10 Things You Need to Know: The Job Market Stinks
Serious about markets? This is what you need to know:
1. The Jobs Market Stinks
For the second straight month, the BLS dropped a crappy nonfarm payrolls report with downward revisions to prior readings.
And immediately, traders started pricing a 100% probability of a September rate cut, with an 11.8% chance of a 50 bps cut, according to the CME's Fedwatch tool.
That wasn't the only disappointing employment data point this week.
We also had misses on:
- ADP Nonfarm Employment
- ISM Manufacturing Employment
- ISM Non-Manufacturing Employment
- Initial Jobless claims
The job market stinks.
And this has traders thinking about…
2. Revenge of the Small Caps
For years, small cap rallies have failed and failed again.
But a rebound is starting to feel real.
Growing expectations for Fed rate cuts pushed up rate-sensitive stocks on Friday, including small caps.
And the Russell 2000 is now up 9.6% in Q3, more than doubling the SPX's performance.
We also saw big strength in housing stocks, with the SPDR S&P Homebuilders ETF (XHB) up nearly 2%.
And XHB is now up over 24% over the past 3 months, so traders are already pricing in an improving housing market.
But, one high-profile stock is looking pretty sad:
3. Nvidia Lost Its Shine
Last week, you learned about Nvidia's growing “awareness problem.”
Nvidia's earnings beats keep getting smaller because analysts have boosted estimates so much.
So those upside surprises have lost their oomph.
And then this week, Broadcom (AVGO) announced a $10 billion AI chip deal with an undisclosed customer. The word on the street is that ChatGPT maker OpenAI is the mystery buyer.
The street viewed this as a market share loss for Nvidia, so the stock showed relative weakness Friday.
So Nvidia is in the penalty box for the first time since the release of the DeepSeek AI model, which was allegedly so efficient that it would hurt demand for AI chips. (didn't happen)
4. Sydney Sweeney Turned Up the Heat on Cracker Barrel
A month ago, American Eagle Outfitters (AEO) came under fire for its “Great Jeans” ad campaign starring Sydney Sweeney.
Mainstream media critics hated the campaign.
Young denim buyers loved it, and American Eagle's strong earnings report sent the stock higher than Ozzy circa 1982.
So for now, American Eagle is the champion of “Culture War Earnings Season.”
The only question we have is did Ms. Sweeney get paid in stock? If she did, she made the trade of the year. Pelosi-esque, if you will.
Next up is Cracker Barrel (CBRL), which has come under fire for alienating its core customers with its modern rebrand.
If the cultural tide is shifting the way it looks, Cracker Barrel's next earnings report (should be around 9/19) could be a big ol' mess.
5. There Is a Lack of Faith in the Market
Despite the SPX hovering near all-time highs, and markets pricing in a September rate cut, there is little trust in this market.
The AAII Sentiment Survey came in at just 32.7% bullish this week.
That's the 5th straight week of below-average bullishness.
But this is healthy for the market.
Because it implies there is still capital on the sidelines ready to be deployed.
6. Earnings Estimates May Be Too High
Factset reports that analysts raised estimates slightly for S&P 500 companies for Q3.
This is a big turnaround for Wall Street.
During the last 20 quarters, analysts CUT estimates by 1.0% on average in the first 2 months of a quarter.
But this time they are RAISING numbers.
This is bad bad bad.
In recent quarters, companies smashed estimates because the bar was so low.
The higher estimates go, the harder it is to come by beats.
Which you just learned is Nvidia's biggest problem.
And estimates have risen most in tech. +4.4% to be exact.
7. The Yoga Pants Economy Is in Freefall
Lululemon (LULU) has been in freefall all year, and got destroyed on Friday after cutting guidance again.
So middle-to-upper-income consumers are tightening their wallets.
One must wonder… are fellow “yoga pants demographic” stocks like Starbucks (SBUX) and Target (TGT) destined for lousy earnings in coming quarters?
The job market can't be helping, and these names have been underperforming as it is:
8. Gold Is In Chainsaw Mode
It's been a banner year for gold bugs.
And on Monday, GLD cut through $317 resistance like a chainsaw through butter:
And it hit a record high at $331.44 Friday.
Why?
It's a perfect storm.
We have economic fears, geopolitical concerns, a weak dollar, and central bank/ETF demand.
I've made fun of the gold bugs many times. Now I wish I was one.
Gold bugs: pic.twitter.com/ejyEKIQfqv
— T3 Live (@t3live) September 5, 2025
9. You May Be Ready to Be a Sultan!
JR Romero just launched a brand service called “Sultans of Swing Trading.”
You can see a sneak preview of how he sets up a swing trading watch list here:
10. Let's Remember Terence Stamp
Legendary British actor Terence Stamp passed away two weeks ago, and shame on us for not mentioning him.
Because he had a memorable turn as Gordon Gekko's nemesis Larry Wildman in “Wall Street.”
“I could break you mate..” never sounded so good.