Sep 05, 2025
4
min read
💬 Daily Observation
“The first rule of compounding: Never interrupt it unnecessarily.”— Charlie Munger
Compounding isn’t a magic trick; it’s a rhythm. Nothing feels urgent while the beat is steady, until it stops. The pauses rarely look reckless: “just this month,” “just until things settle,” “just to optimize.”
The real cost hides in the restart: momentum lost, cadence rebuilt. Munger’s line is a nudge to notice how many “temporary” pauses sneak into long-term plans.
☕ Let’s dive in today’s fresh edition of Diversification Daily.
🗞️ Today's stories that matter (and why)
1. 🧑💼 US job growth almost stalls
The August jobs report showed +22,000 payrolls and unemployment at 4.3%, signaling a slower labor market and reinforcing expectations for a Fed rate cut this month.
Why it matters: A cooler labor market lowers rate and inflation pressures—supportive for bonds and gold, while reminding equity investors to favor quality cash flows.
Assets in Focus: Fixed Income
2. 🏦 Fed’s Williams: cuts likely to be gradual
New York Fed President John Williams said policy is still “modestly restrictive” and that gradual cuts make sense if inflation keeps easing and the labor market cools.
Why it matters: Forward guidance like this anchors bond markets; steadier, smaller cuts reduce policy whiplash for long-term investors.
Assets in Focus: Fixed Income
3. 📊 US services pick up, but hiring stays soft
August ISM Services PMI rose to 52.0 from 50.1, a monthly diffusion index (50 = neutral), signaling modest growth even as the employment sub-index stayed in contraction.
That mix of steady demand and cautious hiring, keeps the “soft-ish landing” narrative intact.
Why it matters: Services drive about two-thirds of the US economy. Growth without hiring heat supports gradual Fed cuts—constructive for bonds and quality equities.
Assets in Focus: Fixed Income
4. 🏠 Mortgage rates fall to lowest since Oct ’24
The average 30-year mortgage rate fell to ~6.5%, with the 15-year around 5.6%, extending a late-summer downtrend as markets price in Fed easing.
Why it matters: Cheaper mortgages can thaw parts of housing without reigniting runaway prices; REITs and rate-sensitive sectors may get a tailwind if this persists.
Assets in Focus: Real Estate
5. 🤖 OpenAI plans in-house AI chips with Broadcom
OpenAI aims to mass-produce custom AI chips in 2026 with Broadcom, per FT reporting cited by Reuters—part of a broader push to rely less on third-party GPUs
Why it matters: Vertical integration in AI favors scale players and chip foundry ecosystems; it can widen moats for hyperscalers and squeeze mid-tier suppliers.
Assets in Focus: Equities
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📊 Market Movements Snapshot
Asset Classes:
- 🟢 Emerging Market Equities: +14.74% YTD. Renewed foreign inflows have lifted EMs, driven by China’s surprise easing measures and a softening US dollar, making tech and industrial EM names attractive again.
- 🟢 International Bonds: +1.86% YTD. Yields in Europe and Japan have continued to decline on dovish central bank guidance, while currency gains versus a weaker dollar have added to unhedged return performance.
For the full list, click here
Sectors:
- 🟢 Financials: +12.59% YTD. US banks and insurance companies posted strong Q2 earnings, aided by wider net-interest margins amid a steeper yield curve and stable credit conditions.
- 🟢 Consumer Discretionary: +8.33% YTD. Leisure and retail segments have outperformed, with strong tourism headwinds and durable retail sales suggesting sustained consumer resilience.
For the full list, click here
🤯 Alternative investment highlight:🍷 Buy a Barrel, Sleep in the Château
Credit: ran77th / Getty Images
Buy the whole barrel… and a château sleepover. A New York auction let bidders buy full barrels of 2024 Bordeaux (~300 bottles each)—plus VIP tastings, private dinners, and overnight stays at the estates. Hammer estimates ran $9,000–$60,000 per barrel, and the wine ships after bottling in spring 2027. Real money for a story you can pour.
More details: It featured 21 barrels from heavy-hitter Left and Right Bank châteaux (think Montrose, Calon Ségur, Pichon Baron, Cos d’Estournel, Bélair-Monange, Angélus). Buyers could personalize bottle sizes and back labels; the sale ran online July 7 with a live-streamed close on July 17 at 10 a.m. ET. One clear source with all the specifics: Food & Wine’s report by Ray Isle (includes the 300 bottles, $9k–$60k, overnights, and spring 2027).
🧠 From the Education Center: Is private credit hiding more risk than it shows?
High yields and low daily volatility don’t always tell the full story in private credit markets.
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