Good morning,

When folks with six-figure pay are flocking to Dollar Tree, you know something is very off… That’s probably the biggest takeaway from yesterday’s earnings.

Dollar Tree said two in three of its new customers are pulling in more than $100k. And Campbell’s soup sales are booming because more people are cooking at home.

So while inflation is down on paper, many Americans apparently don’t feel it...  including wealthier households for whom discount stores aren't the usual stop.

Meanwhile, American Eagle delivered the kind of quarter Wall Street didn’t see coming. It also proved that one controversial ad can move a stock 40%…

… and add a billion dollars to the company’s market cap. IN A DAY!

Bigger picture, all eyes are on today’s jobs report, the last major release before Powell & Co. meet September 17. And Wall Street is keeping fingers crossed for no surprises.

Another weak print would be a serious red light for the labor market. A surprise to the upside, and the Fed’s rate-cut calculus gets a lot trickier.

Quote of the day 

Five things to know before opening bell

🖥️ OpenAI goes big on chips

OpenAI will start mass-producing AI chips with Broadcom, according to a person familiar with the matter (Bloomberg). Broadcom stock jumped after hours on a rumor of a $10 billion order from a new customer.

📈 Services PMI pops back up

Two days after ISM showed manufacturing stuck in contraction, the services side surprised to the upside. The August Services PMI came in at 52, nearly two points higher than July and above forecasts. Growth, yes, but under the hood, employment stayed weak at 46.5, and prices paid are still high. ISM chair Steve Miller noted the index has now topped 60 for nine straight months, its longest streak since 2020–23.

🤖 Google eyes Nvidia’s turf

Nvidia’s trillion-dollar run on AI chips has rivals circling. Google could be the most dangerous. Bank of America says its in-house Tensor Processing Units are set to flood the market and could be worth $900 billion if spun off. Even with a legal win keeping Chrome and Android intact, GOOGL barely closed green yesterday, but the stakes in AI hardware are getting higher.

₿ Bitcoin at a crossroads

September has never been kind to Bitcoin, and this one’s looking no different. ETF demand is falling, and so is futures activity, while some whales are rotating into Ethereum. BTC held near $111k late Thursday, but Glassnode warns only a breakout above $114k–$116k would lure in fresh buyers. The crypto king is still up big this year, but it’s down more than 4% in the past month.

🥫 Campbell’s signals belt-tightening

Campbell Soup topped Q2 earnings thanks to more shoppers trading down and cooking at home. CEO Mick Beekhuizen said consumers are “cautious and intentional” with spending. The company flagged tariffs as the key risk, and the stock finished the day lower despite the beat.

🌍 Trade gap blows out

The U.S. trade deficit jumped 33% in July to $78.3 billion, the widest in four months, as importers raced to front-run tariffs. Adjusted for inflation, the shortfall topped $100 billion. Imports rose nearly 6%, driven by gold and consumer goods, while exports barely budged. The U.S.–China gap widened for the first time in six months, and deficits with Canada and Mexico also ticked up.

⏳ Final word before September 17

Capping off a week full of jobs data is the most important release before the Fed’s September 17 meeting: August's job report.

🔮 What Wall Street expects 

Forecasts for August hiring are weak.

Economists see about 75,000 new jobs, just above July’s number, with unemployment edging up from 4.2% to 4.3%.  Beat that low bar, and the Fed’s plan to cut rates might shift. 

On the flip side, Morgan Stanley’s Michael Gapen says it would take something like 225,000 new jobs plus an inflation jump for the Fed to scrap a September cut.

📉 The pattern so far

So far, a miss is more likely based on this week's other job releases.

ADP reported just 54,000 private payrolls in August, about half the prior month’s and 19,000 below forecasts. Job openings dropped to 7.2 million in July, the lowest since last September. 

And over the past quarter, monthly job gains averaged 35,000 versus 123,000 a year earlier.

As ADP’s chief economist Nela Richardson put it, the jobs market has been “whipsawed” by a strange mix of labor shortages, skittish consumers, and even AI disruptions.

📌 Bottom line: All of which means today’s print won’t just be another number.  It’s the final word before Powell & Co. decide how far they’re willing to push.

🏛️ Senators grill Trump’s Fed pick

Stephen Miran came under tough questioning on Capitol Hill yesterday. 

President Trump’s nominee to replace outgoing Fed governor Adriana Kugler wasn’t just pressed on his credentials. Lawmakers zeroed in on whether his dual roles would compromise the central bank’s independence.

⚖️ The independence question

Kugler’s resignation, effective Jan. 31, opened the door for Trump to expand his influence over the Fed after months of pressure on chair Jerome Powell to turn more dovish.

Lawmakers flagged that Miran also plans to remain chair of the White House’s Council of Economic Advisers if confirmed, an overlap that Sen. Jack Reed (D-RI) called “ridiculous.”

Miran pushed back, saying he’d act independently and would take an unpaid leave for the four months left in Kugler’s term. 

If tapped for longer, he pledged to resign from his White House role. When asked whether Trump would keep him on if their policy views diverged, Miran demurred.

“What I can tell you is that if I am confirmed in the Federal Reserve, I will act independently based on my own independent analysis.”

🚨 Strategists sound the alarm 

Compounding concerns, reports surfaced of a criminal probe into Fed governor Lisa Cook whom Trump has threatened to fire over mortgage-fraud allegations. 

“Markets have become more concerned over Fed independence,” said JPMorgan strategist Nikolaos Panigirtzoglou.

Meanwhile, Goldman Sachs analysts warned that perceived political bias at the Fed could spark a flight from bonds into bullion, with gold potentially surging past $5,000 an ounce.

Their message is plain and simple: damage Fed independence and you invite higher inflation, weaker stocks and bonds, and erosion of the dollar’s reserve-currency status. 

🛒 Six-figure earners flock to dollar stores

It’s not just lower- and middle-income Americans hunting bargains. The six-figure crowd is joining in, too.

📊 The proof in yesterday's earnings 

Dollar Tree’s Q2 earnings showed same-store sales up 6.5% from the prior quarter. Dollar General posted a 2.8% gain. For the year, DLTR and DG are up 35% and 45%, respectively.

The bigger surprise was that about two-thirds of Dollar Tree’s new customers last quarter earned more than $100,000, up from about half the quarter before. 

CEO Mike Creedon said growth was strong across all income groups, but “especially strong performance from middle- and higher-income customers” stood out.

Dollar General’s Todd Vasos also noticed an "acceleration" in “trade-in” with wealthier shoppers switching to discount retailers. 

“We saw that again coming into and out of Q2, and what we’re seeing from the customer is a good start to Q3,” he told investors.

💡 The broader context

Technically, some of that increase is because there are simply more nominal six-figure earners.

National Retail Federation economist Mark Matthews added that higher-income consumers are becoming “a larger and larger part of the economy” by default. 

These earners are now driving more retail spending than usual. But that doesn't mean they have more spending power because six figures don't go as far as they used to. 

Good for dollar stores. Maybe not so good for the economy.