Good morning. Rob is working from London this week after representing the Unhedged podcast at the FT Weekend Festival. Hakyung and Aiden are holding the fort in New York. Send your transatlantic thoughts: unhedged@ft.com.<\/p>\n
Jobs<\/p>\n
It\u2019s not getting better. Job growth came in at just 22,000 in August, far below the 75,000 consensus estimate, but right in line with the dreary results of the preceding months. The three-month moving average of job creation is just 29,000:\u00a0\u00a0<\/p>\n
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Last month, Unhedged argued<\/a> that the jobs numbers were \u201ca bit less bad\u201d than they looked at first glance. Much of the decline had come from a slowdown in government employment; the unemployment rate was still low relative to history; it hasn\u2019t been too long since Trump\u2019s \u201cliberation day\u201d fiasco, so part of the slowdown could be attributed to temporary business uncertainty; and the falling labour supply<\/a> was probably exacerbating weak job creation.\u00a0<\/p>\n All of that remains true. But there is increasing evidence that underlying demand is also dragging on job creation. Matthew Luzzetti of Deutsche Bank estimates that the break-even payroll number \u2014 the number of new jobs required to keep the unemployment rate steady \u2014 has declined to around 50,000 per month. It was probably ranging between 100,000 and 150,000 monthly last year, according to Art Hogan at B. Riley Wealth. But even with a decline in the break-even figure, labour market slack has increased, however you measure it. The Kansas City Fed\u2019s Market Conditions Indicators, which stitch together a wide range<\/a> of measures show that labour market activity is trending steadily down towards the historical average (zero on the vertical axis in the KC Fed\u2019s chart, below) and momentum is now well below average:<\/p>\n Manufacturing jobs, a cyclical indicator, also declined for the fourth consecutive month in August, the longest stretch since the pandemic era. Employment in the sector is now negative for the year. Tariffs are not yet bringing manufacturing jobs home, says Bob Schwartz of Oxford Economics:\u00a0<\/p>\n If tariffs are aimed at bolstering the domestic manufacturing sector, the benefits are not showing up on the hiring front\u2009.\u2009.\u2009.\u2009It appears that the higher input costs linked to tariffs are having an immediate effect, whereas the incentive for companies to bring operations \u2014 and jobs \u2014 to the US has yet to bear fruit.<\/p>\n For now, markets appear content to see weak jobs numbers as confirmation that rate cuts are on their way, lowering the discount rate and propping up risk asset prices. That remains a coherent line of thought so long as the benefits of a lower discount rate outweigh the threat of lower corporate profits. And profit growth is \u2014 more or less<\/a> \u2014 fine right now. Investors need that to continue.\u00a0<\/p>\n (Kim)<\/p>\n Is gold in a bubble?<\/p>\n From<\/a> our colleagues Leslie Hook and Nikou Asgari:<\/p>\n Tether, the world\u2019s biggest stablecoin company, has held talks about investing in gold mining, seeking to deploy its vast crypto profits into bullion. The company has held discussions with mining and investment groups about investing in the entire gold supply chain, from mining and refining to trading and royalty companies\u2026<\/p>\n Tether chief executive Paolo Ardoino has likened gold to \u201cnatural bitcoin\u201d. \u201cI know people think that bitcoin is \u2018digital gold\u2019,\u201d he said in a speech in May. \u201cI prefer to think in bitcoin terms \u2014 I think gold is our source of nature.\u201d<\/p>\n It is generally a bad sign when a company is experiencing so much success in their core business that they move into a business they know nothing about, on the grounds that there is some money lying around, and how hard can this other business be, anyway? See, for just one example, GE\u2019s adventures in finance under Jack Welch.\u00a0<\/p>\n One might argue that this is not the case with Tether, because Tether is sort of in the store of value business and gold is a store of value, or because Tether tokenises things and gold might be a good thing to tokenise. Also the word \u201cmining\u201d does pop up quite a lot in both the crypto and gold industries.<\/p>\n We still think Tether ought to end its flirtation with gold. Readers may have a different view. But the interesting point here is about gold, not Tether. It is very clear (to Unhedged, at least) that there is absolutely no way that Tether would be sniffing around in the gold industry if the price of the yellow stuff had not gone from $2,000 an ounce to $3,600 in a year and a half. What Tether does know something about is hype, and the fact that they are looking at gold suggests the yellow metal is hyped.\u00a0<\/p>\n Last week we wrote<\/a> a quite traditional analysis of gold, according to which its amazing run reflects a combination of a weaker dollar, worries about equity volatility, geopolitical jitters, and central banks diversifying away from the dollar. On that reading, gold is the asset that is responding to risks that stocks and bonds appear to be ignoring.<\/p>\n But what if gold is now a momentum trade? What if it is the eighth member of the Magnificent Seven, rather than an alternative to them? Certainly the speed with which gold has risen is suggestive of this.\u00a0<\/p>\n And it is important to remember that gold has been in bubbles before \u2014 or, at least, things that look very much like bubbles in retrospect. In early 1980, gold briefly passed 800; it reached that level again in (wait for it) 2006. In case you think that is a historical anomaly, it took gold nine years to retake its 2011 high (and yes, in inflation-adjusted terms, gold is as expensive now as it was in 1980, and much more expensive than in 2011).\u00a0<\/p>\n 1980, 2011 and 2025 have fear in common. In 1980 the world was emerging unsteadily from the stagflationary \u201970s; in 2011 it was not clear that the financial system would ever fully recover from the great financial crisis; and in 2025 we are simultaneously worried about an asset bubble, fiscal decay, Trump\u2019s tariffs, and his attacks on the Fed. What happened after 1980 and 2011 is that things turned out not to be as bad as they looked. Gold buyers had purchased very, very expensive insurance against the worst happening, and it didn\u2019t. Should optimism break out, the same could happen today.\u00a0\u00a0<\/p>\n (Armstrong)<\/p>\n One good read<\/p>\n A merciless lover<\/a>.<\/p>\n FT Unhedged podcast Can\u2019t get enough of Unhedged? Listen to our new podcast<\/a>, for a\u00a015-minute dive into the latest markets\u00a0news and financial\u00a0headlines, twice a week.\u00a0Catch up on past editions of the newsletter\u00a0here<\/a>.<\/p>\n Recommended newsletters for you<\/p>\n Due Diligence \u2014 Top stories from the world of corporate finance. Sign up here<\/a><\/p>\n![\"\"](\"https:\/\/www.newsbeep.com\/il\/wp-content\/uploads\/2025\/09\/https:\/\/d1e00ek4ebabms.cloudfront.net\/production\/6b4a88d3-d2f3-40af-acc6-8312e872b658.png\")
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