Markets look past strong jobs report... And tech’s next earnings test 9/4/26

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0:32Mazda has been named Consumer Reports' safest new car brand. It starts with our approach. Every Mazda comes standard with proactive safety features, so you're more aware of what's around you, more focused on the road ahead, and ready before problems ever start. Mazda. More of what matters most to you. Go to mazdausa.com to learn more. Consumer Reports does not endorse or promote any product. Live from the Nasdaq Market Sight in the heart of New York City's Times Square, this is Fast Money, and here is what's on tap tonight. Stocks dropping to end this week as a stronger-than-expected jobs report puts a rate hike back on the table.

1:12So how should you position yourself now going into this long holiday weekend? And software's next big test, Oracle and Adobe, set to report their earnings next week. What can we expect to learn from these numbers, and what could it all mean for the AI trade? Plus, NVIDIA bucking the downtrend in the MAG7 space. Apple pulls back out of next week's big iPhone reveal. And Lululemon hits more than eight-year lows. Can this one-time pandemic darling do anything to get its groove back? We will debate that. I am Frank Holland from Melissa Lee coming to you live from Studio B at the NASDAQ. On the desk tonight, we have Steve Grosso, Courtney Garcia, Tim Seymour, and Bonoan Eisen.

1:50We start with the latest example of good news being, well, not so great news. Stocks lower across the board today, with the Dow falling back into negative territory for this week. The S &P, the Nasdaq, and the Nasdaq 100 all just managing to stay in the green since Monday. Today's moves come after the August jobs report shows payrolls. They rose by more than three times the estimates. July's unexpected contraction was also then revised to a gain. That labor market strength pushed up chances of a September rate hike by the Fed substantially. Odds now stand at nearly 60 percent, compared to about 50-50 before the report.

2:24But President Trump this afternoon doubling down on his calls for a rate cut. Mr. Trump threatening to cut trade with partners if the Fed doesn't act as he wants them to. Our Megan Casella joins us now with the very latest. Megan. Frank, that's right. This was the president going after both the Federal Reserve and all countries with which the U.S. has a trade deficit. That is most of the U.S.'s major trading partners. It was a stark threat on Truth Social. He said without the U.S. agreeing to allow these countries their big surpluses and we could stop that immediately, they would no longer be considered financially elite.

2:56Lower the rate or I'll stop trading with countries with which we have a deficit. And the president then went on to elaborate on these threats, really double down on them. This afternoon in the Oval Office, take a listen to some of what he said. If we don't trade with them, they don't have any money to pay the bills. And if we're not going to be treated properly, we're going to do that. And all we have to do to cut our trade deficit with the country is not trade with them.

3:24Frank, I'll add here that most economists do not believe running a trade deficit is a bad thing. That was not something the president was acknowledging here. But he was doubling down on this. He was not acknowledging either that doing this would likely drive up inflation, make goods more expensive, really shake the economy and lead the Fed more likely to hike rates. What he was doing here is saying that this might not be something that he's going to do imminently, but more likely a direction or a new way that he's threatening the Federal Reserve. another way, something that we haven't heard before, another way of threatening them to cut those rates.

3:55Frank. All right, Megan Casella with the very latest. Megan, thank you very much. Have a great weekend. Tim, I want to come over to you. What do you make with what the president has to say and also that much stronger than expected jobs report? Hey, Frank. Well, I think running a deficit as we have in this country is certainly against some of the biggest trading blocks as a privilege. It's not something that's an insult. And in fact, it's kind of to me, this is effectively where we sit and where we debated, you know, was this two years ago. I think the trade numbers that we have, and if you look at what China's doing with the rest of the world, you could make an argument that their trade as a percentage of GDP has never been better, their surplus has never been higher, and that could draw rancor from the United States specific to China.

4:41But I think the relationship we have with the rest of the world is not a function of where our interest rate policy is, and I don't think that really should be driving Fed policy. I don't think it will. I think the payroll numbers today, depending on how you look at it, we're now back to roughly 75 ,000 jobs added on average over the last three months, which is not necessarily in line with where the labor force is growing. So in other words, there is a bit of a draw, I think, and some tension on the unemployment rate to the downside. So at least in the current labor market, I realize August was better than July.

5:16You can, you know, these are lumpy figures. But for the most part, I think this is a number that does put the Fed back in play. Although, again, I don't think this is extraordinary one way or the other. But I do think that the Fed, who has been focused more on inflation than weakness in the labor market, got enough strength in the labor market today to focus now on inflation. All right, Courtney, I want to come over to you. So do you think that this incredible jobs for, I mean, three times the estimates also revision again in July, does that raise the chances of a hike coming up? Yeah, I mean, this is one of those scenarios where we're getting to that narrative where good news is bad news for the markets, right?

5:53I mean, this shows that we are in a strong economy, which should be a good thing. But it raises the likelihood that the Fed's going to increase interest rates. And that's what the markets don't like to see. But I think what was pretty interesting was the fact that semis actually did well today. So things that are long-direction assets tend to do poorly when you're seeing interest rates go up. But that's not happening, which means the markets are, I think, ultimately going to start to look through this, just like semis did. Because earnings, I think, are going to be the bigger driver. And if the economy and earnings continue to be in good shape, I think that is a good thing.

6:20But I think more than likely the Fed's going to stay or raise rates from here. The fact we're talking about cutting right now is really out of left field. I don't know where this is coming from. All right. Just to your point, by the way, LSA came out with the adjusted earnings growth numbers, 35 percent earnings growth adjusted for this quarter with about, I think, 492 S &Ps company already reporting. So pretty much over. Steve, when I come over to you, just just as a sidebar, I was just kind of looking up some of the companies countries that we run a trade deficit with. It's China. It's Germany.

6:48It's Mexico. It's Vietnam there. It's a lot of big. I don't have that one, but it's a lot of big trade partners. I think it's everybody. Right. I mean, I think it's pretty much everybody. But when you look at where he wants lower rates, that's it's been out there. And I think he's trying to he had the tariffs on main stage. Now he's got trade imbalances on main stage. But when you look at the jobs number that we came into this, Tim talked about the three month average around 70 ,000. I have the 12 month average around 31 ,000. These aren't big numbers. These aren't strong numbers. And we had CPI last month that was at a five year low on core.

7:27Right. Two point five percent. So I don't think one number and I don't think anyone is saying this, but I don't think one number is the reason why we should raise or cut rates. But if you look at where we're coming from, there's a reason to sit on your hands and maybe wait it out. He's got a bunch of tasks for task force that he developed now. I think you have to wait till they report. And then what else do we have? And Scott Bessant is thinking about putting some of his balance sheet to work this month as well. This will be the first purchase he does at the long end. So I think they're trying to triangulize around everything he wants, lower rates.

8:01I think we should just sit on our hands. Bono, I'm coming over to you. Yeah, I tend to agree with Courtney. I think lower rates are a bit challenging. And I think that the job numbers today essentially removed that from the table. I'm not willing to go as far as to say that the numbers were robust enough to suggest that there was a hike. You also had wage growth inflation that clearly wasn't a scary figure at 3.1 percent. So that's roughly in line. So that gives you a little bit of wiggle room to the downside to acknowledge Steve's point. But I don't think you're seeing the weakness within the within the labor force that would suggest a need to cut.

8:36And then you just mentioned a 35 percent earnings growth. I mean, that shows robust, robust market data, robust wealth creation. So, you know, I think anytime you're starting to kind of talk about onshoring and inflationary pressures, I think there are secondary effects. For example, you're already seeing the Norwegian Sovereign Wealth Fund looking at pulling out of some of its Treasury holdings and diversifying away into higher yielding assets. So you're already seeing some other type of signs that would suggest that you may not actually get the end point that you're looking to achieve by lowering rates.

9:15Because if you get sovereign wealth funds acknowledging that the amount that they're talking about withdrawing is not, you know, largely significant, but as an indicator of direction, that would likely push yield higher. And then you're kind of, you know, undoing what it is that your target objective was to begin with. You know, one other thing I was just kind of thinking about is that we hear the president talking about not trading with countries we have a deficit with. At the same time, we have Xi coming up. And sometime in September and a report from Reuters today that a lot of Chinese rare earth exporters aren't exporting to the U.S.

9:48So, Tim, I want to come to you. I know you focused a lot on international markets. Is this just a concerning sign for the global state of play, the fact that we have the Chinese president coming here? We need the rare earths. And the president's talking about not doing trade. The headlines were that China coming out of the G20 wasn't happy with tariffs as a essentially as a wedge that's been driven and obviously the pressure from the Iran war. So I do think there there there is some pressure going into the Trump Xi summit. As I noted, the China trade figures are extraordinary. They've never been better.

10:21And some of this I really do think is both industrial and technology, China exporting to the rest of the world. So I these are all part of the calculus that that that feeds into where deficits are. I think what's going on with the long end of the U.S. curve, as we talk about often, is a function of mass issuance by investment grade players, not just sovereigns. So government debt, but debt, excuse me, debt yields going up around the world because it's not just the United States. I mean, it's Japan, it's Germany, Germany of all places. If you think about relative change, talk about a philosophy change to a economy, but a finance ministry that was extremely austere and was never running deficits.

11:05The idea of printing, well, printing euros, but but running deficits to build out defense and energy security is what the entire world is doing. I think it's putting pressure on rates everywhere. I think the United States happens to be just another play there. All right. We want to turn back to today's jobs report. Let's bring in Mark Zandy, chief economist at Moody's Analytics. Mark, good to see you. As always, happy Friday. Are people reading this right that this could be seen by the Fed as inflationary to get this really strong jobs report and also, again, that upward revision from July? Well, Frank, my sense is that the August, they were good, you know, no doubt about it.

11:46Even the internals of the report looked strong with a few exceptions. but it overstates the case. I mean, there's a lot of noise in the data. You know, you take a look at what sectors added a lot of jobs. It just looks weird. So, you know, the job market's okay. It's creating jobs, but not to the degree that August would say. And, you know, conversely, the weak job numbers we got in July, you know, previously there were a decline. They were equally dark on the downside and overstated the case. So the reality is something in between the two. And my sense is that when you cut through the noise, all the ups and downs and all the rounds, the seasonal factors and measurement issues, so forth and so on, underlying monthly job growth is about 50K.

12:33That's kind of sort of where we've been over the past year. That's kind of sort of where we are, which is, you know, okay, I'll take it. But, you know, it's not enough to really bring down a reduced amount of slack in the labor market. And there is slack in the labor market. And evidence of that is the slowing in wage growth. Wage growth continues to decelerate, the steady deceleration. It's now below the rate of inflation, so people's purchasing power is declining. So I don't think the economy and job market is strong, but I don't think it's overly weak. But it's not, you know, it's OK. And from the Fed's perspective, OK means that, OK, I'm not going to really pay a lot of attention to what's going on in the labor market when making my decision about raising or not raising rates when I get together in a couple of weeks.

13:14and it's all about inflation. And so that means that the CPI report that comes out on Wednesday won't be important. That'll be a really critical gauge of what's going on with inflation. I think that will ultimately determine which way they decide to go here because it is a close call. All right. So you're saying it's a close call. By the way, Bono and also highlighted that that hourly earnings growth has slowed significantly. I'm looking at the chart back in 2022, obviously pandemic, it was almost 6 percent. Now it's at about 3 percent. So you're saying they're going to be paying very close attention when it comes to CPR.

13:43Is there any specific component, shelter, food? I mean, what are they looking at when they're going to be looking at CPR? Is it just simply the core number? I think it's the core. I mean, they know, I mean, the top line number is going to be a little on the hot side because energy prices have pushed back up again with the resumption of the conflict in the Middle East. Oil prices are back up over 90 bucks a barrel. You see gasoline prices back firmly over four. Diesel is close to, well, it is a record high, you know, close to, you know,$6 a gallon. So, you know, we're going to see the top line number are hot.

14:15But the core number, that's, you know, it looks like it's going to come in pretty soft, you know, something 0.2 maybe, maybe even a 0.1. And year over year, it's going to come in at 2.3, 2.4%. And you know what? If I tell it said that this core CPI was 2.3, 2.4, you say, OK, mission accomplished. I got what I need in terms of inflation. And then you throw in inflation expectations. They're rock solid. They're anchored. You know, if you look at the break evens across the duration, they're right exactly where you need them. So, you know, I look at that and I look at the job numbers and I come to the conclusion that at least adding it all up, I wouldn't raise rates.

14:54I certainly wouldn't cut them. That's just I don't know where that's coming from. But I don't think I'd raise them. But again, you know, it's a committee. People got different views. It sounds like you're the group of folks that are talking today could be exactly what the committee is going to be saying. when they meet in two weeks, and you can see it going either way. But my sense is they should not raise rates. They should hold the line here and see how this all plays out. Hey, Mark, it's Courtney here. And I think you actually bring up a lot of really valid points here that they can really stand pat, maybe raise interest rates, probably not cut them.

15:23But you're seeing all of this pressure coming from Trump right now. And we're obviously leading up to the midterm elections, which is probably where some of that is coming from here. And is there enough data out there to support that they can keep rates steady, even though they've really come out and said 2 % is their target over and over. And every time they speak, they're hawkish. At what point do they not raise rates? Do markets really start to question the rhetoric versus what they're actually doing? Yeah, it's a good point. But the markets haven't done that yet, right? I mean, inflation expectations are like nailed to the ground.

15:54I mean, just take a look at the one year all the way out to the 30 year. It's exactly where you expect them to be. And, you know, Now, the markets are looking at the same data as the Fed. So I'd say, you know, in markets, they're saying only a 60 percent probability of rate hike in September. That's not too far from 50. So given all that, I'd say, OK, you know, I'm just going to wait a little bit and see how this all plays out. You know, I'm totally perplexed by this idea about slashing interest rates. I mean, yeah, the Fed could cut rates, but wouldn't that be, can you tell me, wouldn't that be counterproductive?

16:23I mean, wouldn't the inflation expectations then rise and long term interest rates rise? We'd be looking at a long bond that's, you know, over well over five percent, 30 year fixed rates at well over seven percent. I don't think anybody would want that. That would not be good for the economy. So I'm just I just don't get this argument that the Fed should be cutting cutting interest rates. That's just not going to happen. Mark Zandi, great to see you. Have a great holiday. Thank you very much. Yeah, thank you. Steve, coming over to you. Yeah. So so if Mark doesn't see a reason to to raise rates and he sees CPI, I think he said in the low twos, 2.3 percent in the core and it was 2.5 percent last last month, five year low.

17:04Then I don't I don't see a reason to ever raise rates because we're getting closer to the end. This is with oil spiking right in July. We had oil back below the pre-war levels. So if we get back to that level again, then inflation is actually going to spiral downward if he's looking for 2.3 core with oil spiking this month. All right. So in July, we had oil tank. That's why you had CPI for August. So we had oil tank below the pre-war levels. We're in the 66 range. Now we've seen it spike up to 90. And if Mark sees CPI core at 2.3 lower than last month, when should we ever raise? So do you get what I'm saying?

17:53Everybody's trying to figure out, Bono. And I want to come over to you. What do you make of all this talk? Number one, when Mark Zanney was saying, hey, where is this coming from? It's coming from the White House that we should cut rates. I don't think many other people are saying it. But how are you looking at this picture when it comes to inflation and the Fed trying to maintain its mandate? You know, I think this adds another layer of complexity. I think a lot of us hope that now with a new Fed chair in place that perhaps, you know, the signaling, the communication would be a bit more muted, both coming from the Fed and coming from the White House, whether it be in support or antagonizing them.

18:28And I think it's a bit concerning that we are seeing this this early in his run. I mean, I think he's really inherited a tough situation. For me, it's a matter of what is the logic for cutting? There is nothing, I should never say nothing, let me not speak in absolute, but I see very little to suggest that we need to invigorate a slacking economy. And that is really where my concerns stem from, that if we were to cut anticipatorily, what tools do we then have left to spur market when we do see further weakness in the labor market or in the equities market or in the bond market. And so I just think, you know, it's a bit presumptuous.

19:11I really scratched my head as to understand what that logic is. I hear Steve, if oil were to fall, but I would rather wait if we're going to wait to hike and wait to cut. Let's wait to see what commodities, which we know are extremely volatile. Let's wait to see what they do before anticipatorily making a move south in terms of rates. Yeah, we heard Waller saying something just pretty much to that tune. All right, we want to turn to NVIDIA now. Rising almost 1 % today to post a 6 % gain for the week. The stock within 3 % of its all-time high that it hit back in May. NVIDIA joining Meta as the only MAG7 stocks in the green today.

19:46The chip giant is also the best performer in the group this year, up almost 24%. Tim? Well, I just feel like the numbers that we had recently de-risked some of the stock. We continue to reinforce the numbers on hyperscaler CapEx, where we're going to be across the board in terms of CapEx. The multiple on NVIDIA is extremely attractive. And the market at this point is more comfortable with this holding company mentality and AI infrastructure play that NVIDIA has also become in addition to the semiconductor. So I think NVIDIA's price action this week was extraordinary. I think the fact that it held the gains from the earnings.

20:29It oscillated a bit. It built on that. I think on the chart, it's very strong in terms of where you have a semiconductor group that is waiting for this kind of leadership. I think NVIDIA is a buy here. I think we got the kind of reaffirmation, the reaffirmation, excuse me, of the story, but a chance to actually see where growth was that really outperformed. All right. Coming up, Lululemon shares. They are stuck in downward dog, and it's far from the only athleisure stock hitting the mat. We're going to take a look at which names, if any, are worth adding to your cart right now. Plus, Robinhood's blockchain boosts one firm's call for more strength ahead and whether a brewing battle with AMC could dent that bull case.

21:10Do not go anywhere. More Fast Money coming back in two.

21:15You're watching Fast Money here on CNBC. We'll be right back.

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22:52Welcome back to Fast Money. Shares of Lululemon plunging 17 % today, hitting their lowest level since 2018. The company last night said comparable store sales dropped 9 % in the last quarter. It also cut both revenue and earnings guidance for the year. But Lulu, not the only athleisure name under pressure in 2026. We got Hoka Maker, Deckers, On Holdings, and Nike all down double digits this year, which got us thinking, which of these stocks would you rather add to the cart? Are you passing on all of them? Would you rather that leisure court coming over to you? Yeah, it's funny. You actually brought this up last week.