1. Jobs growth 339,000 in May versus 190,000 expected. Wages decelerate. Unemployment rate rose to 3.7% versus decline to 3.5% expected. Labor participation unchanged. Market odds still point Fed interest rate hike pause at June meeting. The Dow, the S&P 500 and the Nasdaq all looking at higher opens.
2. Both sides of the aisle agreed on debt ceiling compromise. Credit to House Speaker Kevin McCarthy for getting it done. The Democratic-controlled Senate last night followed the GOP-controlled House and passed the bill ahead of Monday’s default deadline. President Joe Biden will sign it and address the nation tonight.
3. Here’s my special Friday retail edition of what’s working and what’s not working in this market. First up, what’s working: Lululemon (LULU): community, excitement. Club-like feel. Five Below (FIVE). Lots of excitement, expansion, right merchandise. Kids and parents. Increasing stores (2500 stores to 3500 stores) and doubling sales. Nordstrom (JWN). Supported by strong Rack outlet performance. Rack bodes well for off-price retailer and Club stock TJX Companies (TJX).
4. Also working: Club name Costco (COST). No shrink (stealing) except when it comes to getting great prices. It’s the anti-food inflation. Club name Amazon (AMZN). Back to bargains and convenience. No shrink. Hard to be impacted by theft like other retailers with limited brick-and-mortar presence. (There’s now a report that Amazon is talking to mobile carriers about offering free mobile to Prime members.)
5. What may be working: Walmart (WMT). Also, Macy’s (M) no excitement. But Nike (NKE) partnership is back. Bloomingdales doing much better. Blue Mercury coming out well.
6. What’s not working: Victoria’s Secret (VSCO). Mall-based. PVH Corp (PVH). General miss. Kohl’s (KSS) and Target (TGT). Both facing boycotts over LGBTQ+ lines. Elsewhere, nothing really new and fresh in the stories and of course shrink.
7. Also not working: Club name Foot Locker (FL). Really bad end of quarter. Can CEO Mary Dillon pull it out like she did when leading Ulta Beauty (ULTA). Not clear yet and dividend might not be safe. Dollar General (DG). Total chaos. Oppenheimer removes stock from top pick list. Dollar Tree (DLTR). Unexciting, shrink.
8. Broadcom (AVGO) did say positive things about AI but not positive things about rest of the quarter. Slowdown. But multiple price target boosts. This is about Salesforce (CRM)-like story. CRM a Club stock.
9. Zscaler (ZS): multiple neutrals but multiple target price bumps, too. Haves in cybersecurity: Club name Palo Alto Networks (PANW), Zscaler, Crowdstrike (CRWD). Have-nots: SentinelOne (S) and Okta (OKTA).
10. Chance to sell oil? Sadly, I think yes. Though WTI prices are up Friday (so are our oils CTRA, PXD, HAL) ahead of the weekend OPEC+ meeting. WTI had its worst weekly performance last week since November 2021. OPEC+ can’t really cut production.
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