We know what’s coming and we are prepared.
šŗšø The Sahm Rule Was Right All Along
The Sahm Rule is one of the cleanest, most reliable ways to identify when the U.S. is in recession. Itās simple: if the three month average unemployment rate rises half a percentage point above its 12 month low, youāre already in one. Itās not about forecasts, itās a contemporaneous signal and itās been 100% accurate since the 1970s. When it flirted with activation in 2023, Claudia Sahm herself urged caution because of pandemic era distortions, but she also stressed that if it flipped cleanly, it meant the labor market was weaker than the glossy headlines implied.
Fast forward, and the revisions now show thatās exactly what happened. In August 2024, BLS benchmark adjustments erased 818,000 jobs. By February 2025, another 589,000 were gone. And just recently, Treasury Secretary Scott Bessent flagged that another 800,000 could be stripped out. Add to that the steady drip of downward revisions through 2025, June flipping from a modest gain to a net job loss and the labor market has been overstated by somewhere between 2.3 and 2.4 million jobs since April 2023.
Like i said in my previous post that kind of wholesale rewrite hasnāt happened since 2009, when the BLS had to admit it had massively overstated payrolls heading into the financial crisis. And history shows that these benchmark adjustments arenāt just statistical clean up. They almost always surface at turning points, the stagflationary recession of the mid 1970s, the double dip downturn in the early 1980s, and the collapse of 2007-09. Theyāre usually evidence that the economy was already much weaker beneath the surface, and the headline strength was more illusion than fact.
Which brings us back to the Sahm Rule. On the charts today, the indicator looks muted, sitting well below the 0.5 threshold. But thatās because the unemployment rate itself has been calculated off job counts that are now being revised down. If those missing millions of jobs had been reflected at the time, the unemployment rate would have been higher, the Sahm Rule would have ticked up, and the U.S. might already be shown as having tripped into recession. In other words, the Sahm Rule didnāt miss, the inputs did. Once the revisions are fully baked in, history may show it was flashing red in 2023 while policymakers insisted on labor resilience.
Thatās what makes this so consequential. For two years, the Fed leaned on the strong jobs market as its justification for keeping rates higher for longer. But if those jobs never really existed, then the Fed was tightening into fragility. That turns its high for longer stance into a policy error built on faulty data.
Which is why the September 17, 2025 cut is unlikely to be a one off. As these revisions settle and the depth of labor weakness becomes impossible to deny, the Fed wonāt just be trimming for optics. It will be forced into a broader pivot in 2026 acknowledging, belatedly, that the Sahm Rule was right all along.
š EndGame Macro
Speaking at the WEF, Savor CEO Kathleen Alexander boasts about how her company is "saving the planet" from the evils of agriculture by replacing real butters and oils with synthetic versions made from carbon dioxide and methane. š³
"Savor is part of bringing transformation to the food system by re-imagining how we make an entire macronutrientāfats and oils."
"The result is that we can dramatically lower the planetary footprint of our food system."
"Our food system today uses about 50% of the habitable land on the planet. It's 20-30% of our greenhouse gas emissions."
"And we can reduce all of those by 50-100%."
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š Market News Digest
[July 3, 2026 EST]
š„ Top Stories
ā¢ Middle East risk flares ā IDF hits Hezbollah sites in south Lebanon; Houthis threaten Saudi assets; France deploys naval/mine-countermeasure assets near Hormuz.
ā¢ U.S. oil market scrutiny ā DOJ/FTC say theyāre monitoring crude for price-fixing/collusion as Brent settles at $72.12/bbl.
ā¢ Trump pardons saga ā Trump signs pardons for six and faces fresh scrutiny after NBC reported undisclosed stock purchases before tariff pause.
ā½ Oil & Energy
ā¢ Gulf crude exports topped 10M bpd in June but remain ~40% below pre-conflict levels; Fitch flags ongoing Iran/Mideast risk to corporates and oil forecasts.
ā¢ CMA CGM warns Hormuz transit charges would be ādevastatingā; Airbus says defense cooperation remains pressured.
š Markets & Macro
ā¢ Germanyās 2027 draft budget lifts borrowing to ā¬203.7B and spending to ā¬555.4B; euro equities firm with DAX +0.85%.
ā¢ ECB/BoE message: inflation still the focus, but Bailey says UK ...
š®š·ššŗšø Iran Is a Bigger Defeat Than Vietnam | Foreign Policy
At his second inaugural, U.S. President Donald Trump pronounced his hope āthat our recent presidential election will be remembered as the greatest and most consequential election in the history of our country.ā By losing his Gulf war, Trump has achieved that goal. His choice to launch a campaign against Iran was encouraged by others, but fully his own. It has led to a reversal that marks a strategic calamity far greater than the U.S. defeat in the Vietnam War.
Defeat in the Iranian war looks, on the surface, nothing like other U.S. military defeats. The speed of the war and its remoteness have lent an air of unreality to the whole endeavor. The White House has not been burned, as it was in 1814; there have not been protests against a nonexistent draft. The absence of substantial U.S. casualties in this conflict also masks the scale of the U.S. defeat. To be sure, the war has been deadly: Thousands of Iranians, ...
According to The Wall Street Journal, Donald Trump reviewed military options for a full-scale war against Iran to āfinish the job,ā but has decided, for now, not to move forward.
The report says Trump is concerned that renewed military conflict could hurt the chances of a diplomatic resolution and of dismantling Iranās nuclear program, and that heās shown willingness to let indirect talks in Qatar run past the August 18 deadline. He is said to be fine with continuing limited strikes on Iranian targets if Tehran violates the current temporary deal - as it already has, repeatedly.
How are those negotiations going?
Not well. It seems JD Vanceās āhistoricā face-to-face achievement was a one-off. Washington has been quietly downgraded from talking to the Great Satan to negotiating with the Little Satan instead - a senior Qatari official confirmed that U.S. envoys Steve Witkoff and Jared Kushner met Qatari officials in Doha, but there are currently no high-level U.S.-Iran meetings ...
