Fed, Jobs, Markets… And A Beaten Down Lululemon Reports Results 9/4/25

0:02Live from the Nasdaq market site in the heart of New York City's Times Square this is fast money Here's what's on tap tonight. The Fed's independence in focus, whether it's the courts versus Lisa Cook or Stephen Myron before Congress. We're watching all the fireworks at the central bank. The implications for the markets ahead of tomorrow's jobs report. And Lulu lessons shares of the athleisure company plunging after its latest earnings report, where we learned about the consumer and the rest of the retail space. Plus, the latest bear on Apple gets a little less bearish. Health Secretary RFK Jr.

0:31gives some fiery testimony on Capitol Hill. And from A to Z, why the chartmaster says it is time to put cash into Amazon. I'm Melissa Lee coming to you live from Studio B at the NASDAQ. On the desk tonight, Tim Seymour, Karen Feynman, Dan Nathan, and Steve Grasso. And we start off with two Fed-focused headlines that put the central bank's Fed independence front and center today. The DOJ officially opening a criminal investigation into Lisa Cook, the fired Fed governor fighting back against allegations of mortgage fraud. And at the same time, Stephen Meyer, the president's nominee to replace retiring governor Adriana Kugler, testified at his own confirmation hearing on Capitol Hill.

1:04All this ahead of tomorrow's closely watched jobs report or reading this morning showing the slowest growth in private payrolls for August in at least 16 years. CNBC's Steve Leisman joins us now with all the headlines from today. Steve. Yeah, Melissa, I'm hanging around for the traded portion of this that comes after my head because I want to hear what everybody thinks. Weaker data and controversy surrounding Fed personnel has markets leaning towards a more dovish Fed outlook. Look, I want to start with the probabilities here. 98 % on September. That's as good as a lock. And now you're toying with a quicker follow-up cut.

1:39Remember, that was down in the mid-40s for the possibility of a second cut. But the second cut is for sure, or much more for sure, or confidently dialed in for December at 92%. Looking out to next year, I'd like to follow this. It's an indication. The Fed Fund's December 26 contract trades with a yield now of 293. Well, I guess it's 296 now. It was 293 a few minutes ago. But anyway, that's one of the lowest we've seen. By then, five of the seven board members could have been appointed by President Trump. In testimony today, Fed Governor nominee Stephen Myron told the Senate Banking Committee he supports independence, but he would only take an unpaid leave of absence from his job as CEA chair, returning after fulfilling what is a four-month job on the Federal Reserve.

2:23Democrats saw that a source of conflict since his job performance at the Fed could determine if the president takes him back. But Republicans, they didn't seem concerned. And he could be confirmed before the Fed's September 16th meeting. ADP private payroll is coming in at 54 ,000. Melissa already told you it was one of the lowest ones we've seen in quite a bit. That's against an estimate of 75 ,000, so below estimates. That compares with the non-farm payroll you can see right there for Friday for government and business and the private sector of 75 ,000. New York Fed President John Williams, meanwhile, he noted in his speech the cooling of the labor market.

2:54And he said that makes him think it is thinks it is appropriate to move rates to a more neutral stance. Trade it, Melissa. We shall, Steve. We shall trade it. That's what we do here. But I'm just wondering, in terms of the number tomorrow, I mean, are you anticipating? And I know it's an impossible question, but, you know, the administration wants to portray a stronger jobs market. But in order for the Fed to cut, you want a weaker jobs market. So, I mean, they're stuck between a rock and a hard place in terms of what data to provide the American public. So, I think the September rate cut is the jobs report to lose.

3:34And what I mean by that is it has to be a very strong jobs report with the unemployment rate going the wrong way, which would be the right way, which would be down. In other words, a decline in the unemployment rate, strong jobs numbers, strong upward revisions. That could possibly call into question the September rate cut, but I think it's a very, very high bar. I think the question, well, first of all, what I want you to know is consensus has been missing August in like 10 of the last 15 years. August has turned out to be a very hard number to predict. And it turns out that it comes in a little bit on the low side before being revised higher in revisions for whatever reason that is.

4:11So if this is the month that the BLS wanted a good number, I think this is the wrong month. This is a number that's typically adjusted or revised and revised pretty heftily. So we're looking for a number of 75 ,000. Focus on the private payrolls. Focus on the work week. Here's what I can tell you Fed officials are doing. Because a lot of stuff is moving around, and by that I mean immigration, labor force growth, they're focusing on ratios. And that primary ratio is the unemployment rate. If that number is steady or goes up a bit, that's going to lock in a rate cut. It's going to start thinking about October.

4:48You get Myron on the board there. You might or might not have a replacement for Cook. We'll see. That would be four of seven board members that are appointed by President Trump and leaning towards rate cuts. And what it amounts to, Melissa, is the number of Fed officials that are confidently looking through the inflation rate and saying, I see higher prices from tariffs. I do not think it's an inflation problem. We can cut rates and we will get lower inflation over the next several months. I want to also circle back, Steve, just briefly before we let you go to this attack on Fed independence. Are we really, we, the media, whoever, watchers, making too much of it given, I mean, if you read what the markets are telling us, it's not a problem.

5:31The S &P 500 is at a record. Yields have backed off. We're not really seeing the sort of tumult that a true attack on Fed independence would theoretically have on markets. Well, the question is what would theory tell you should happen? If you told the kids you were going to give them a lot of sugar right now and you gave them that sugar, they'd run around like crazy for a little while until they kind of, you know, did a crash. You're familiar with what little kids react to that, Melissa. So I think this may be one of those Charles Prince moments where everybody has to dance because there's going to be liquidity.

6:07There's going to be lower rates, whether or not that's good or positive for the long term. I will say this, Melissa, between the president's desire for low rates, there are people and those people may or may not decide. The question becomes, I think, how much fidelity the nominees have to the president versus the institutional independence of the Federal Reserve. You know, you could put a guy I mean, look, the Fed gets gets gets slapped around for the notion of political being political. But all of the Biden nominees voted to hike rates to five and five point three eight percent for 14 months during the Biden presidency.

6:49So that struck strikes me as by as as political independence right there, whether or not, you know, and you have Supreme Court justices who have been appointed and were expected to vote one way. And sometimes they don't. So there are people in the middle. And we'll see about how much fortitude Federal Reserve independence ends up having. Steve, thanks. Great to see you. Steve Leisman. I'll pose the same question to you, Tim Seymour. What do you think? Well, first of all, too much sugar for the kids leads to cavities, which then leads to your teeth getting drilled and putting in fillings. So, I mean, I think the market follows the same thing.

7:26I think we can get a sugar high. I think markets have priced in Fed cutting over the last six weeks. I think it's almost done what we priced in for tomorrow. And the question is, and Guy's rolling around in his crocs right now when I say, you know, the Goldilocks is that we have a gentle softening of the labor market, which allows the Fed to cut again, a Fed that's now focused on the labor market, not inflation, as Steve pointed out. So I think equities have pressed a lot into this. I think a strong labor market tomorrow would be a short term disappointment. But really, what are we talking about in terms of an economy that right now has a labor market that's relatively strong?

8:04And I think the forces for the market, which are better earnings, better margins, productivity gains that are coming from all these big macro trends. Like I kind of believe it's not a no lose situation into tomorrow. But what I don't want to see is a terrible jobs number. I do not want to see something that puts that October cut very much in play and takes that to 75 percent in addition to December. We're just following the little kids and the sugar. Yeah, let's do this. If they're really little kids, then they do get cavities. It doesn't matter. Those aren't going to be their permanent teeth.

8:38Wow. Second derivative. Wow. Like cavity discussion. Yes. So if they really get disciplined, though, when the new teeth come in, then they have to get the sugar. But, you know, we all know that never happens. So I agree with everything you said. I think that a bad labor number is bad for the market because already we're pricing in a cut. Right. So unless unless it's super bad and then they look to price in, you know, a 50 basis point cut. But I so I sort of agree with you. I do wonder, though, is there a PPI number in the future that is that would is super hot and hard to ignore? Right now, it doesn't matter.

9:16That sort of mandate, that dual mandate, seems to be temporarily off the table. And the tariff uncertainty sort of allows it to say, well, we don't even know how that's going to shake out. So we can ignore that data for now. But in the short term, I think we're OK. Long and variable lags, right? Isn't that what we know about monetary policy? So you cut 25 basis points. It doesn't really matter. We have a 30-year that's just below 5%. We have a 10 year that, you know, it's kind of sticky here in and around this kind of four, two percent sort of level. So I wouldn't expect like a 25 basis point cut to really do a whole heck of a lot.

9:50If you go back and you look at what Fed Chair Powell had to say in Jackson Hole, he said, what is our curious kind of balance between, you know, a labor market that's weakening and then that sort of supply demand. We saw that from jolts. Right. We're seeing this kind of evening of, you know, job openings are going lower and we're not seeing like demand for jobs. You know, I mean, it's kind of this curious kind of place. So I think I agree with you guys. You have a weak number. Not good. You get a rate cut. Who cares? OK, maybe it's good for the stock market. I can't imagine why. We're at all time highs.

10:19Right. If we get a really good number, lights out, people. That's the last thing anybody wants to see, in my opinion, because I think you're going to have some really weird volatility as it relates to equities, as it relates to, you know, treasury yields and that sort of thing, because nobody wants to see that. It could not change. What, a strong number? Yeah. I mean, like a really strong number. Like a re-rigged number. You know what I'm saying? Take the cut off the table. But is that going to change the Fed's view that this really is more about the labor market? No, what I'm saying, it's about independence, right?

10:47And this is at a time where the Treasury Secretary is interviewing folks to be the next Fed chair. And don't think for a second. Look at the cabinet. They all bend the knee. They're not going to do a single thing to oppose any of this sort of policy. And so, yeah, this is a Senate-approved position, but so are all the other cabinet people. So you tell me how important the independence of like an organization like the BLS, how independence of, you know, the Federal Reserve, where we have to go back 50 years where there felt like there was any strain on that sort of thing. And what Steve just said about all those governors voting the way they did to raise interest rates when they knew that's going to put, you know, a damper on the economy and growth and employment that we saw.

11:27So to me, I just think that there's bigger risk here than talking about what the stock market might do. Because we know, give or take a few percent, that's all we're going to get here right now. I'm just saying in the stock market either way over the next few weeks or something like that. The major difference was back in 2022, the inflation rate was at 9%. That's why they were all voting to raise rates. You aren't going to vote to cut rates with the CPI at 9. Not going to happen. To your point, the market doesn't care. The market doesn't care, so we shouldn't care until the market cares.

11:59long variable lags. They're late then. They should be cutting. They should have been cutting. So if whatever we're seeing, they're already behind because this is lagging down. Why? If inflation is starting to pick back up again, Steve, I mean, that's the sort of thing. There's this curious sort of balance. I mean, like. Right, you have to balance the unemployment rate with a stable price. I mean, like, just to be so definitive that they're late. No, no, no. But we're not at nine. We're closer to their target than we were a year ago, two years ago. Of course. But the cumulative effects and then you throw on a trade war and we have no more clarity about a trade war than we did a few months ago.

12:32I mean, I think they're probably staying pat. I think they're probably kind of doing the right thing. I just I just think they were late in raising rates. Originally, they're always behind the curve, whether they're raising or cutting. They're late now. The one key is their neutral rate is 225 to 325. That's their neutral rate. But I think the thing that Dan, you're focused on is interesting that it's if you have a really strong number, It forces the independence of the Fed question to really be what people focus on. And that's more detrimental if it looks like it's not independent. I thought today what was really interesting is two guys from opposite sides of the fence.

13:07Both came to a place that were seemingly the opposite of what you would have expected them. Stephen Myram said everything you wanted him to say in terms of independence of the Fed. He also said Trump's allowed to have an opinion. Of course, he's allowed to have an opinion. He's the president of the United States. Of course, he's got an opinion. And then John Williams, who, if anything, has been on the side of the more hawkish Fed and backing Jerome Powell, kind of fallen in line and saying, not because I think he's feeling pressure from the White House, but because he truly believes it. Whereas I don't think that Waller has necessarily the market has the same perspective of Waller's stance.

13:40It seems a little more political. What do I know? That's what was interesting today. Two opposing forces actually fell to the opposite side of what you thought their inclination might be, which gives me a better feeling about what the numbers can truly be without the market overreacting. All right. For more on what to expect out of tomorrow's jobs report, let's bring in Chris Heisey, Merrill and B of A private bank CIO. Chris, great to have you with us. Thanks, Melissa. Great to be here. Does tomorrow's report, will it change your view of the markets and where we stand right now at record highs?

14:13You know, I think there's a few things to parse through there. I was just listening to some of the commentary and I agree with all. So what I have to add is the market's at an all time high, obviously, because of narrow leadership. But what's interesting is below some of the narrow leadership, we started to see a change really since the beginning of August when there was some pricing in of a September cut. And that's where the small caps obviously had a big rally in August. Financials are under triple momentum right now. Now, you know, being a cyclical growth so-called sector and with small caps acting well, granted, it's one month.

14:46However, we haven't seen this in a while, which means, you know, any kind of cut, if it comes, it has to be based on balanced data. And if it's really weak data, for whatever reason, on Friday, you could see overall movement in the market be even more than what's expected. because then, as you guys were discussing before, you might start pricing in a little bit more of a majority cut in October as well. So I think right now, it's a little bit of an exhale. It's like, let's see what happens. It's clear at this point, much of the data will be more balanced in terms of supply of labor and demand for labor.

15:23And we'll probably see more of the same. Revisions, we all know what's gonna happen there, perhaps. And then ultimately on Tuesday, you'll see the revisions come out as well. So we're gonna buy the dip here, Melissa. if there is one. All right. So it sounds like you're bullish, basically, at this point. There's no valuation concerns. You mentioned the breadth of leadership. It is starting to show breadth, but we are still historically narrow. That doesn't concern you? The actual concentration doesn't concern me as much because the earnings contribution of the leaders is equivalent to their market cap.

16:01We didn't see that at the peak of the last tech cycle in 99-2000, March of 2000, the actual earnings contribution was well below one half of their actual market cap. And now it's almost neck and neck. So it doesn't really concern us because ultimately, if you do further get rotation, that creates a healthier market. What could happen, though, and this is where it gets important, is the actual return on an annual basis goes down relative to what we've seen over the course of the last few years and even the last decade. You get more normal returns versus the double digit 13, 14, 15 or higher. So overall, we are bullish.

16:37We call it an owl market, which is moving your head left and right 360 degrees to try to find confirmation every step of the way that the most important factor, which is profits, continue to accelerate and you see revisions going up to the upside. That's what we expect. Chris, without the government jobs, is there a shot that the jobs number where you started is a bad number and we get a 50 basis point cut in September? Well, I'm going to start off by saying I'm not an economist or a rate strategist. However, there is a shot. I don't think that that's likely given a lot of the data that we've seen, particularly in consumer spending, which is still solid.

17:15As you know, our Bank of America Institute has very good data around that. And we would be very surprised if you got an extremely weak number for whatever reason. We see more of a balanced number, if you will, what the consensus expects as well. Chris, great to see you. Thank you. Chris Heisey. Thank you, America. Merrill Lynch. There's an expression, don't fight the Fed. Yes. Are we in that position right now with markets at a record high? You don't want to fight the Fed in that we know that the Fed will cut rates, that we know that the changes to the makeup of the Fed would make it even more likely that those rate cuts will come and make it more likely potentially for those rate cuts to come sooner.

17:54I don't ever want to fight the Fed, but I would be concerned that if we had significant deterioration in a labor market more than we thought, the market's not priced even close to slower growth, let alone recession. So I thought Chris's comments as it relates to both supercycle and not just AI capex, but capex in the industrial sector, parts of the economy that absolutely lead to both better earnings but also just better spend around industrials is interesting, and there's an argument for that. All right. Meantime, we do have an earnings alert on Broadcom. Shares of the chipmaker volatile after hours despite beating estimates and guiding to a strong Q4.

18:31Christina Parts of Nevelos joins us here on set with the latest from the call. Hi, Christina. Hi. Two big things from the call right now. The fact that they just said that the gross margins were down for the chip group year over year primarily due to product mix. I just scribbled that down right before coming on set. And another thing that I found in the 8K, which hasn't been discussed on the call, is this one-time non-cash tax provision of$4.5 billion because of a transfer of IP back to the United States due to supply realignment. He hasn't explained what that means. Tried to ask all of my colleagues, you know, what is this IP shift?

19:06So I have an unanswered statement in regards to that. But for the stock, there was a run-up quite a bit, much like we saw with NVIDIA. Stock more than doubled heading into the print. AI revenues came in at their guiding at$6.2 billion, which was higher than not only the street, but what BuySide wanted at$6 billion. So there's a lot of strength in this report. VMware came in strong. That's their software segment now. They had record-free cash flow. But yet, like you said, stock is just not really rewarding investors as much. Although it's at 4%. Oh, now I can see it. It is jumping. No, sorry. It's jumping.

19:42You better get back on the call. Well, they're talking, I guess, to the strength, too. They said broadband wireless is improving. Networking should remain, enterprise networking should remain down, though. But overall, I think he's really talking up the fact that AI servers as strength, chip strength is continuing. Christina, thank you. Christina Partinev, listen. Of course, this comes after HPE report yesterday. Very strong. It's another data point in terms of the AI story, Karen. Right. Dell. Dell was up today in the back of all that. Yeah. So Dell was pretty disappointing, I got to say, of all of them.

20:11Dell was weakest. I mean, this is great. It was a very good report. It's just the valuation going in is expensive and remains so. Similar growth to NVIDIA, but NVIDIA's got much better multiple. I mean, you think about that, right? But we keep hearing this. We keep reading this. There was a report I think we talked about the other night that, you know, Google is set on competing with NVIDIA. They obviously are also creating their own TPUs, their Tensor Processing Units. And we keep hearing also about a lot of NVIDIA customers that are looking to do custom silicon. So at the end of the day, you know, you look at this sort of revenue beat and you look at the guidance, it's not particularly exciting.

20:48And I'm actually surprised after the run the stock had that it's still up. And I wouldn't be surprised. You know, we were talking very similarly about NVIDIA about a week ago or something. And the stock really didn't make any progress. And if you look at Taiwan Semi, it hasn't made any progress since its earnings. Microsoft hasn't either. So I think there's probably a leveling out of the enthusiasm because the percentage of the beats are just getting smaller. There are some comments being made on the conference call from Hocktan, the CEO of Broadcom, saying we expect growth in AI semiconductor revenue to accelerate to$6.2 billion in Q4, delivering 11 consecutive quarters of growth as our customers continue to strongly invest.

21:24So that could potentially be behind that pop that we just saw in the after-hour session, up almost 4 % at this point. We'll keep an eye on the call and any headlines that may cross. Meantime, coming up, one of the last holdouts on Apple just turned the corner. Why the recent Bayer upgrade of the tech giant and what is in store for the stock plus crypto under pressure. And Bitcoin treasury companies leading the pack lower. Where are traders? See that space heading next. Do not go anywhere. Fast Money is back in two.

21:54Welcome back to Fast Money. Moffitt Nathanson changing its tune on Apple this morning, upgrading the tech titan to neutral from sell, bumping its price target to$225 from$139. Analysts saying the worst case scenario for the stock, well off the table. But they warn its valuation is still rich and its Apple intelligence rollout has been a dud, though not a big enough dud to warrant a sell rating anymore, at least. Of course, you know, in terms of the money it collects research, that's in play. That is secured now. And now it has an agreement to find a new AI product. Well, one of the things they talked about was just some of the really bad things not coming to pass.

22:30And that was certainly one of them. I mean, it's an interesting call. Good, you know, it's 225. It's still below where it's trading now. I have not been so positive on Apple for a while. For all the reasons that Dan loves to talk about, little Mr. Ray of sunshine there. No product cycle, no AI, expensive, all of that. But the announcements. Things have gotten better, haven't they, in the past months? No, they have not. They are literally reintroducing a phone next week that they have introduced to us the last four years. And, you know, Siri. And I'm going to buy one. I mean, look how broken this one is.

23:03Yeah, you have an iPhone 10. 14, 14, 14 max. My point is, this is a high single-digit earnings grower. It's a mid-single-digits revenue grower. There is no upgrade cycle. If they told us they are literally doing a 1984 commercial, remember that commercial where they were just, and they said, Siri, you're dead. Like, you're dead to us. The stock would go up like 5%. I guarantee you, because nobody is going to be excited about a mid-2026 relaunch of Siri with Apple intelligence built on the models that they've built using a search technology they have yet to build. They've had a massive brain drain as it relates to their AI capabilities.