Jobs Got Whacked, Yields Rolled—and the Fed Is Cornered

Corporate Overview

The façade of the “resilient U.S. labor market” finally cracked this week. The BLS admitted it overstated job creation by 911,000 over the past year, while August produced just 22,000 net new jobs, far below the already-muted consensus of 75,000. This wasn’t a “soft patch.” It was a revision-driven collapse of credibility.

Markets don’t mind. Bad jobs data means the Fed will be forced into cuts, and the bond market already front-ran Powell. The 10-year yield tumbled ~40–50bps to ~4.07%—its sharpest weekly decline in months. Equity indices ground higher, gold ripped to new records, and oil found a bid.

At Daly Asset Management, our ethos is simple: systematic investing, data-driven conviction, no AUM fees, no lifestyle fluff. We don’t dress up bad data as “resilience,” and we don’t outsource thinking to sell-side narratives. Our readers get unvarnished macro truth and actionable strategy.

Stock of the Week: Exxon Mobil (XOM)

Sector: Energy / Oil & Gas | Market Cap: ~$450B | Dividend Yield: ~3.7%

Why now:

• Crude oil rebounded on geopolitical escalation in the Middle East, with WTI climbing to ~$62–63.

• Gold surged to fresh highs (~$3,650–3,680), confirming the safe-haven rotation. Energy sits squarely in that hedge trade.

• Exxon is printing cash, buying back stock, and rewarding shareholders at a time when underinvestment leaves global supply fragile.

Risks:

• If ceasefires hold or demand collapses, oil retraces.

• ESG/regulatory pressure remains an overhang.

• Fed rate cuts could eventually signal softer demand.

Verdict: We’re long because it’s essential. Energy is no longer cyclical beta—it’s insurance against central bank credibility failure.

Market Snapshot (Week of Sept 8–12, 2025)

*Approximate weekly closes.

Flows rotated into hard assets and bonds. Equity gains are thin-breadth, fueled by hopes of cuts—not broad conviction. The real story is the collapse in yields, signaling disbelief in the Fed’s “resilient” narrative.

Market Commentary

1. U.S. Macro: The Mirage of “Resilient” Labor

The revision of 911k fewer jobs in the trailing year was a credibility shock. For months, the Fed hiked into supposedly “strong” labor markets—when in reality, the ground was eroding.

The August print of 22,000 jobs—versus 75,000 expected—wasn’t cyclical softness. It was evidence that the “soft landing” narrative was always backward-looking. Bond yields fell off a cliff as markets repriced: the Fed can’t pretend anymore.

Contrarian Daly AM view: this isn’t a pivot by choice—it’s a capitulation forced by the bond market. The Fed is reactive, not proactive.

2. Structural Themes: Tariffs, Supply Chains, and AI Illusions

Tariff wars and retaliatory measures have embedded structural inflation into the system. The lazy consensus: “tariffs hurt trade, but AI will save productivity.”

Here’s the reality: AI spending is capital-intensive but narrow. A trillion dollars in GPU clusters won’t unclog a container port or reshore manufacturing capacity overnight. We’re seeing bifurcation: a capex arms race in tech vs. stagnation in labor-intensive industries.

Contrarian Daly AM view: AI doesn’t offset tariff-driven inefficiency. It amplifies the capital cycle. Inflation stays higher than models assume.

3. Geopolitics: Energy as the New Margin of Safety

Markets shrugged at headlines of an Israeli strike in Qatar, but oil spiked and gold surged. Why? Because supply chains are brittle, reserves are low, and every shock now resonates.

The U.S. Strategic Petroleum Reserve sits near depleted levels, OPEC+ is dictating supply, and U.S. shale isn’t coming to the rescue. In that world, energy equities aren’t cyclical—they’re defensive.

Contrarian Daly AM view: when the Fed loses credibility, energy becomes the hedge of last resort.

4. Institutional Flows: The Quiet Hedging Rotation

Look past the indices—watch the flows. VIX is subdued, but Treasury volatility remains elevated. Credit spreads are calm, yet institutions are reallocating into gold, oil, and cash-like assets.

Pensions and insurers aren’t betting on growth—they’re protecting solvency. Retail investors see “stocks up = all good.” Institutions are quietly rotating into protection.

Contrarian Daly AM view: price lags positioning. When the big money hedges with gold and energy, it’s a signal.

5. Equity Rotations: Tech’s Illusion vs. Energy’s Reality

The Nasdaq climbed on thin breadth—driven by a handful of mega-cap AI plays. Meanwhile, the Russell 2000 fell 1%, signaling stress in credit-sensitive small caps.

Energy, by contrast, quietly led. Cash-rich balance sheets, real yields, and geopolitical optionality are winning.

Consensus says: “Tech is essential, energy is cyclical.” Daly AM says: Tech is already priced as essential. Energy is mispriced as optional. That’s the opportunity.

6. Fed Credibility and the Market’s Ultimatum

Jackson Hole hawkishness lasted exactly one week. The data killed it. Markets now price multiple cuts by year-end, and Powell will have no choice but to follow.

Contrarian Daly AM view: the Fed doesn’t set the policy rate—the curve does. And right now, the curve is screaming that the Fed has already lost control of the narrative.

🧭 Tactical Map: Where to Lean In

• Energy Majors (XOM, CVX): Cash-rich, dividend-paying, geopolitical hedges.

• Gold & Miners: Cheap convexity for systemic risk.

• High-Dividend Utilities: Rate-sensitive yield with defensive flows.

• Selective EM Debt (local currency): Dollar weakness creates entry.

• Barbell Positioning: Long large-cap defensives, short small-cap cyclicals.

Theme to Watch: Fed-Driven De-Dollarization

The dollar dropped to six-week lows after the jobs shock. Each cut in credibility is another chip off reserve status. Countries in BRICS+ are already experimenting with commodity-linked settlement, and central banks are stockpiling gold at record pace.

For allocators, this isn’t about the “death of the dollar.” It’s about understanding that non-dollar assets (commodities, EM real assets) will generate alpha in a system where the Fed loses its monopoly on trust.

📅 Forward View: Sept 15–19, 2025

• Sept 12–13: CPI & PPI – confirmation if inflation is soft enough for cuts.

• Sept 16–17: FOMC – 25bp cut priced; whispers of 50bp. Watch Powell’s language.

• Sept 16–18: Treasury Auctions (2-, 5-, 7-year) – demand will reveal real appetite for U.S. paper.

• Corporate Earnings: Industrials and consumer discretionary—key gauges of cyclical demand.

💬 Final Words

This week exposed the Fed’s weak hand. Bad data forced their pivot, not foresight.
Energy and gold are no longer optional—they’re essential hedges in a credibility crisis.

At Daly Asset Management, we strip away the noise and deliver systematic, data-driven conviction—without high-fee advisors clouding your judgment.

Disclosures: This newsletter is for informational purposes only and does not constitute investment advice. Past performance is not indicative of future results. Always conduct your own due diligence or consult with a financial advisor before making investment decisions.