Jobs Surge Raises Odds of September Fed Hike

• August jobs report blows past expectations, strengthening the case for a Fed rate hike.
• Q2 earnings season saw significant year-over-year growth (55%), but much was driven by accounting changes, tariff refunds, and strong energy/banking sectors, not core profitability.
• A major concern is the competition for capital from record government borrowing and substantial AI investments, which could drive longer-term bond yields higher.
• Nvidia's acquisition of AI startup Hugging Face for $13B signals significant cash flow in tech and the ongoing investment in the AI ecosystem.

Jonathan Golub discusses the stronger-than-expected August jobs report, reinforcing the likelihood of a September Fed rate hike despite political pressure. He highlights robust Q2 earnings, though with caveats like accounting changes and tariff refunds. His primary concern is the long-term impact of heavy government borrowing and AI investment competing for capital, potentially leading to higher 10-year bond yields.