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TGIF, everyone. It's Friday, September 4th, 2026. This week's topic, the fruits of labor with love. But before we start, here's a word from our attorneys.

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The unofficial end of summer is here. Labor Day weekend marks the last trip to the beach, Laker Mountains, before the year-end rush commences. Nearly 50 million Americans are expected to hit the road this Labor Day weekend. It's going to cost us. We are experiencing the highest gas prices ever for a Labor Day weekend. West Texas Intermediate is back above $90. That bleeds into so many things we use and buy on a daily basis. Representing 70% of USGDP, the American consumer is the ultimate economic engine. We keep spending. It's definitely adding up. With the price of the pump hitting $4.15 on average across the country, the focus is increasingly turning towards refined products. It's up $1.18 compared to last year. There's little sign of relief from these high prices. Notably, gas prices stayed above four dollars per gallon throughout August for the first time ever. Ever is a long time. The price of diesel is where the greatest pain point lives. The diesel crack spread, which is the difference between the price of oil and refined products shot above $106 per barrel. That shattered the previous record. There's a serious supply crunch with diesel. The global refining system has little slack to make up for the disruptions. We must not forget the bureaucratic issues. There hasn't been a new refinery built in America since 1977. There's not likely to be one anytime soon either. New refineries would require several permits from federal, state, and local governments. They're more likely to close than open. President Trump made a fresh push for new refineries to be built. It's unlikely to go anywhere. Building new refineries would require billions of dollars in three to five years of construction. By that time, demand could shrink. The energy industry doesn't believe it's a profitable proposition. So for now, refiners are reaping record profits amidst this global fuel crunch. American refineries are all operating near maximum capacity. This, from one of our street sources, quote, nobody's going to go out and make a huge multibillion dollar investment based on three months of record margins. End quote. That's the highest on record. It was $3.71 a year ago. Diesel is often called the workhorse of the U.S. economy. While consumer attention focuses heavily on gasoline and electric vehicles, diesel is the primary fuel powering America's physical infrastructure, supply chains, and heavy industries that keep the nation functioning. It's diesel that powers the vast majority of commercial transportation moving goods across North America. It's been a major contributor to higher prices at the store. Those Labor Day barbecues will be more expensive this weekend. Burgers and dogs are the traditional fan favorites. Their prices these days are not. Ground beef costs 63 cents more on average around the country this year. A package of hot dogs cost roughly 50 cents more, marking an 11% increase from last year. Those buns cost 18 cents more this year. You might notice fruit salads are more expensive this year. A basket of strawberries cost 58 cents more on average. The price for an ear of corn is 4% more. If you're feeling nickel and dimed, you are. It all adds up. Something that hasn't increased in price this year are eggs. They've actually fallen. Remember when their costs skyrocketed? They've come back down to earth. Egg prices have fallen 31% since their spring of 2025 peak. Now stores are oversupplied, taking the price down with it. Free market works for true price discovery. You know what costs less? Potato chips. Potato prices have actually declined. Potato salad is down 18% compared to last year. But don't forget those bags of chips saw a massive price increase after COVID. Instead of coming down, the bags shrunk. That's a sneaky game food companies play. Simply put, we've been paying much more for less. The price of lettuce plummeted in response to the parasitic outbreak in Mexico. Lettuce prices fell 16.4% in July. That was the biggest monthly decline on record. It was a clear case of nobody wants it in an instant. Despite no evidence of contamination in U.S. grown produce, people still avoided lettuce in size. Taco Bell was hit hard. As it was the first to be associated with the contaminated lettuce, traffic plummeted by 31%. It didn't stop there. An estimated 26 million American households stopped buying fresh greens and produce during the height of the scare. Many surveys said they only served cooked vegetables. This, from market researcher Numerator. What's crazy? Despite the record price decline, lettuce still costs 7% more this Labor Day weekend. Prices have risen seemingly everywhere. Interest rates have exploded higher with the price of oil. That matters. Interest rates are the price of money. The ten-year treasury yield, the barometer for most loans in circulation, hit 4.81% this week. That's the high on the year. That's the highest in three years. It keeps getting more expensive to borrow. Mortgage rates have jumped again. 30 year loans are back, pushing 7%. That's the highest since June of last year. Those loans were under 6% before the conflict in Iran began. A 7% mortgage buys a lot less house. It's not just an American thing. Higher rates have flown overseas. Ten year Japanese government bonds hit 3% for the first time since 1996. That's a 30-year high. Ten year British guilts just hit the highest level since 2008. Ten year German buns are at the highest since 2011. The long bond is feeling the pressure too. The 30-year treasury yield has been above the 5% level for 59 days this year. That is the most since 2006. As you can see, the market is dealing with some unfamiliar territory. That generally creates some stress and volatility. The labor market proved its strength again ahead of this Labor Day weekend. 162,000 jobs were created in August. That was triple the number the street expected. The unemployment rate stuck at 4.1%. Restaurants and hospitality were the standout source. July was revised higher too. Travel and leisure continue to be a hot theme. It was a strong summer for labor. High prices are taking a toll on consumer spending. But America's economic engine keeps chugging. The market is now assigning a 70% probability that the Fed does a rate hike by Halloween. Comments from a Fed representative earlier in the week led markets to believe the Fed is on hold. He suggested the central bank is not going to hike at its next meeting. Stocks rallied. Then Friday came. The strong job report suggests a hike might be necessary. Stocks didn't like that. They sold off Friday to close out the choppy price action flat on the week, and bond yields remained high. Despite the multi-year high in yields, the credit markets are behaving quite well. There's no sign of meaningful stress in the financial system at this time. That's very significant. It's something we track extensively. Struggles in the credit markets will be one of the first signs of trouble ahead. To us, higher yields are akin to yellow lights flashing. We proceed with caution. Rising spreads in the credit market would turn things to red. We're not there yet. And that's a really good thing. In closing, I'll leave you with this. History was made with an AI agent firing the first human employee. That is the headline. But there's more to it than that. It turns out that the employee who worked at a retail store in San Francisco was late to work in 17 of her 23 shifts, one of which resulted in the store opening over an hour late. An AI agent named Luna, run on Anthropics Claude model, was the manager of the store and the boss. This was all highly exploratory. The AI agent came to the correct conclusion, according to the human executives at the company. She just took too long and didn't follow the employee handbook. What's wild is Luna created the handbook, but it's her longer-term memory that failed. In the industry, that's called AI hallucination or memory decay. So the takeaway, not all humans make good employees, and AI is far from perfect too. Sounds like the combination of people and machines is the best solution for well-run organizations. It's worked well the past few decades. It's still the case today. The fruits of labor and the labor of love are so tangled and intertwined in this digital age. Perhaps it's always been the way. Have a nice weekend. Happy Labor Day. The market will be closed on Monday in honor of the holiday. Our offices will be closed too. We'll be back dark and early on Tuesday. I'm Mike Frasier.