Tim Olsen won last week’s world famous news haiku competition™ with this beauty about the fact that jobs numbers smashed expectations, putting pressure on the Fed chair to raise interest rates to cool inflation:

Congrats, Tim, who it turns out is a would-be revolutionary! He writes: “I thought this one might resonate with readers because the system IS rigged by the wealthy and the only way the rest of us can succeed is as a by-product of greed. We need to remember that they have the power but WE have the numbers.”

I love the occasional all-caps word to explain the animus behind a winning haiku. Rage against the machine, Tim! Here’s your celebratory image:

And here’s how Tim fared against the competition (he positively killed them in the name of this competition…):

🟨🟨⬜️⬜️⬜️⬜️ August jobs rates soar, Warsh raising interest rates. Trump blows a gasket. ~S. Bybee (59)
⬜️⬜️⬜️⬜️⬜️⬜️ Make it make sense please, More jobs equals higher interest. Not buying a home now! ~Thomas C. Clair (18)
⬜️⬜️⬜️⬜️⬜️⬜️ Job numbers fly high, Interest rates to follow. Kev says all good, right? ~Steven R. Balzac (10)
⬜️⬜️⬜️⬜️⬜️⬜️ Job numbers rise -- Yay! Will mortgage rates rise too? Boo! It’s always something! ~Margaret Lea (11)
⬜️⬜️⬜️⬜️⬜️⬜️ Why when jobs are up, Should interest rates go down? Quite the conundrum. ~Janine G (6)
⬜️⬜️⬜️⬜️⬜️⬜️ New jobs smashed forecasts, Risks an interest rate hike. Stocks sank on the news. ~Bob Andersen (9)
🟨⬜️⬜️⬜️⬜️⬜️ Warsh heeds the data, won’t give in to Trump’s pressure. Cooler heads prevail? ~Jim Tyler (26)
⬜️⬜️⬜️⬜️⬜️⬜️ We do well, Work Hard. Work! Spend! Save! As we are taught. The Fed Punishes. ~Dick Peterson (22)
🟩🟩🟩🟩🟩🟩 More jobs, higher rates. The rich keep getting richer. The rest, left behind. ~Tim Olsen (156)
317 Votes via @beehiiv polls

This week’s world-famous-news-haiku-competition™ is about how Anthropic caught ‘rogue actors’ making bioweapons with Claude. Send me your entry — to haiku at cheddar dot com — by noon ET Thursday, for consideration by your Cheddar peers. (Don’t worry if you get a bounceback email. The mailbox is working, it’s just been inundated with haikus lately, thank goodness!)

Now, news!

Matt Davis — Need2Know Chedditor

Table of Contents

• 90% Chance of a Rate Rise This Week

• Scott Bessent Fails To Calm the Bond Markets

• Anthropic Caught ‘Rogue Actors’ Making Bioweapons

• Minnesota: Frontline in ‘Prediction Market’ Fight

• Fast Food Firms Double Down on Hospitality

• Poll of the Day: The Daddy Mack’ll Make Ya…

What’s the Stock Market Up To, Eh?

$SPX ( ▲ 0.86% )  $DJI ( ▲ 0.98% )  $NDX ( ▲ 1.59% )  

Companies Mentioned in Today’s Newsletter

$MS ( ▲ 0.81% )  $BAC ( ▲ 0.21% )  $ANTHZZX ( ▼ 0.89% )  $KALSZZX ( ▲ 0.13% )  $PLYRZZX ( ▲ 0.01% )  $QSR ( ▲ 0.61% )  $WEN ( ▲ 2.55% )  

90% Chance of a Rate Rise This Week

If your jaw hits the floor often at the grocery store these days, you’re not alone. The cumulative toll of 3.4% inflation has turned everyday errands into a comedy of high prices. Raw steak that cost $6 a pound in 2012 and $8 in 2019 now costs $13. Gas lingers near $4 a gallon, and as Kroger CEO Greg Foran says, "customers are buying more on need." 

The sticker shock is putting pressure on Federal Reserve Chair Kevin Warsh to raise interest rates to tame inflation. Stock market traders now expect 90% chance of a rate increase when the Fed meets this week. When Warsh took the helm, skeptics doubted his independence. Democratic Senator Elizabeth Warren called him "Donald Trump’s sock puppet." But it turns out, the "sock puppet" is showing unexpected political savvy and biting back. As Cornell professor Eswar Prasad told the ,, the latest price surge "sharpens the conflict between the Fed’s price stability mandate and the keep-Trump-happy dictate."

Meanwhile, billionaire investor Stanley Druckenmiller threw gasoline on the fire. He told a Wall Street audience that Fed officials who argue current rates are restrictive are "just ridiculous.“ Trump and Treasury Secretary Scott Bessent have argued that raising rates would be “unpatriotic.” Although Druckenmiller didn’t mention them by name, so maybe he was referring to other people?

Quote of the Day

Scott Bessent Fails To Calm the Bond Markets

Treasury Secretary Scott Bessent has warned traders not to bet against bond markets. Last week he said, "I am the house." As in, the house always wins. But in this case, Scott seems more like, I dunno…like a bungalow perched on the edge of a cliff suffering erosion damage?

After buying $6 billion worth of U.S. bonds to try to shore up the market, yields continued to rise last week. That sounds good, right? But, it’s bad. Yields rise when people think the U.S. government is less likely to be good for its IOU payments. It means bond traders can charge the government more to borrow money. Yikes.

In fact, the buyback stirred comparisons to fiscal interventions in volatile developing economies. Ellen Zentner at Morgan Stanley $MS ( ▲ 0.81% ) told the FT, “We can’t ignore the fact that there are emerging-market-type risks in some of the actions the U.S. has been taking."

She is comparing us to Argentina, my friends.

Wall Street veterans were also scathing about the modest scale of the effort by the house. I’m sorry, by Scott Bessent. Mark Cabana at Bank of America $BAC ( ▲ 0.21% ) told the FT the Treasury seems to be “doing things on the cheap, almost nickel and diming…which is inconsistent with a ‘whatever it takes’ approach." DoubleLine portfolio manager Bill Campbell is also incredulous: “I would have thought Bessent would have understood that with any intervention your first shot is your best shot and you have to come in big,” he said. 

Anthropic Caught ‘Rogue Actors’ Making Bioweapons

More delightful options emerged last week on the à la carte menu of how we'd best like AI to “kill us all.” In this case: Bird flu, dissident surveillance, or catfishing bots?

Rogue scientists from China, Russia, and Iran have been tricking AI bots into helping them synthesize global plagues. AI startup Anthropic $ANTHZZX ( ▼ 0.89% ) says it caught them using its Claude model for biological weapons. Fortunately, of course, Anthropic was able to stop the attempts and tell us all about it. But for every story we're seeing about AI firms stopping such madness, how many slip through the cracks?

One such “rogue actor” spent weeks planning a new kind of bird flu outbreak, the AI firm said. Although they insisted that they couldn't prove evil intent. That's because bioweapon recipes double as vaccine blueprints. But, you know. Anthropic hopes to “spark a conversation within the AI industry and with governments about emerging biological risks and how best to counter them.”

I bet they do. Anthropic's recent rogue actors report said people used its technology for everything from “a network of fake dating apps designed to defraud users” to dissident surveillance. Meanwhile, rival Chinese labs continue to rip off our 'merican AI models, Anthropic said. It just gets better and better, doesn’t it?

Song of the Day: Portraits of Tracy, ‘Royal Courts’

This single by alternative pop artist Portraits of Tracy exemplifies genre-defying psychedelic baroque pop. The self-produced track shifts from minimalist acoustic guitar strums into theatrical, full-scale arrangements and operatic belts. So, it’s a lot like this newsletter.

Minnesota: Frontline in ‘Prediction Market’ Fight

If you were betting on Minnesota to trigger a landmark federal constitutional showdown over teenagers betting on Taylor Swift’s wedding? It's time to collect your winnings. 

The Gopher State just became the first in the nation to ban "prediction markets" like Kalshi $KALSZZX ( ▲ 0.13% ) and Polymarket $PLYRZZX ( ▲ 0.01% ) . Lawmakers stepped in after teachers saw underage students making bets on their phones during class. State Representative Emma Greenman declared the trend "both a public safety and public health issue," talking to the NYT. Science teacher Devon Bowker tried warning students about dopamine hits. He asked them, “Do you want to be in control of your own destiny or leave it to chance on the app?”

I'd prefer an app to decide my destiny, Devon, obvs. But I don't recall you asking me. 

Federal regulators and betting platforms sued immediately. CFTC Chairman Michael S. Selig insisted prediction markets shouldn't be “regulated under a patchwork of state gaming laws.” He'd prefer them to go unregulated under an absence of any federal law, it seems. Kalshi general counsel Rick Heaslip complained lawmakers rushed “to pass an unprecedented ban of a product they didn’t understand.”

Minnesota Attorney General Keith Ellison bets that he understands the product well enough. He said in court that the apps help “gambling, plain and simple.” State lawyer Lindsey Middlecamp questioned how wagers on Taylor Swift’s wedding fit federal financial mandates. 

U.S. District Judge Kate M. Menendez, who opened hearings asking, “Who is going to take the ‘educating the middle-aged judge’ set of questions?”, agreed that “one is hard-pressed to imagine the financial, economic, or commercial consequence” of betting on Love Island.

Law professors describe this as the ultimate “test case.” Whether Wall Street can rebrand teenage pop-culture gambling as sophisticated high finance rests, for now, on St. Paul. Until the government appeals and it goes to the Supreme Court, that is. And then it's anybody's guess. I'll give you 2:1 odds on Clarence Thomas siding with the prediction markets. Unrelatedly, I'm sure, the President's son, Donald, Jr., has financial stakes worth millions of bucks in both major firms. 🤷

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Fast Food Firms Double Down on Hospitality

After spending millions automating service, fast-food giants have stumbled upon a shocking discovery. Turns out, people actually dislike ordering cheeseburgers from a glowing, sterile monolith.

For years, chains rushed to replace cashiers with self-service kiosks and app-only pickups. The result? Lobbies transformed into dystopian waiting rooms where customers stand around staring at screens. The National Operators Association, a McDonald’s $MCD ( ▼ 0.21% ) franchisee group, candidly admitted in a survey that “many guests say their experiences in our restaurants seem rushed, impersonal, sterile, and cold.”

Tell me about it. Try ordering a decaf coffee from the Hampton Boulevard McDonald's in Norfolk, Virginia. I swear to God they never have any. Or it's cold. Or they tell me to park in a spot to wait for it and then leave me hanging for 30 minutes. I mean I've driven off, frustrated, like a dozen times. Meanwhile the Dunkin’ Donuts across the street is always perfect. Mwah. (This is SO off-topic, Matt — Ed.)

Diners like me have voted with their feet. Customer Carolyn Blue, a former McDonald's loyalist who fled to competitors over the impersonal screens, lamented to the Wall Street Journal, “It breaks my heart….We just won’t go back.”

Steady on, Carolyn. It’s only a McMuffin we’re talking about.

Still, executives are spending millions retraining workers on something called "basic human warmth." McDonald’s is launching a massive initiative to coach 2 million employees on authentic hospitality. Tiffanie Boyd, McDonald’s global chief people officer, noted that “experience has also become much more important than it used to be,” while Burger King $QSR ( ▲ 0.61% ) U.S. President Tom Curtis acknowledged customers “want a friendly face….We have to lean in to that because that’s evaporating in the fast food space.” Over at Wendy’s $WEN ( ▲ 2.55% ) CEO Bob Wright insisted that “the best service experiences feel natural to the customer,” even if that "naturalness" is scripted by the head office, of course. Now. SMILE…

Should You Check Your 401(k) Today?

👎️ 

Nope.

Poll of the Day: The Daddy Mack’ll Make Ya…

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