineers and technicians. Meanwhile, supposedly vulnerable professions are still expanding: Paralegal employment: +11% Market-research analysts: +6% US employment overall: +2.5% The emerging picture is more nuanced than “AI destroys jobs.” For now, AI appears to be transforming work faster than it is eliminating it. Source: Bearly AI
Germany’s electricity market is flashing another warning sign.
The country’s one-year forward power price has surged to €122/MWh—its highest level since 2023. This matters because the contract is a key benchmark for the procurement costs faced by household electricity suppliers. The main culprit? Surging natural gas prices. Under Europe’s merit-order system, the most expensive power plant required to meet demand sets the wholesale electricity price. And that plant is often gas-fired. So even when most electricity comes from cheaper sources, rising gas prices can lift the cost of the entire power market. The result: renewed pressure on households, businesses and Germany’s industrial competitiveness. Source: HolgerZ, Bloomberg
The US ISM Services report was particularly strong, both overall and relative to expectations
With nearly all activity and price subcomponents rising robustly (employment being the lone exception). Notably, overall business activity expanded to a six-month high, new orders climbed to their highest level in over three years, and prices paid reached a four-year peak. Source: Bloomberg, Mo El Erian
Nobody saw this one coming.
Wall Street expected just 55,000 new jobs in August, but the US economy added 162,000, nearly three times consensus, while July and June were also revised higher by a combined 55,000. Unemployment remained at 4.1% and the participation rate rose to 61.6%, with job creation broadening beyond healthcare to hospitality, education, construction and manufacturing. With the 2026 monthly average now around 80,000 jobs versus only 10,000 in 2025, the report suggests a much more resilient labour market than recent weakness narratives implied. For markets, however, stronger employment could weaken the case for Fed rate cuts, potentially putting upward pressure on yields and the dollar while weighing on stocks, crypto and gold. Source: BLS
