Is the US Jobs Market Starting to Crack? Steven Rattner on Tariffs, AI and Stagflation
Summary
- The US labor market is softening, characterized by lower labor force participation, fewer job openings, and rising unemployment, despite strong GDP growth.
- This disconnect implies rising corporate productivity, as companies cut headcount to offset the costs of tariffs and post-COVID over-hiring.
- AI is not yet replacing jobs en masse, but it is having an "anticipatory effect" where companies are freezing hiring for engineers and financial staff.
- Stagflation risks are rising; war-driven inflation and oil prices may force the Fed to reduce expected rate cuts from two down to one or zero.
- Private credit markets will experience pain, specifically regarding "ARR" (Annual Recurring Revenue) loans made to unprofitable software companies.
- Traditional safe havens are shifting: Treasuries are selling off due to inflation risks, while the US Dollar, Gold, and Silver are catching fear-driven bids.
Trade Ideas
"There were a lot of loans made to particularly software companies, what we call ARR loans... Revenues don't necessarily mean you're solvent. And so those kinds of loans... there's definitely going to be some pain." During the zero-interest-rate environment, many unprofitable software companies survived on venture debt and private credit based purely on top-line revenue growth (ARR) rather than actual cash flow. As private credit lenders face write-downs and tighten lending standards, these cash-burning software companies will face severe liquidity crises. Furthermore, AI is causing an anticipatory freeze in software hiring and capex. AVOID unprofitable, high-multiple software and cloud computing companies reliant on debt to fund operations. The Fed could pivot to aggressive rate cuts, easing financial conditions and bailing out over-leveraged tech companies.
"I think the dollar is a safe haven, and most people see it, and as you said, that's probably what we've been seeing." In a stagflationary environment where global geopolitical risks are high and US interest rates remain elevated to fight inflation, global capital seeks both safety and yield. The US Dollar provides both, especially as Treasuries lose their appeal due to inflation erosion. LONG the US Dollar index as the premier safe-haven asset in a high-inflation, high-geopolitical-risk environment. Coordinated global central bank intervention to weaken the dollar, or a sudden resolution to Middle Eastern conflicts lowering the geopolitical premium.
"The war creates inflation, and inflation is bad for Treasuries. And so you could argue that that's why Treasuries should sell off in this set of circumstances." Geopolitical conflicts (like the war involving Iran) disrupt supply chains and spike oil prices, leading to sticky inflation. If inflation remains elevated, the Federal Reserve cannot cut rates as aggressively as the market previously priced in (Rattner notes cuts may drop from two to one or zero). Higher for longer interest rates directly decrease the value of long-duration bonds. SHORT long-duration US Treasuries as inflation risks neutralize their traditional safe-haven status. A sudden, severe recession or a deflationary shock could force the Fed to slash rates, causing long-duration bonds to rally sharply.
"Gold until recently and silver also until recently have been so strong that those are normally indicators of a lot of fear out there in the market." Investors are quietly hedging against stagflation (rising unemployment + rising inflation) and geopolitical escalation. Because inflation destroys the real yield of fiat currencies and bonds, precious metals act as a non-yielding but inflation-resistant store of value. The strong bid in these metals indicates smart money is positioning for systemic friction. LONG precious metals as a hedge against stagflation and the declining utility of Treasuries as a safe haven. A massive spike in real interest rates (yields rising faster than inflation) makes non-yielding assets like gold and silver less attractive to hold.
Up Next
This Bloomberg Markets video, published March 14, 2026, features Steve Rattner discussing IGV, WCLD, UUP, TLT, GLD, SLV. 4 trade ideas extracted by AI with direction and confidence scoring.
Speakers: Steve Rattner · Tickers: IGV, WCLD, UUP, TLT, GLD, SLV