Transcript of THE JOBS GUT PUNCH: Why Good News Sold Off Wall Street & Crushed Tech!
Wall Street Truthbombs
0:00Hello everyone, I'm Mark Malk, founder0:01of Wall Street Truth Bombs and CIO at0:04Seibert Financial. This recap is0:06sponsored by Seibert Financial, where0:08investing is for everyone. Now, let's0:10break down the big themes that drove the0:12markets this week, the top three stocks0:14that mattered the most, and the key0:16economic data behind it all, and what's0:18coming up next week that you need to0:20have on your radar. My friends, this was0:24a week that looked like nothing happened0:26and changed everything. The S&P 5000:29finished up about 1/10 of a percent at0:317718.6.0:33The Dow lost 2/10 of a percent, and the0:36Russell 2000 went, well, absolutely0:39nowhere. But, seven of the 11 sectors0:41finished lower. That's not a rally, my0:44friends. That is a rotation wearing a0:46rally's clothes. And by Friday, this0:49market was arguing about whether good0:51news is still good news. Let's start0:54where the week ended, because Friday0:57rewrote everything before it. Now,1:00August payrolls on Friday came in at1:03162,0001:05jobs against a Dow Jones consensus of1:0853,000.1:10That is not a beat, my friends. That is1:12a demolition, and it arrived with 55,0001:16in upward revisions to June and July on1:19top of the whole cake. And July flipped1:21from a reported loss of 23,000 jobs, you1:24remember that, to a gain of 21,000. The1:28labor market Wall Street spent all1:30summer burying turned out to be, well,1:33breathing after all. And the market,1:36well, the market sold it. The Dow fell a1:38half of a percent, the two-year yield1:40hit 4.37%1:42and its highest level since January of1:452025.1:47And September rate hike odds jumped, not1:49surprisingly, to roughly 62%.1:53The second story, well, that was about,1:56I'm sure you're not surprised to hear1:57this, energy. Just about the only thing2:00that really worked. Energy gained 2.2%2:03while consumer discretionary lost 1.9%.2:07West Texas Intermediate closed at2:09$89.38.2:11That's up 7% and its best week since2:15July 13th. Brent crude finished at2:1893.93.2:19The driver is, well, a US-Iran conflict2:22now in its seventh month. And here's a2:26number that should actually stop you2:27cold. Only four commodity vessels moved2:31through the Strait of Hormuz on Thursday2:33against a 10-day average of about 15.2:37Diesel prices hit a record high. That's2:41not a headline risk. That is a cost2:43riding in every truck on every single2:46highway. My friends, we're going to get2:49deeper right now. If you like this type2:50of content, please click like and don't2:52forget to subscribe. It's really2:54important to be in the know about this2:55stuff and this is exactly how you do it.2:57Okay.2:59The third thread is a Federal Reserve3:01split in public. On Wednesday, Governor3:04Christopher Waller said the August3:06inflation report would decide his vote3:10and hike odds near 65% collapsed to a3:14coin flip literally within hours.3:17Friday, well, Friday not surprisingly3:20shoved them right back up where they3:21were. Meanwhile, ISM services prices3:25climbed to 72.6 from 70.33:29and manufacturing prices held at 71.1.3:32Input costs, my friends, are not3:35cooling. No surprise there. So, put all3:38three together. A labor market stronger3:40than advertised, an energy shock feeding3:43into the freight and goods costs of3:45absolutely everything, and a central3:47bank at 3 and 1/2 to 3.75%3:50arguing out loud about, well, going3:53higher.3:54This market spent the summer pricing a3:57Fed that actually wasn't finished. This4:00week it started pricing a Fed that might4:02be, well, starting over. I got a truth4:04bomb on that. The market didn't sell off4:06Friday because the economy is weak, it4:09sold off because the economy is strong.4:12When 162,000 jobs and a 221%4:17AI growth rate get punished in the same4:205 days, that is not a growth problem. It4:23is a discount rate problem. And those4:25themes showed up clearly in the4:27individual names that moved this week,4:29which brings me to this week's top4:33three. Each one found out that something4:35it thought it owned, pricing power,4:38loyalty, or a monopoly, well, it was4:41never guaranteed. Investing in your4:43future doesn't have to feel4:45intimidating. At Siebert, you're never4:47on this journey alone. Our team of4:49advisors, brokers, investment managers,4:51and insurance professionals [music] is4:53with you every step of the way. We4:55believe your financial plan should be as4:57unique as you are, not a4:58one-size-fits-all template. As a leading5:00brokerage and financial services firm,5:03we tailor our solutions to [music] your5:05goals, your timeline, and the life5:07you're building. If you're ready to take5:09the next step toward true financial5:11freedom, visit siebert.com to learn5:13more.5:14>> [music]5:18>> Now, let's start with stock number5:20three, and that is Lululemon Athletica,5:24Lulu, l u l u. Lululemon fell 17% on5:28Friday after cutting its full-year5:30outlook for the second time this year.5:32Second quarter fiscal 26 revenue was5:35$2.4 billion,5:37down 4% year-over-year and short of the5:40$2.465:42billion consensus. Comparable sales,5:45that's the important thing to watch,5:46That dropped 9% overall and 12% in the5:50Americas. Remember, comparable sales5:53compares the same amount of stores as5:55you have last year. So, you can't just5:57grow by adding stores. And that's why we5:59watch that carefully, especially with6:02brick-and-mortar retailers. Now, watch6:04the earnings line because this is where6:06people got fooled. Adjusted earnings of6:08$2.926:10crushed the $1.82 estimate, but $0.86 of6:14that was Here it is again, a tariff6:17refund. If you strip it out, well,6:19you're at $2.06.6:21Then guidance came down to 10.356:24billion dollars to 10.5 billion dollars6:27from flat. And I got a truth bomb on6:29that one, and it's a bomb. A company6:31that beats on a tariff refund and misses6:33on its own customers, well, they don't6:35have an accounting problem. It has a6:37brand problem. And you can't refund your6:40way out of that one. Okay, stock number6:43two. This is one you don't hear about6:45often. Ready? It is Fair Isaac, FICO.6:50You probably heard that one. Fair Isaac6:52lost roughly 17.5% on Friday as well and6:56shed about $173 per share. No earnings,7:00no guidance cut. Actually, it was a7:02regulator. Federal Housing Finance7:05Agency Director Bill Pulte directed7:08Fannie Mae and Freddie Mac to accept7:10mortgages underwritten with a Vantage7:12score instead of a FICO score, the old7:15way. Here's why that landed so hard.7:17Vantage score, you see, charges about7:19$0.99 to pull a score, and FICO charges7:2210 bucks or more. The product didn't7:25change, the customer just got a legal7:28alternative. There's a truth bomb there.7:30Guys, every moat looks permanent until7:33somebody with a regulatory pen decides7:36that it is not. And if your margins7:39depend on being the only option, you do7:41not own a business, you only rent one.7:45My friends, this is some important7:47stuff. I hope you're learning today. If7:49you like it, please click like and don't7:51forget to subscribe. Now, let's get to7:52stock number one. Drum roll, please. The7:58stock The number one stock of the week7:59was Broadcom, AVGO.8:03My friends, Broadcom, which we love very8:06much, Broadcom reported third quarter8:08fiscal '26 results after Wednesday's8:10close, and then the stock, well, it8:12promptly fell 6% on Thursday to $346.49.8:17Now, understand what it reported.8:20Revenue of $29.6 billion, up 86%8:24year-over-year. AI semiconductor revenue8:26of $16.7 billion,8:29that was up 221%8:31year-over-year and 54% from the prior8:34quarter. Adjusted earnings of $3.328:38a share. AI is now 56% of the company,8:42and CEO Hock Tan said Broadcom expects8:44to ship $350 billion worth of AI8:48semiconductors over two years to six8:51hyperscaler customers. So, why did it8:54get whacked? Well, fourth quarter8:57guidance of $34.8 billion landed just8:59under the $35.059:02billion Wall Street was expecting. And9:05gross margin was guided to 73% against9:08the expectations of 78% a year ago.9:12Growing 86% into a shrinking margin is a9:15different investment case than growing9:1786% into an expanding one. Nvidia rose9:211% that same day, and AMD fell 2%. This9:25market, my friends, is not rejecting AI,9:28it's repricing who keeps the money.9:31Okay, your truth bomb is this.9:33Broadcom grew its AI business 221% and9:37got sold for it because the AI trade9:39quietly changed its question from how9:41fast you're growing to how much do you9:44keep. That's the question the bond9:46market asked everybody on Friday. My9:49friends, those are your top three stocks9:52of the week, at least the ones that I9:54found interesting. If you want my daily9:56deep dives into any of these tickers or9:58any others or you have some comments on10:00that, please leave them below because we10:02love hearing from you. Now, let's get10:05under the hood on the data that explains10:07why this week played out the way it did.10:10Let's start with looking back on the10:13numbers that we collected.10:16My friends, the report that mattered10:17most was, of course, the August10:19employment situation from the Bureau of10:21Labor Statistics, otherwise known as10:23BLS, released on Friday 8:30 a.m. Wall10:27Street Times time. Payroll grew Payrolls10:30grew 162,00010:33against a Dow Jones consensus of 53,000.10:37Unemployment held at 4.1%. Average10:39hourly earnings rose 10 cents to $37.75.10:45That's up 3/10 of a percent on the month10:47and 3.1% over the year. June was revised10:50up by 110,000,10:53excuse me, 11,000 and July by 44,000.10:57Food services added 59,000 jobs and11:00local government education, 42,000.11:04We had a video out yesterday on all11:06that. If you want to do a deep dive,11:07check out our homepage on YouTube. The11:09one ugly line was information. That was11:13down 23,000 jobs. Now, here's the part11:15that almost nobody put on your screen.11:18On Wednesday, ADP, the private guys,11:21said that private payrolls grew just11:2338,000 in August. Two days later, the11:26government said 162,000.11:28And on Tuesday, the JOLTS Job Openings11:31Survey showed July openings flat at 7.311:35million with June revised down by11:38177,000.11:40The surveys, well, they disagree.11:42The Fed had to decide has to decide on11:45September 16th coming up fast using11:48numbers still fighting amongst11:50themselves. If you like this stuff,11:52guys, this is where you get it. Okay,11:54let's get to11:56the week ahead and see what we got.11:58First of all, we have a short week. Uh12:00markets are closed on Monday, September12:017th for Labor Day and the Fed is already12:04in blackout ahead of the September 15th12:07and 16th meeting. So, no more speeches,12:10no public fights, no guidance. Well, we12:12weren't getting that anyway. And the12:14data has the floor to itself. And guess12:17what we got. We have two reports to12:20decide this month. We have August PPI,12:23which lands on Thursday, um and at 8:3012:26a.m. Wall Street time, and August CPI,12:29consumer price index, that lands later12:32in the week. So, uh we also get12:34preliminary University of Michigan12:36sentiment uh at 10:00 on Friday. For12:40your baseline, uh July headline CPI rose12:431/10 of a percent on the month and 3.4%12:46over the year with core at 2.5%. Watch12:50energy and services, of course, above12:52everything else.12:54Excuse me, [clears throat] because12:56this is the first inflation print that12:58can capture what $89 oil and record13:01diesel prices, which you're hearing13:03about right now, are doing to our13:06wallets. So, here are the two questions.13:09Does August inflation hand the Fed the13:10permission slip it needs on September13:1216th? And if it does, how much of this13:15market is still priced for a central13:17bank everyone assumed was done? So, here13:21is your bottom line. This was the week13:23the market lost the ability to root for13:26good news. A strong jobs report? Well,13:29it hurt stocks. A 221%13:31AI growth rate hurt Broadcom, and a13:34monopoly that looked untouchable at FICO13:37on Thursday lost 17.5%13:41on Friday. Watch Friday's CPI above all13:44else in the week ahead because until13:46that number tells the Fed what it is13:48allowed to do, the rest of it, my13:50friends, is just noise.13:54My friends, I'm Mark Malkiel, and this13:55has been your weekly market recap. We13:58gave you top stocks and a week ahead14:00review that radar, and this was14:03sponsored by Seabird Financial, my14:04friends, where investing is for14:06everyone. Stay disciplined. Stay14:09truthful. Stay truthful. Stay focused,14:11and I will see you all in the next one.14:14In the interim, join me every day at14:16Wall Street Truth Bombs, where I drop14:18them right here, even when I'm sick like14:20I am, and the market figures them out.
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