Trading Observations

• Payrolls out 142k vs 165k (Not as bad as feared). 4.2% unemployment.  GOLDILOCKS???  Last print of 114k was revised to 89k . . . what jobs where they counting?  My daughters babysitting?

• Once again closed right at 50-day - will see if jobs can reverse the early weakness

• FWIW - SF Fed President Mary Daly on the labor market:  "I am watching it extremely carefully because any additional slowing would be unwelcomed. And we don't want to wait until we see it, because then it's too late."  But she adds, "My expectation is ... the labor market will continue to look healthy, not fragile."

• AVGO dragging chips and AI again - maybe we are finally getting away from AI being the lone story in the market.  SMH $217 is the rising 200-day.  Needs to hold.  Historically I have seen AVGO weakness be bought.

• SPX -   5440 next support.  Need to reclaim 5560 to calm the waters

• Total put/call at 0.86 normal, equity put/call up to 0.98, showing at least some caution creeping in

Futures

DOW +13

S&P +2

Nasdaq -33

10-Year Yield

Oil

BITCOIN

Consumer/Financial Healthcare

GS initiates on 7 Residential REITs – Buy on INVH, AMH, MAA as they like the single-family home community. Sell on UDR.

COST – Still killing it. Global comps +7.1% in August vs +7.2% in July. Traffic was strong, but ticket growth is moderating. COST customer a bit less cost conscience than DLTR, and it also works as a trade down from expensive grocery. That said the multiple this stock carries is ridiculously high.

LULU – Baird brand checks remain muted on traffic and overall spending. They think the low multiple prices in the issues, but we need to see a growth inflection to change course.

PYPL – Baird saying investor interest is accelerating in PYPL. The stock missed revenue growth for several years, has re-priced to an attractive multiple, and if new management can re-inflect growth, it could easilt re-rate. Current multiple 10x EV/EBITDA (probably deserves 12-13x).

CHWY - shares rise 3.8% premarket after Morgan Stanley analyst Nathan Feather boosts his bull-case price target for the pet food/products online retailer to $53 from $49, based on his Ebitda projections.

Technology

AVGO: Softer topline trends (F3Q AI revs flattish q/q & Semi revs miss vs strength in SW / Vmware) + elevated positioning weigh on stock. Guidance below at midpoint. AVGO -8% in pre-market.

FY3Q (July) revenue of $13.1bn (+5% q/q) was ~1% above consensus. albeit with Semiconductor Solutions revs of $7.3bn or ~2% below consensus, while Infrastructure Software revenue of $5.8bn was ~5% above Street estimates. The company guided FY4Q (October) revenue to $14.0bn (-4%/-1% vs. GSe/consensus, +7% qoq and +51% yoy)

CRM: Salesforce signs definitive agreement to acquire Own Company for ~$1.9B in cash; maintains guidance

MBLY / INTC: Intel considering selling part of stake in Mobileye – One to keep eye on. 

• If INTC really puts pressure on MBLY could give a solid entry point. INTC selling because they have to. INTC Paid $15.3B, IPO’d at $27B current EV $9B. 

INTC: Qualcomm considers buying portions of Intel's chip design business - Reuters

GOOG: UK's CMA issues statement of objections to Google today regarding digital ads on websites

NVDA: Nvidia processors are cheaper to rent in China than the US, suggesting Western export restrictions are being easily circumvented - FT

TSMC plans to start mass production in Arizona in 2025

US / CHINA: U.S. rolls out new chip-related export controls as China makes industry advances – CNBC

Industrials 

JBLU: JetBlue – Florida investor Vladimir Galkin holds a stake worth nearly 10% in the company and has discussed a potential board seat

Bloom Energy (BE) downgraded to hold from buy at Jefferies

Carrier Global (CARR) upgraded to peerperform at Wolfe

Concrete Pumping Holdings (BBCP) downgraded to neutral from buy at UBS

Eaton (ETN) upgraded to peerperform at Wolfe

Fastenal (FAST) reported August Average Daily Sale +2.1%, compared to Baird’s model/expectations of +2.4%

Fortive (FTV) upgraded to outperform from neutral at Mizuho Securities USA and downgraded to Peerperform at Wolfe

Hubbell (HUBB) upgraded to buy from hold at Deutsche Bank

Mobileye (MBLY) traded down 9% on headlines that Intel is considering selling part of stake in Mobileye – Bloomberg

Rockwell Automation's (ROK) board approves $1B for common stock repurchase

United States Steel (X) - Cleveland-Cliffs CEO on CNBC says X offer still on table and is working with JP Morgan and Wells Fargo on a plan; commends President Biden's decision to block foreign ownership of US Steel – Separately, X upgraded to outperform from neutral at BNP Paribas Exane