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Non-Farm Friday – Is America Working?

This is a nice graphic.

I like it when I find an image that really simplifies something and shows you exactly how something complex works.  Of course we kind of know this but seeing it laid out like this really sticks and makes all the other images and stories easier to digest – it's like a good investment that keeps paying off.

The Government "invested" $10Tn since Donald Trump took office in January of 2017 and, since then, the GDP has gone from $19.542Tn to $21.277Tn so a 50% addition to our National Debt has bought us 8.87% more GDP.  The hard numbers for the 2018-2021 (not finished, so estimated) are $20.611 (+$1.069Tn), $21.433 (+$1.891Tn), $20.936 (+$1.394Tn) and $21.277 (+$1.735Tn) so the total gain in GDP over $19.542Tn is $6.089Tn – we're not exactly getting good bang for our buck, are we?  

What this really means is the tax cuts did not pay for themselves, did they?  For that to happen, the extra $1Tn a year of deficit spending we've endured to make the rich (like Trump) much, much richer should have resulted in a $3Tn boost to GDP which would have generated $1Tn in taxes.  Of course that wouldn't really work because, as we know, almost all of the gains go to the Top 1% and they effectively pay only 18% in taxes while Top 1% Corporations pay more like 8% so the GDP would have had to have gone up more like $6.5Tn for those tax cuts to pay for themselves.

So that is gaping wound #1 in our economy – we don't collect enough tax revenues to pay for our spending.  Gaping wound #2 is, of course, Covid and we spent $4Tn last year fighting that economic disaster (not the so much the disease, just the economic impact was fought) and the Fed spent another $4Tn of our money making sure no bank was harmed by the virus as well.  

Gaping wound #3 is the continuing virus issues as well as the damage that has been done to the economy.  We have parts shortages and labor shortages and, because we bailed everyone out to keep the economy strong – we have skyrocketing inflation as the same money is chasing less parts and labor – see how that all connects?

Wound #3 is gaping away this morning with Non-Farm Payrolls for August coming in at just 235,000 – miles below the 750,000 expected by Leading Economorons but pretty much just where we, at PSW, expected them to be.  The market is SHOCKED that jobs numbers were not more robust and indexes are moving sharply lower at the initial report BUT this is likely to leave the Fed on the table with their $120Bn a month in stimulus — so we'll see what happens.

Adding insult to economic injury is the 0.6% rise in wages in August and that is only 100% higher than the estimates of our esteemed Economorons vs the 200% miss in jobs numbers.   A stagnant economy that is not producing more jobs coupled with rising inflation is called Stagflation – and it's a very bad thing.  

Oil is still at $70.35 for some reason and we shorted it yesterday at $70.20 so so far, so wrong but it's a conviction play and we're happy to double down if oil goes higher.  This economy is nowhere near as hot as we've been told and we've had fun, Fun, FUN until Congress took our stimulus away but now what?

Morgan Stanley yesterday cut their Q3 GDP forecast from 6.5% to 2.9% – another 100% miss from the prognosticators.  Consumption is forecast to come in at an anemic 0.3% vs the promised 2.9% that has been propelling the markets higher and even the ever-optimistic Atlanta Fed has lowered their GDPNow forecast from 5.4% to 3.7%.  Notice the RIDICULOUSLY unrealistic range of 8.7% by private forecasters and that is only the AVERAGE – some of these guys are over 10% growth projections in their Fantasy Land outlooks.  

Alaska Airlines (ALK) got a shot of reality this morning as they cut Q3 guidance, citing worsening booking trends as COVID-19 cases rise once again in the six weeks since its last guidance was released.  The airline now expects up to $50M in cash flow from operations, in the lower end of its previous guidance of up to $100M as forward bookings slow down rapidly.  

We will keep our eyes open as companies begin to capitulate ahead of earnings shocks as certainly A LOT has changed since Q2 earnings were announced and guidance was given.  As I said during our portfolio reviews two weeks ago – traders are generally oblivious to changes until they get slapped in the face with them and that's why we took advantage of the situation and sold them our overpriced positions while it was easy to do so.

It's still pretty easy to sell your holdings at the top of the market and we're about 80% in CASH!!! in our Member Portfolios and, if you are less than 50% in cash – I strongly suggest you rethink those positions.  GDP forecasts don't usually get knocked down 50% in a week – especially while, simultaneously, the pundits are raising the expectations for the masses.  

Something has to give.  

Have a great weekend, 

- Phil

 


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  1. Good Morning.


  2. AVGO – Solid Quarter….. lots of Cash on hand and to year end…..

    Broadcom (NASDAQ:AVGO) is up 0.4% after hours following fiscal third-quarter results that topped expectations, including record revenues, and upbeat revenue guidance for the current quarter.

    Consolidated revenue grew 16% to $6.8 billion, with help from some above-consensus results in infrastructure software.

    And net income more than doubled to $1.88 billion from a year-ago $688 million.

    "Broadcom delivered record revenues in the third quarter reflecting our product and technology leadership across multiple secular growth markets in cloud, 5G infrastructure, broadband, and wireless," says CEO Hock Tan. "We are projecting the momentum to continue in the fourth quarter."

    Net revenue by segment: Semiconductor solutions, $5.02 billion (up 19%); Infrastructure software, $1.76 billion (up 9.7%).

    Cash from operations was $3.54 billion, with $115 million spent on capital expenditures (free cash flow about $3.4 billion, "and we expect free cash flow to remain strong in the fourth quarter," says CFO Kirsten Spears).

    Cash and equivalents came to $11.1 billion, up from $9.52 billion at the end of last quarter.

    It's guiding to Q4 revenue of $7.35 billion, up 14% and above consensus for $7.24 billion, and expects adjusted EBITDA of about 61% of that (or $4.48 billion).


  3. Comment content omitted because it is too long.


  4. Good morning!  

    A little dip at the open and a big dip off the pre-market expectations bus we'll see how things play out. 

       

    Oil pulling back a bit, gold flying:

       
     

    Coffee testing $200 – remember when we used to play it at $100?

    Lumber had a crazy run that died:

    • The economy created many fewer jobs than expected last month, putting the Fed's asset tapering schedule in question.
    • Nonfarm payrolls rose a relatively paltry 235K in August, compared with the upwardly-revised July gain of 1.05M
    • Economists, on average, were looking for a gain of 750K.
    • The unemployment rate fell to 5.2% from 5.4% in July, matching forecasts.
    • Inflation hawks will note a 0.6% rise in average hourly earnings, double the 0.3% consensus estimate.
    • The 10-year Treasury yield rose from where it was before the report, now up 3 basis points to 1.32%.
    • The labor participation rate stayed steady at 61.7%.
    • Permanent job losses fell by 443K to 2.5M in August, 1.2M higher than February 2020.
    • Randall Kroszner, former Fed governor now with the University of Chicago's Booth School of Business, said on Bloomberg a lot of the people who have recently quit positions won't be coming back, "happy being out of the labor market" rather than take the risks of the COVID Delta variant.
    • The impact of the Delta variant was clear in this report, with the services jobs numbers particularly weak.
    • "In August, employment in leisure and hospitality was unchanged, after increasing by an average of 350,000 per month over the prior 6 months," the BLS said. "In August, a job gain in arts, entertainment, and recreation (+36,000) was more than offset by a loss in food services and drinking places (-42,000). Employment in leisure and hospitality is down by 1.7  million, or 10.0 percent, since February 2020."
    • Combined with June, upward revisions of nonfarm payrolls totaled 134K.
    • "While revisions were favorable, it's a big surprise and very disappointing," Mohamed El-Erian, advisor at Allianz, tweets. "Some will point to the #DeltaVariant impact. Others will add the malfunctioning of the labor market in matching workers to #jobs. Look for more talk of stagflationary winds."
    • The report almost guarantees that the FOMC won't make an official announcement of tapering at the Sept. 22 meeting and may push any decision to the end of the year.
    • Wall Street was looking for tapering to start before 2022 after Chairman Jay Powell's Jackson Hole speech.
    • The big miss on the headline number follows a trend of soft economic data as Delta variant cases rose.
    • Morgan Stanley recently slashed its Q3 GDP forecast.

    • BofA Securities' economics team expects that the economy created many fewer jobs than Wall Street is forecasting, consistent with the softening in other indicators since the surge in COVID Delta variant cases.
    • The conensus is for a gain of 750K in nonfarm payrolls. BofA is calling for a gain of 600K.
    • It predicts that the jobless rate will dip to 5.3% from 5.4%, with average hourly earnings rising 0.4%.
    • So far, equities look optimistic, with S&P futures (SPX) (NYSEARCA:SPY), Nasdaq 100 futures (NDX:IND) (NASDAQ:QQQ) and Dow futures (INDU) (NYSEARCA:DIA) higher.
    • The 10-year Treasury yield (NYSEARCA:TBT) (NASDAQ:TLT) is hovering around where is has been most of the week, up 1 basis point to 1.3%.
    • "Our below-consensus nonfarm payrolls forecast is predicated on the markedly weaker high frequency employment data between the July and August payroll survey periods," BofA economists Joseph Song and Stephen Juneau write in a note. "Specifically, the Homebase and UKG employment series were both down 3.4% and 2.4%, respectively, over the month."
    • "Since we have been tracking these measures, there have been two months when both employment measures declined over the month and both months showed relatively soft employment growth with nonfarm payrolls growing by 264k in November 2020 and 233k in January 2021 (private payrolls grew by 359k in November 2020 and 122k inJanuary 2021)."

    • "We expect government payrolls to be an area of strength again in August as we look for government payrolls to increase by 200k," they add. "The gain should come from the education sector where there was an outsized increase in hires over the summer due to greater summer school enrollment compared to other years."
    • If BofA is correct, it says that will rule out a formal taper announcement of asset tapering at the September FOMC meeting, but leaves the door opening to signal tapering is coming.
    • "The Fed should assess the further gains in employment and reduction in the unemployment rate, albeit at a slower pace, as further progress towards its goals for maximum employment but will likely want further evidence before announcing taper, in our view," Song and Juneau say.
    • Bill McBride, who writes the Calculated Risk blog, is also looking for a below-consensus number due to the rise in Delta variant cases, says investors should watch the number of permanent job losers (chart at bottom).
    • "While there has been a strong bounce back in total employment, from the shutdown in March and April 2020, permanent job losers had been flat over the last several months," he says.
    • Randall Kroszner, former Fed governor now with the University of Chicago's Booth School of Business, said on Bloomberg a lot of the people who have recently quit positions won't be coming back, "happy being out of the labor market" rather than take the risks of the Delta variant.
    • A weak August jobs number would also jibe with Morgan Stanley's overall assessment of economics conditions this quarter.
    • Yesterday it slashed its expectations for Q3 GDP.
    • In an irony that coincides with Labor Day, enhanced pandemic unemployment benefits will be coming to an end this weekend. The assistance, which helped out-of-work Americans during the pandemic, were distributed under several programs created by the CARES Act. Among them: Pandemic Unemployment Assistance, Pandemic Emergency Unemployment Compensation and Federal Pandemic Unemployment Compensation.
    • Historic safety net: States issued $794B in combined state and federal unemployment benefits from March 2020 through July 2021, according to the Labor Department. That included weekly bonus payments, which were raised by $600/week and then lowered to $300/week, as well as unemployment insurance and assistance for gig workers. The long-term unemployed also collected federally financed weeks of benefits when state aid was depleted.
    • A year into the pandemic, up to 46.2M people had received at least one week of benefits, amounting to about a quarter of the U.S. workforce, per an estimate from The Century Foundation. About half of U.S. states also ended their involvement in some or all federal unemployment programs in June or July, before their official expiration this weekend.
    • Go deeper: While it's hard to make direct comparisons, the $794B pandemic figure weighs up against the $128B in unemployment benefits distributed in 2009, the year which unemployment peaked during the Great Recession. Back in 2009, only 14.5M Americans collected at least one benefit payment, which was less than a third of the pandemic annual total. The latest figures are even likely to be understated because some states haven't filed regular data for Pandemic Unemployment Assistance.

    • A longer-term look at restaurants points to a continuing arc back toward normality from the upset of the COVID-19 pandemic, Baird says in introducing calendar 2023 estimates across its coverage.
    • And in setting up the estimates, it assumed the consumer spending environment would return to a more normalized growth rate after a period where volatility from the pandemic combined with "massive" government stimulus payments to consumers.
    • "Said differently, we suspect the industry demand outlook is likely to be more reliant on the traditional economic variables (e.g., employment/wage growth, consumer confidence, other factors) that have correlated to restaurant spending historically, and we are assuming a year-over-year backdrop (relative to the 2022E base) that is similar to the years heading into the pandemic," analyst David Tarantino and team write.
    • But they're also expecting "modest" EBITDA margin expansion on the expectation that supply chain and staffing challenges should ease, potentially supporting more modest input cost inflation than expected over the coming year – as well as "anticipated leverage on G&A from total revenue increases."
    • And summarizing the estimates, the top revenue growth for 2023 is forecast for Shake Shack (NYSE:SHAK), with an expected rate of 20% (though just 2% in same-store sales growth).
    • On revenue growth, the burger chain came in ahead of three other restaurants expected to grow revenues by double digits in 2023: WingStop (NASDAQ:WING), with a rate of 15%; Chipotle Mexican Grill (NYSE:CMG), at 12%; and Chuy's (NASDAQ:CHUY), at 12%. WingStop and Chipotle are both forecast for same-store sales of 5% for 2023, tops on that measure in Baird's coverage, while Shake Shack leads their overall revenue growth chart due to 18% expected unit growth.
    • Those names are followed by Starbucks (NASDAQ:SBUX), at 9% revenue growth; Domino's Pizza (NYSE:DPZ), at 8%; Texas Roadhouse (NASDAQ:TXRH), at 8%; Yum Brands (NYSE:YUM), at 7%; and El Pollo Loco (NASDAQ:LOCO), at 6%.
    • Turning to EBITDA growth expectations for that year, Shake Shack is again on top with 29% growth expected (though with a non-meaningful growth in EPS), followed by Chipotle at 20%, WingStop at 17%, and Chuy's at 13%.
    • And looking at earnings per share, Baird sees 25% growth for Chipotle that year, to $42.50 (above consensus expectations for $42.13). That's well ahead of expected growth rates of 18% for WingStop and Chuy's, and 14% growth expected for Domino's Pizza.
    • Looking at the coverage as a whole, Baird says its best ratings are on stocks exhibiting one or more characteristics: potential to grab "sizable" amounts of market share and show greater-than-expected core profit growth on reopening; ability to sustain scarce EPS/revenue growth rates for a period well beyond reopening; combination of above-average earnings visibility for 2022 and depressed relative valuation; and/or relatively low direct exposure to key risk factors (like input cost inflation, moderating consumer spending; and COVID-19 unknowns).
    • And considering those factors, it's maintaining Outperform rates on seven stocks: Starbucks (SBUX); Chipotle (CMG); McDonald's (NYSE:MCD); Domino's Pizza (DPZ); Yum Brands (YUM); WingStop (WING); and Darden Restaurants (NYSE:DRI).
    • The U.S. Securities and Exchange Commission charged Kraft Heinz Co. (NASDAQ:KHC) with allegedly engaging in a long-running "expense management scheme" that resulted in several years of restatements.
    • The SEC also charged Kraft's former Chief Operating Officer Eduardo Pelleissone and its former Chief Procurement Officer Klaus Hofmann for their alleged "misconduct" related to the scheme, according to a statement.
    • Without admitting or denying the SEC's findings, Kraft agreed to a cease and desist from future violations and pay a civil penalty of $62M.
    • The SEC claims that from the last quarter of 2015 to the end of 2018 Kraft engaged in various forms of "accounting misconduct," including recognizing unearned discounts from suppliers and maintaining "false and misleading" supplier contracts. The accounting "improprieties" resulted in Kraft (KHC) reporting inflated adjusted EBITDA.
    • In June 2019, Kraft restated its financials, correcting a $208m in "improperly-recognized" costs savings over nearly 300 transactions.
    • Recall June 2019, Kraft Heinz files annual report, 'returning to path of normalization and May 2019, Kraft -3% after accounting update.
    • via elecktrek
    • "This month will be the craziest month for deliveries Tesla (NASDAQ:TSLA) will ever have," says Elon Musk in a company-wide call last night. Citing stresses on employees and some dissatisfied customers, the company has been attempting to chill its so-called "delivery pushes" at the end of each quarter, but that's not happening this time around. Adding to the difficulties are chip shortages and logistical issues being seen throughout the economy. Musk believes Tesla will have a better handle on reducing these "delivery pushes" by the first quarter of next year, at the latest.
    • In other news, Musk tells workers he's hoping to have a $25K car available sometime in 2023. The key, says Musk, is the company having a complete self-driving ready to go, and he suggests the "Model 2" may not come with a steering wheel or pedals.
    • Finally, Musk confirmed that the Cybertruck indeed has been delayed until late in 2022. It had initially hoped to be in production late this year. Musk: "It will be a special project. Like a glitch in the Matrix. Like if Neo had a car."
    • Regulators earlier this week had more questions for Tesla and its autopilot.
    • Shares of Didi Global (NYSE:DIDI) are up 3% in premarket trading on a report that it could come under control of Beijing.
    • Beijing's City Government is looking to invest in the ride-hailing company where Shouqi Group and other state-run companies in Beijing would acquire a stake in Didi, Bloomberg reports,, citing people familiar with the matter.
    • The size of the stake is not clear and could include a golden veto share and/or a seat on the board.
    • There is also the possibility that DiDi is eventually taken private, which could explain the jump in the stock price before the bell.
    • Xi Jinping is making these moves to address social inequality and "avoid an existential threat form an outsider of the Chinese Communist Party" that could challenge the hierarchy, Thanos Papsavvas, CIO at ABP Invest, said on Bloomberg TV.
    • Yesterday, Chinese regulators summoned Didi (DIDI), Meituan (OTCPK:MPNGF) and nine other ride-hailing companies asking them to rectify non-compliant behavior.

    • Eurozone August final services PMI 59.0 vs 59.7 prelim. Composite PMI came in at 59.0 compared to preliminary reading of 59.5.
    • “The benefit of looser lockdown restrictions has fuelled two of the best expansions since mid-2006 in July and August, but a step down since the preliminary ‘flash’ number tells us that this growth momentum is fading," said Joe Hayes, Senior Economist at IHS Markit.
    • London +0.15%.
    • Germany +0.06%August final services PMI 60.8 vs 61.5 prelim. Composite PMI 60.0 in-line with prelim.
    • "The steep rebound in activity and strong business confidence about longer-term prospects continue to help drive a rapid pace of job creation, albeit with the rate of employment growth in August easing from July's all-time survey high," said Phil Smith, Associate Economics Director at IHS Markit.
    • "Price pressures remained historically elevated across the service sector in August, adding to even stronger inflation in manufacturing."
    • France -0.30%August final services PMI 56.3 vs 56.4 prelim. Composite PMI 55.9 in-line with prelim.
    • "The rate of jobs growth was at its best in almost three years in August… Business confidence is also proving to be resilient, despite the emergence of the delta variant and steep cost pressures across the economy," said Joe Hayes, Senior Economist at IHS Markit.
    • Spain August services PMI 60.1 vs 61.4 expected, prior 61.9. Composite PMI 60.6, prior 61.2.
    • U.K. August final services and composite PMI is due today at 0830 GMT.
    • Eurozone July retail sales data will be out later in the day at 0900 GMT
    • Japan +1.80%. Shares edge higher on reports Prime Minister Yoshihide Suga's resignation.
    • Jibun Bank/Markit August Services PMI came in at 42.9 compared to preliminary reading of 43.5 and lower than July's reading of 47.4.
    • Composite PMI reached 45.5 vs. preliminary 45.9 (July 48.8).
    • China -0.15%Caixin/Markit Services PMI for August came in at 46.7, against July’s reading of 54.9 and lower than expectations of 52.6.
    • Business activity and new orders both fall amid uptick in COVID-19 cases. Composite PMI of 47.2, prior 53.1.
    • Hong Kong -0.54%.
    • Australia +0.36%Australia Retail sales fell 2.7% M/M in July, much lower than market consensus for a 0.2% decline.
    • Lockdowns in Australia’s major cities dented retail spending. Annually, Retail sales fell 3.1%.
    • Overnight on Wall Street, Dow Jones jumped 131.29 points to 35,443.82, S&P 500 advanced 0.28% to 4,536.95 while Nasdaq edged 0.14% higher to 15,331.18.
    • Oil prices were mixed, with Brent crude futures up 0.03% to $73.05/barrel. U.S. crude futures dipped 0.16% to $69.88/barrel.
    • U.S. stock futures higher. Dow Jones +0.20%; S&P 500 +0.22%; Nasdaq +0.16%.
    • Japan’s Nikkei 225 jumps nearly 2% following the news that Prime Minister Yoshihide Suga will not run in the Sept. 29 leadership race for his governing Liberal Democratic Party, leaving his post after serving only one year, source CNBC.
    • He says he wants to focus on pandemic measures.
    • Suga took over after Shinzo Abe resigned last September, citing ill health.
    • The prime minister has faced criticism and his support ratings have dropped to around 26% from as high as 70% in his early tenure over slow coronavirus measures and conducting Olympics despite the public’s health concerns.
    • Suga's resignation means Japan is likely to have a new leader who is elected as head of LDP, due to the party’s majority in the parliament.
    • The government has been considering holding the general election on Oct. 17. Fumio Kishida, a former foreign minister, is competing for the party leader post.

    Wow, that was fast:

     

     

    • The U.S. Department of Energy today authorized the release of 1.5M barrels of crude oil from the Strategic Petroleum Reserve to exchange with Exxon Mobil's (NYSE:XOM) Baton Rouge refinery in Louisiana to ensure access to fuel for areas hit by Hurricane Ida.
    • Exxon shares closed +2.4% in today's trading.
    • With 94% of U.S. Gulf of Mexico crude production still shut in from Ida as of earlier today, S&P Global Platts reports energy analysts believe supplies from the SPR may help get oil refineries running more quickly once they have their power restored.
    • More than 2M bbl/day of oil refining capacity was shut ahead of the hurricane, and Exxon Baton Rouge is the only refinery restarting so far.
    • Exxon is among many fuel producers that had to shut their crude processing plants in Louisiana due to the storm.
    • Nasdaq's (NASDAQ:NDAQ) U.S. matched equity volume declined to 33.76B contracts in August from 36.32B in August 2020, and M/M from 34.53B in July 2021.
    • U.S. equity options volume rose to 247M contracts, from 243M in July, and 215M in August  2020.
    • European options and futures volume decreased to 4.5M both M/M and Y/Y (5.0M in July and 4.9M in August 2020).
    • European equity volume decreased to $82.4B from $87.5B in July, and increased from $68.9B in August 2020.
    • European fixed income volume of 2.0M contracts rose M/M from 1.4M in July and was at par compared to August 2020.
    • Broadcom (NASDAQ:AVGO) is up 0.4% after hours following fiscal third-quarter results that topped expectations, including record revenues, and upbeat revenue guidance for the current quarter.
    • Consolidated revenue grew 16% to $6.8 billion, with help from some above-consensus results in infrastructure software.
    • And net income more than doubled to $1.88 billion from a year-ago $688 million.
    • "Broadcom delivered record revenues in the third quarter reflecting our product and technology leadership across multiple secular growth markets in cloud, 5G infrastructure, broadband, and wireless," says CEO Hock Tan. "We are projecting the momentum to continue in the fourth quarter."
    • Net revenue by segment: Semiconductor solutions, $5.02 billion (up 19%); Infrastructure software, $1.76 billion (up 9.7%).
    • Cash from operations was $3.54 billion, with $115 million spent on capital expenditures (free cash flow about $3.4 billion, "and we expect free cash flow to remain strong in the fourth quarter," says CFO Kirsten Spears).
    • Cash and equivalents came to $11.1 billion, up from $9.52 billion at the end of last quarter.
    • It's guiding to Q4 revenue of $7.35 billion, up 14% and above consensus for $7.24 billion, and expects adjusted EBITDA of about 61% of that (or $4.48 billion).
    • Conference call to come at 5 p.m. ET.

  5. AVGO/Batman – Such a good company.  

    They are just crossing $200Bn at $500/share but they are dropping $12Bn to the bottom line so not overpriced.   Last year they still made $3Bn so in very good financial shape compared to most.



  6. The Storm Warnings Were Dire. Why Couldn’t the City Be Protected?




    • Broadcom (AVGO +1.7%) was downgraded by Summit Insights to Hold from Buy following FQ3 results.
    • Meanwhile, Citi raised the price target on the company to $585 from $528 and reiterated a Buy rating, as the company provided guidance above consensus driven by strong demand from its semiconductor segment.
    • The company beat analysts' earnings and revenue expectations for its FQ3 and provided upbeat revenue guidance for the current quarter.
    • The Citi analyst further noted that the company continues to see "robust demand" for its semiconductor products due to strength from the cloud and telecom end markets.
    • For FQ3, Semiconductor solutions revenue grew to $5.02B (up 19%), while Infrastructure software revenue amounted to $1.76B (up 9.7%).
    • However, Summit analyst believes the current industry supply constraint will continue to limit material upside to Broadcom's semiconductor business.
    • The company, though, seems confident for its supply availability. While speaking to analysts President and CEO Hock Tan had noted that "As far as our capacity for 2022, I think we have gotten a pretty good supply availability lineup for 2022, and we feel pretty okay about then. I won't say great but, in this environment, all things considered, we're feeling quite good."
    • Summit analyst further noted that while orders have remained strong in general, channel checks are now indicating that some of the company's end customers have started to reduce double ordering.
    • Tan, however, emphasized: "I would say that the engine for growth for our semiconductor business in 2022 will likely be enterprise spending,"
    • Regarding enterprise, Tan expects a continuing trajectory of improving demand, spending, and demand, which is expected to improve and grow in Q4 and beyond.
    • Leading health officials in the U.S. have told the White House to scale back COVID-19 booster rollout scheduled for later this month, noting that they needed additional time to collect and review all necessary data, The New York Times reported citing people familiar with the discussions.
    • Dr. Janet Woodcock, the acting commissioner of the Food and Drug Administration (FDA), and Dr. Rochelle P. Walensky, the director of the U.S. Centers for Disease Control and Prevention (CDC) have warned on Thursday that regulators will only be able to recommend booster shots for Pfizer (NYSE:PFE)/BioNTech (NASDAQ:BNTX) vaccine recipients.
    • Among reasons cited by regulators for the delay is more time needed to determine the appropriate dosage for a booster shot of Moderna (NASDAQ:MRNA) COVID-19 vaccine. Meanwhile, Johnson (NYSE:JNJ) has also yet to deliver some other data, according to the NYT report.
    • Woodcock and Walensky made the case for their delay in a discussion with Jeffrey D. Zients, the White House pandemic coordinator. The response of Mr. Zients is unclear, according to several people familiar with the matter.
    • Asked about the meeting, White House spokesman Chris Meagher said on Friday: “We always said we would follow the science, and this is all part of a process that is now underway.”
    • The administration is waiting for the “full review and approval” of booster shots along with a CDC recommendation, he added.

    • Alex Kopel and Joe Maas, co-founders and managing directors at Rowan Street Capital, said in a letter to investors that the "future prospects remain bright" for Facebook (NASDAQ:FB), despite the fact that the fund's investment in the social media platform has already doubled over the past three years.
    • "We were convinced that FB remains an extraordinary business with an incredible moat (2.9B users), and they still have tons of opportunities to profitably reinvest their capital," they said in a fund letter released this week.
    • Kopel and Maas acknowledged that the company has been forced to increase its expenses in recent years to answer regulatory concerns and to counter worries about misinformation on its platform.
    • However, they expect future expense growth to approximate revenue growth over time.
    • The Rowan Street co-founders predicted that FB would continue to see revenue growth of at least 20%.
    • In its latest earnings report, released in late July, FB reported a quarterly profit that easily topped expectations, on revenue that climbed nearly 56% to just over $29B.
    • However, the company also warned that revenue growth would significantly decelerate as it comes up against more difficult comparisons.
    • FB has advanced steadily since March, reaching a series of 52-week highs. This included a peak of $384.33 set earlier this week. Shares were up fractionally in Friday's intraday action, rising to $376.69:

    • Since it began its steady climb earlier this year, FB has significantly outperformed the broader market. Since the beginning of March, the stock has returned nearly 42%, compared to a return of 17% for the S&P 500:

    • Telsey raises its price target on Signet Jewelers (SIG -3.9%) to $94 from $85, a sell-side analyst high, after the company's strong earnings report.
    • The firm keeps its rating at Hold, citing tough comparisons for same-store sales growth in the second half. Analyst Dana Telsey praises the Jared and Kay Jewelers owner's digital and merchandising strategy, but is concerned that falling consumer discretionary income will affect sales.
    • CEO Gina Drosos mentioned the issue in the company's earnings call yesterday: "As prices for essentials increase and as stimulus programs wane, naturally, customers discretionary income decreases." The company hopes to appeal to higher-income consumers, among whom consumer confidence is highest.
    • Signet Jewelers raised its FY 2021 outlook and authorized additional share buybacks after revenue more than doubled from last year.
    • ETFs that invest in stocks attracted $19.2B in the week ended Sept. 1 — the largest weekly inflow in nearly six months, new figures show.
    • However, while equity ETFs made substantial gains, the investment community was still a overall net redeemers of fund assets for the first time in six weeks, removing $1.1B, according to the latest Refinitiv Lipper U.S. fund-flow insight report. Fund assets include ETFs, traditional mutual funds ETNs and closed end funds.
    • Breaking down the data, investors will notice that equity funds garnered $12.7B, taxable bond funds pulled in $5.3B and tax-exempt fixed income funds took in $1B. On the other hand, money-market funds lost $20.1B to capital outflows for the week.
    • SPDR S&P 500 ETF (NYSEARCA:SPY) and Invesco QQQ Trust 1 (NASDAQ:QQQ) attracted the most inflows among equity ETFs, adding $6.9B and $3.8B, respectively.
    • Meanwhile, Invesco S&P 500 High Beta ETF (NYSEARCA:SPHB) and Direxion Daily Semiconductor Bull 3x Shares (NYSEARCA:SOXL) retracted the greatest, with outflows totaling $391M and $321M.
    • The top inflows for fixed-income ETFs included $386M in new money for the SPDR Bloomberg Barclays High Yield Bond ETF (NYSEARCA:JNK) and $365M for the the iShares TIPS Bond ETF (NYSEARCA:TIP).
    • At the other end of the spectrum, iShares iBoxx $ Investment Grade Corporate Bond ETF (NYSEARCA:LQD) and iShares 20+ Year Treasury Bond ETF (NASDAQ:TLT) witnessed the largest outflows, totaling $818M and $328M, respectively.
    • On a monthly basis, many ETFs rallied in August and gained capital inflows. However, here's a look at three exchange traded funds that weren't as fortunate and experienced the largest monthly outflows.

  7. Amazingly, we are bouncing back yet again.  Nothing can stop this market – certainly not data…

    The U.S. economy added 235,000 jobs last month, falling far short of estimates. Hiring was particularly weak in services sectors that involve in-person interaction. 5 min read

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    The First Country to Adopt Bitcoin

    El Salvador’s president says his country will be the first to adopt bitcoin as a national currency. WSJ's Santiago Perez talked to Salvadorans about it.Read Transcript

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    How Disney and Scarlett Johansson Reached the Point of No Return

    Car Buyers Face Bleak Prospects This Labor Day Weekend



  8. At $180, DIS has a market cap of $330Bn and they made $12.5Bn in their best year (2018).  They lost $2.8Bn last year and there's still Covid uncertainty for theme parks and cruises – they are almost a short at this point…  

    With the streaming, Black Widow made another $125M but that's just North America and Canada – DIS has a lot of money put into these productions and they need a better pay-off than that.  


  9. Have a great weekend folks,

    - Phil


  10. Sotomayor’s Defiant Dissent


  11. There Will Be No Reopening Trade 2.0