Dear Trader,
Mark Sebastian and Tim Colby are going live today at 10 AM ET, and the three stories below are the agenda.
Tim's been on the yen carry trade for weeks, so he'll take the Thursday spike and whether Tokyo actually stepped in or the market just front-ran a September hike.
Mark gets Broadcom, which is the more interesting one for options traders: a company grows AI revenue 221% and the stock sells off on a guidance miss under 1%.
What does that do to how you price earnings from here? Both of them will weigh in on the ISM print, since softer new orders and hiring with sticky prices paid is the mix nobody wants heading into the jobs report.
This link adds State of the Market to your calendar.
The Daily News Breakdown
SIREN: The August ISM Manufacturing PMI came in at 54.6, down from 55.6 in July and under the 55.2 economists expected. That's still expansion, and still the eighth straight month above 50, so nobody's calling a factory recession. The pieces underneath are worse than the headline, though. New orders dropped to 53.7 from 56.7. The employment index slid to 51.2 from 52.8, which had been the best reading in roughly four years. Prices paid didn't budge at 71.1, so factories are carrying the same cost pressure with less demand to cover it. Production grew for the 10th month running, just slower, and the ratio of upbeat to downbeat comments from purchasing managers fell to about 2-to-1 from 3-to-1. The dollar index barely moved, holding modest gains near 99.50.
SNEAKER: The yen jumped more than 1% Thursday and touched 156.15 per dollar, its strongest level since Aug. 3. That was days after the U.S. and Japan bought yen together on July 31, and the currency had since given most of that back, trading above 160 on Tuesday. So did Tokyo sneak back into the market? Japan Macro Advisors' Takuji Okubo doubts it. He says the Ministry of Finance doesn't do small stealth operations, and he pins the move on Governor Ueda all but confirming a September hike. ING's Chris Turner adds that the FX matching systems showed none of the dislocation real intervention leaves behind. The BOJ decides on Sept. 18. Bessent told CNBC Monday he has information the market doesn't, so somebody's getting a stronger yen one way or another.
SIGN: Broadcom (AVGO) fell as much as 4% after hours Wednesday on a quarter that beat on every line that matters. Adjusted EPS of $3.32 topped the $3.23 estimate. Revenue rose 86% to $29.6 billion against $29.45 billion expected. AI semiconductor revenue hit $16.7 billion, up 221% from a year ago and 54% from last quarter. The problem was the guide: $34.8 billion for the current quarter versus the $35.05 billion consensus, a miss of less than 1%. StoneX's Cody Acree, who rates it a Buy, said the beat and raise just wasn't big enough for a company this levered to AI. The stock is up 6% this year against Nvidia's (NVDA) 20%, and a sub-1% guidance miss just became a reason to sell. That's the bar for AI names right now.