September’s False Dawn: Weak Jobs + Tariff Turmoil Signal Real Risk

Corporate Overview

September has a way of humbling investors who still think indexes only go one way. This week’s soft jobs data, tariff chaos, and bond-market tantrum weren’t “blips” — they were a reminder that the narrative Wall Street sells you is often the most expensive story you’ll ever buy. While high-fee advisors will tell you to sit tight and trust the 60/40, the reality is different: capital is rotating hard, volatility is back, and you need to understand where the flows are really moving.

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Stock of the Week: Arista Networks (ANET)

Sector: Cloud Networking / Infrastructure | Market Cap: ≈ $50 bn | Yield: None (growth profile)

Arista Networks isn’t a hype stock — it’s the backbone of the modern cloud. The company’s Arista 2.0 strategy is gaining traction as enterprises move from siloed architectures to data-centric ecosystems. Unlike traditional networking vendors, Arista offers a unified software stack that spans data centers, campus networks, and WAN routing. That versatility is increasingly valuable as hyperscalers, AI players, and enterprises demand seamless, software-driven solutions.

Year-to-date, shares are up 23.2%, and the Zacks Consensus Estimate for fiscal 2025 EPS has been revised +9.7% higher in the last 30 days, now pegged at $2.81 per share — implying 23.8% year-over-year earnings growth. Strong free cash flow and diversified demand across verticals (cloud, enterprise, service providers) mean Arista isn’t reliant on one client or one trend. This positions the company as a structural winner in the secular cloud and AI buildout cycle.

Risks:
Valuation is not cheap relative to peers, and any pullback in hyperscaler capex would ripple through quickly. Networking is still a competitive field, and execution risk remains if customer adoption slows. Geopolitical tech tensions (China/US restrictions, supply chain fragility) could also weigh on sentiment.

This week’s macro backdrop — weak jobs, tariff uncertainty, and bond-market pressure — is pushing investors out of cyclicals and into durable, high-ROIC infrastructure. Arista fits that pivot perfectly: a company generating sticky revenue, riding secular tailwinds, and proving its pricing power in real time.

📉 Market Snapshot (Week of September 1–5, 2025)

*Approximate weekly closes.

Equity markets closed the week with strength, led by tech and small caps. The Nasdaq climbed 1.2%, and the S&P rose 0.6%, as the 10-year yield dropped to ~4.07%, easing pressure on rate-sensitive sectors. Crude oil reversed earlier gains, slipping 2–3% as demand fears mounted. Gold, however, broke to a fresh all-time high near $3,594/oz, driven by dollar weakness and strong Fed rate-cut expectations. Bitcoin rallied modestly—closing just above $110,700, tapping $113,000 intraday—reflecting renewed risk appetite among crypto watchful investors.

This week’s moves aren’t random—they reflect a cautious rotation: away from cyclicals and into real assets, infrastructure, and software. The market’s fear reset was real—but manageable.

Market Commentary

1. Data Credibility Is Breaking

Payroll growth averaged just 35,000 jobs/month over the past three months — numbers not seen outside recession or pandemic. On top of that, Powell admitted prior jobs data may have been overstated by 800,000. With August’s print expected at just 75,000 jobs and unemployment ticking to 4.3%, confidence in BLS numbers is fading fast. When your core macro indicator is this questionable, markets price in risk first, then argue later.

2. Tariff Shock = Rotation Play

A U.S. appeals court ruled most Trump-era tariffs illegal but left them in place for now. That limbo matters. On paper, tariffs were a cost-push inflation engine. In practice, the uncertainty paralyzes corporate planners. The result: a rotation out of cyclical bets that depend on trade clarity. Markets are pricing rate cuts, but not conviction — exactly the environment where DIY allocators can front-run complacent advisory models.

3. Bond Vigilantes Are Back

The sharp sell-off in equities wasn’t earnings-driven — it was bond-driven. The 10-year jumped back above 4.25%, and equities finally blinked. Nvidia fell 2%, Amazon 1.6%, Apple 1%. These aren’t small caps — they’re trillion-dollar names that set the market’s tone. Gold’s breakout to $3,500 and crude oil’s surge confirm it: capital is looking for hedges against both inflation and credibility risk.

4. Geopolitics Add Volatility, Not Clarity

A cyberattack at Jaguar Land Rover disrupted operations, reminding markets that geopolitics aren’t just sanctions and summits — they’re operational risk. Add activist pressure at PepsiCo and Kraft Heinz restructuring, and you have boardroom volatility layered on top of macro uncertainty. Geopolitics isn’t just “Russia/China” — it’s how fragile systems ripple across balance sheets.

5. Oil and Commodities Shift the Narrative

WTI crude’s 7% weekly jump wasn’t just supply disruption; it was dollar weakness plus real demand. Gold at $3,500 is not just inflation hedge — it’s a vote of no confidence in both central bank credibility and government data. For allocators, this is a flashing signal: hedge your paper assets with something tangible.

6. Institutions Pull Back, Retail Has an Opening

Institutional money is scaling back from crowded momentum trades, but that doesn’t mean cash is leaving the market. It’s rotating into gold, energy, and infrastructure. DIY allocators who understand this can exploit the gap before Wall Street repackages it as “new advice” for high fees six months from now.

🧭 Tactical Map: Where to Lean In

• AI Infrastructure: Long Arista, selective semis with proven demand.

• Gold & Hard Assets: Physical exposure and miners — still under-owned relative to risk.

• Short-Duration Credit: High-grade, floating-rate corporates — yield without duration drag.

• Defense & Sovereign Contractors: Beneficiaries of rising geopolitical budgets.

• Energy Producers: Disciplined U.S. names returning capital via buybacks and dividends.

Theme to Watch: “Tariff-Proof Infrastructure: The New Alpha”

Decoupling and reshoring are not narratives — they’re capital flows. As tariffs wobble in and out of legality, nations and corporations alike are racing to control their own infrastructure: data centers, semis, energy, logistics. That’s not just policy — it’s investable. Companies enabling sovereign tech and supply chain independence are positioned for multi-year alpha, regardless of which political regime spins the wheel.

📅 Forward View: September 8–12, 2025

• Friday (Sept 5): Non-Farm Payrolls — consensus ~75k, unemployment 4.3%. A big miss cements Fed cuts; a surprise beat could stall risk assets.

• Wednesday (Sept 3): Eurozone CPI & PMIs — Europe’s disinflation path sets tone for ECB.

• Thursday (Sept 4): U.S. EIA oil inventories — after crude’s 7% pop, supply reports are market-moving.

• Earnings: Broadcom (AI demand pulse), Salesforce (enterprise software health).

• Levels: S&P resistance near 6,600; 10-year above 4.3% = renewed equity stress.

💬 Final Words

The first week of September wasn’t about noise — it was about confirmation. Weak jobs, tariff limbo, and bond stress aren’t “transitory shocks.” They’re the signs of a regime shift where lazy allocation dies and strategy matters. At Daly Asset Management, we don’t package this into a glossy brochure and bill you 1% AUM. We give you the playbook as it is: data-driven, skeptical, and actionable. Institutions are already repositioning. The question is whether you’ll keep funding Wall Street’s fee machine — or start thinking like the people who actually move the tape.

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.