THE DEAN’S LIST: Hot Jobs, Hotter Oil.

Last week I told you Friday's jobs report had become the most important number standing between here and the Fed’s September 16 decision. It came in at 162,000 against a consensus of 53,000, and the hike argument flipped back on inside of an hour. Then the weekend delivered the other half of the story. US forces struck three Iranian oil tankers; Iran said it hit back at shipping in the strait, and Brent is pushing $97 this morning. My Single-Digit Millionaire portfolio holds stocks, cash, gold, and a little crypto, so no single week has to be right.

Dean’s note:
Start with the jobs number, because we have been saying this series is volatile and it can easily pop back up. August popped. Payrolls grew 162,000 against a consensus of 53,000, though other surveys ran somewhat higher, so the size of the beat depends on whose forecast you use. Unemployment held at 4.1%, and June and July were revised up by a combined 55,000, with July flipping from a 23,000 loss to a 21,000 gain.

Now hold it against the year it sits in. One strong month does not settle the argument about whether hiring is healthy. Labor force participation is still down half a percentage point since January, and 27% of the unemployed have been out of work six months or longer. Two categories carried close to two-thirds of August’s gain, and one of them looks like a summer seasonal quirk unwinding rather than a hiring wave. August pushes back hard against the most bearish reading of this labor market. 

Information employment fell another 23,000, and that line deserves its own note. The decline is consistent with automation and AI-related restructuring in parts of tech and media, and I think that is what is happening. But BLS does not assign a cause, and information is a broad category that also covers telecom, film, and traditional publishing. A lot of software work sits in professional and technical services, outside it entirely. So call it a strong hypothesis, not a proven one, and watch whether the streak continues.

Now on to the Fed drama playing out in real time. Thursday, Governor Christopher Waller said he is willing to support holding the policy rate where it is if there is continued progress toward 2%, and that his decision would be heavily influenced by August CPI. Hike odds fell to roughly 49%. Friday’s payroll print pushed them back to about 58% at the close, per CME FedWatch. That is a coin flip that tipped toward a hike, not a sure thing. The Fed’s blackout period began Saturday and runs through September 17, so nobody there can move the number before CPI lands Friday.

The bond market did something worth reading. The 2-year yield fell mid-week on a soft ADP print, then snapped back Friday to its highest since January 2025. The 30-year barely moved and finished near 5.24%. That is consistent with the market pricing in more tightening now without a matching rise in long rates. It’s likely the long end already overplayed its hand the past few weeks, and it’s done until we hear from the Fed.

Then there is the oil. Brent rose more than 8% last week and is near $97 this morning after the fight around the Strait of Hormuz turned into a tanker war. And still the S&P finished the week up 0.1%, even with seven of eleven sectors down. 

A week that started with stocks falling on Iran, turned dovish by Thursday, and then got repriced by one jobs number Friday. Here is how it played out.

Monday (August 31): Stocks fell after the US and Iran traded fire for the first time in a month. The S&P dropped 0.33% to 7,686.14, and the Nasdaq slipped 0.12% to 26,370.89. Brent rose 2.7% and closed back above $90. All three indexes still finished August with gains.

Tuesday (September 1): US Central Command launched new attacks on Iranian targets, and Brent topped $95 in afternoon trading. The ISM Manufacturing PMI slipped to 54.6 from 55.6 in July, below the 55.2 consensus but still above 50, which means the factory sector is expanding, just more slowly. JOLTS job openings rose to 7.27 million but missed expectations. The S&P fell 0.71% to 7,631.47, and the Nasdaq dropped 271 points to 26,099.77.

Wednesday (September 2): ADP said private employers added 38,000 jobs in August against 48,000 expected, its weakest reading since January. Treasury yields fell, gold rose, and stocks snapped a three-session slide. The S&P and Nasdaq each added 0.46%. For about 48 hours, the market decided the labor market was cooling after all.

Thursday (September 3): Fed Governor Christopher Waller said he is willing to hold rates steady if inflation keeps progressing toward 2%, and that August CPI would heavily influence his vote. He also named three upside risks: higher energy prices, price pressure on technology goods tied to the AI buildout, and the possibility of more tariffs. Hike odds slid to roughly 49%. ISM services came in at 55.4 against 54.1 expected, and jobless claims edged up to 206,000. The S&P closed at 7,747.71, its best day in a month. Iran fired missiles and drones at US-linked sites in Kuwait, Bahrain, and Jordan, and Brent settled at $95.52 after touching $97.

Friday (September 4): August payrolls came in at 162,000 against a 53,000 consensus, unemployment held at 4.1%, and June and July were revised up by a combined 55,000. CME FedWatch hike odds jumped from roughly 49% to about 58% late in the day. The 2-year closed at 4.37%, reported as its highest since January 2025; the 10-year at 4.78%, and the 30-year little changed at 5.24%. The S&P fell 0.38% to 7,718.60, and the Nasdaq lost 0.29% to 26,506.99. Small caps bucked it, with the Russell 2000 up 0.25% to 2,975.65.

Monday (September 7): US stock and bond markets are closed for Labor Day, so the action is in oil. Over the weekend, US forces struck three Iranian oil tankers after the Revolutionary Guard fired two ballistic missiles at two Navy warships. Neither ship was hit. Iran then said it had targeted three tankers and three US-linked vessels in the strait, a claim that had not been independently confirmed as of this morning. Brent is up about 1.2% toward $97.39. Canada’s counter-tariffs on about $20 billion of American goods take effect at 12:01 a.m. Tuesday. PPI lands Thursday and August CPI lands Friday.

Nonfarm payrolls grew 162,000 in August against a Dow Jones consensus of 53,000. Unemployment held at 4.1%. Average hourly earnings rose 0.3% on the month and 3.1% over the year. June was revised up 11,000 to 31,000, and July was revised up 44,000, from a 23,000 loss to a 21,000 gain.

BLS put the same report in context in its own release. The average monthly gain over the prior 12 months was 31,000. Labor force participation ticked up to 61.6% but is down half a point since January. Long-term unemployment, meaning 27 weeks or more, stood at 1.9 million people, or 27.0% of all unemployed. By composition, leisure and hospitality added 62,000, local government education added 42,000 after losing 49,000 in July, construction added 22,000, manufacturing added 16,000, health care added 13,000, and information fell 23,000.

Dean’s note:
We said job growth could pop back up, and it did. I want to be careful about how much that buys, though, because one preliminary print is not a verdict. Set 162,000 next to an average of 31,000 a month over the past year, and you get the honest picture. This month pushes back hard against the story that the labor market was quietly falling apart. It does not prove the opposite. Participation is still lower than it was in January, and more than a quarter of the unemployed have been out of work six months or longer. Labor is a lagging indicator, so remember this is like reading last week’s newspaper. Stocks move long before these numbers confirm major inflection points in either direction. 

On Saturday, the US military struck three Iranian oil tankers after the IRGC fired two ballistic missiles at two Navy warships patrolling near the Strait of Hormuz. Neither ship was hit, and no sailors were injured. Two tankers were reported permanently disabled and one destroyed. It was the first time American forces had targeted Iranian tankers directly.

Iran said the same evening that it had struck three oil tankers and three US-linked vessels in the strait. Those claims had not been independently verified in the reporting available as of this morning, and Iranian claims in this conflict have been disputed before. US Central Command flatly denied a similar Iranian mine claim last week. Iran’s navy warned ships in the Gulf against what it called suspicious movement and signaled a restricted maritime zone beyond the strait. Brent finished last week up more than 8%, its strongest week since July.

Dean’s note:
Watch the ships, not the statements, and be careful about whose statement you are reading. Iran said it hit six vessels. Nobody outside Iran had confirmed that this morning, and last week a similar claim did not hold up. Our base case, and I want it labeled as a forecast rather than a fact, is that election-year pressure and $97 crude push both sides toward a limited shipping arrangement before November. The honest risk to that view is the obvious one. Escalation can harden positions and take a near-term deal off the table entirely. If you want to track this yourself, the things worth watching are tanker traffic through the strait, war-risk insurance premiums, and confirmed export volumes.

The 2-year Treasury yield is the market’s cleanest read on the Fed’s next move. It fell mid-week when ADP came in soft, then jumped Friday as traders repriced September hike odds from a coin flip back toward 58%. It closed at 4.37%, reported as its highest since January 2025. The 10-year rose more modestly, to 4.78%. The 30-year barely budged, closing at 5.24% and essentially flat on the week. It has sat close to its highest levels since 2007 for most of this year, but it did not climb with the 2-year on Friday.

Dean’s note:
The plain description is that the market priced more tightening now without demanding more compensation for the long haul. The long yield carries expected short rates, growth expectations, inflation expectations, term premium, and Treasury supply all at once. We think the long end already discounted any change in inflation expectations the past few weeks. The bond market is still the adult in the room, and the long bond is still the tell I watch most closely. Looking at it on a daily basis can make you myopic, so be careful.

By Thursday, the market had talked itself into a hold. ADP had missed Wednesday, and then Governor Waller said he could support holding rates if inflation kept progressing toward 2%, while flagging upside risks from energy, AI-related equipment costs, and further tariffs. September hike odds fell to roughly 49%. Vice President Vance separately called for cuts to improve housing affordability. The S&P closed at 7,747.71, above its prior high, and posted its best day in a month.

Friday’s payroll number undid the mood in one print. The S&P fell 0.38%, the Nasdaq 0.29%, and the Dow 0.51%. Underneath the index was a rotation. Energy gained 2.2% as crude surged. Consumer discretionary lost 1.9%. Seven of eleven sectors finished red while the S&P still ended the week up 0.1%.

Dean’s note:
This week saw money change seats, not leave the building, and it is the pattern a diversified position is built for. Energy strength offset consumer weakness this particular week, which is what diversification is supposed to do, though I would not want anyone reading that as a promise it works every week. It does not. The useful takeaway is smaller and more durable. A market that can absorb a Fed story that flipped twice and a tanker war in five sessions and still finish flat is not fragile.

Canada’s retaliatory tariffs take effect at 12:01 a.m. Tuesday, covering more than 700 American products worth about C$27.6 billion, roughly $20 billion, at rates from 15% to 50%. The list runs across steel and aluminum, dairy, appliances, agricultural equipment, pulp and paper, plastics, and electronics. Washington’s own 50% tariffs on the same value of Canadian goods are already in force.

Oil is the second pressure, and it is a supply shock rather than a tax. Brent has gone from about $90 at the end of August to near $97 this morning, which feeds into gasoline, freight, and anything priced off diesel. Both arrive in the same window as Thursday’s PPI report and Friday’s August CPI report, the last major inflation data the Fed sees before it meets September 15 and 16.

Dean’s note:
A tariff is a tax on imports, and who actually pays it is genuinely unsettled. Exporters can eat margin, importers can absorb it, retailers can pass it along, and currency moves can offset part of it. So I will say the honest version. Tariffs raise costs somewhere in the chain, and the share that reaches the shelf depends on pricing power. Neither of these will show up much in Friday’s CPI, because both are too recent. What they do is shape the next few prints. Waller named both energy and tariffs as upside risks on Thursday, which tells you the Fed is already watching the same two things.

The jobs market answered loudly, and the answer raised more questions than it settled.

One number reset the Fed argument Friday, and a weekend of tanker strikes reset the oil price. Here is what moved money, and what to watch as CPI lands Friday.

•  August payrolls came in at 162,000 against a 53,000 Dow Jones consensus, unemployment held at 4.1%, and June and July were revised up by a combined 55,000. Job growth popped back up, which is what we said it could do.

• Read the rest of the BLS release before you celebrate. Participation is down half a point since January, 27.0% of the unemployed have been out of work six months or more, and two categories carried close to two-thirds of the month’s gain.

•  CME FedWatch had September hike odds near 49% Thursday and about 58% at Friday’s close. That is a coin flip that tipped toward a hike, not a decision. The Fed’s blackout began Saturday and runs through September 17.

•  The 2-year yield hit its highest since January 2025 while the 30-year sat near 5.24% and barely moved. Describe that as more tightening priced now without a matching move in long rates, and leave the cause open.

•  Brent rose more than 8% on the week to near $97 after the US struck three Iranian tankers and Iran said it hit shipping in return. Energy was the best sector at 2.2%, consumer discretionary the worst at down 1.9%.

•  On the 401(k): the 2026 elective deferral limit is $24,500, and participants who turn 60, 61, 62, or 63 during 2026 may add an $11,250 super catch-up for $35,750 total, if their plan permits catch-up contributions. If you earned more than $150,000 from that employer last year, your 2026 catch-up generally has to go in as Roth. Where your plan, cash flow, and emergency reserves support it, a volatile week is not on its own a reason to stop contributing. Check the specifics with your plan administrator.

None of this changes the shape of the year. Inflation is sticky, the labor market is better than the pessimists claimed and thinner than the headline suggests, oil is a live wire, and despite the headlines about a few huge stocks dominating, the benefits of diversification are on full display in the performance of the equal-weighted S&P 500, Russell 2000 and foreign stocks this year. What changed Friday is that the Fed now has cover to move if CPI gives it a reason.

- Dean

P.S. The number that sticks with me is 31,000. That is the average monthly job gain over the 12 months before August, straight out of the BLS release. So Friday’s 162,000 is not just a beat against forecasts. It is either the start of a real reacceleration or one loud month in a quiet year, and I do not think anybody can tell you which. Two more payroll reports will settle it. Anyone claiming to know today is selling you a story.

And one more thought. Friday, September 11 is the date to circle. August CPI is the most consequential scheduled input before the Fed decides on September 16, and Waller said outright that his vote turns on it. Thursday’s PPI gives you a producer-side preview, and Oracle reports that same day after the close, with Adobe and Apple’s fall event also in the week. Be careful about the word scheduled, though. Oil, the strait, and the tariffs that start Tuesday can all move rate expectations before any data release does, and it is a thin four-day week, so moves can run further than they deserve to. What I would watch inside CPI is not the headline but the breadth. That is the ground Warsh chose to fight on. At Jackson Hole, he broke the PCE price index into 199 individual components and said 54% of them had risen more than 3% over the prior 12 months, with 49% doing so at an annualized rate over the prior six months. Those are his own calculations rather than a standard BEA table, and PCE is the index the Fed actually targets. CPI lands first, so read it as the early proxy.

👉 What do you do with a week where the jobs number beats by more than 100,000, the Fed argument flips twice in three days, and a tanker war pushes crude toward $97? You stop trying to guess which force wins next month. My Single-Digit Millionaire portfolio blends stocks, cash, gold, and a little crypto so no single data print, Fed meeting, or headline out of the strait decides your whole year. Be clear-eyed about the trade-offs, because every one of those sleeves can hurt. Gold has drawn down hard before, crypto is the most volatile thing most people own, energy gives back fast when a conflict cools, and cash costs you return when stocks run. 
This newsletter is for informational purposes only and does not constitute investment advice. Past performance is not indicative of future results. Consult with a qualified financial advisor before making any investment decisions.