One number now decides the argument. ͏  ͏  ͏  ͏  ͏
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[Morning Watchlist]

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MORNING WATCHLIST: SUNDAY EDITION             

_A quick note from Behind the Markets_

It's Sunday morning — the quiet one. The market is closed, the
arguments haven't started yet, and the calendar in front of us is one
of the fullest of the summer.

And the week's last big question got its answer Friday morning: Kevin
Warsh's first Jackson Hole speech. No promises, no pivot — but a
warning that the Fed will "have work to do" if it can't get confident
inflation is heading back to 2%.

The market heard him. By midday Friday, futures odds of a rate hike
next month had jumped from about 35% to 46%, the two-year yield
touched a one-month high, and gold slipped about 1% to around $4,604.
Stocks shrugged and rose.

Today we do what Sunday is for: we look forward — into a week whose
stakes just went up.

Four catalysts this week. Four pairings. Let's get into it.

-------------------------

1) WEDNESDAY NIGHT: THE OTHER AI REPORT CARD

This past Wednesday, Nvidia showed the world a $2 trillion order book.
This coming Wednesday, after the close, the other half of the AI chip
story reports: Broadcom — the company that builds custom AI chips
for the giants who don't want to depend on Nvidia.

The expectations: roughly $29.4 billion in revenue, with AI chip sales
guided to about $16 billion — up more than 200% from a year ago. But
watch the ceiling, not the floor. Last quarter Broadcom beat its
numbers and the stock still fell 12.6%, because management declined to
raise its 2027 target of $100 billion-plus in AI revenue. At a $1.7
trillion valuation, _beats don't move the stock anymore — raised
ceilings do._

We already covered the quiet side of the AI trade earlier this week,
so this time we looked somewhere else: inside Broadcom itself. Under
the chip business sits a software division that did $7.2 billion last
quarter — mostly VMware, which Broadcom bought and has been
repricing aggressively ever since. Here's the thing about relentless
price increases. EVERY RENEWAL NOTICE IS AN ADVERTISEMENT FOR THE
COMPETITION.

THE PAIRING: NUTANIX (NTNX) — WATCH

Nutanix sells the leading alternative to VMware — the moving company
in a town where the biggest landlord keeps raising the rent. It signs
500 to 1,000 new customers every quarter, nearly all of them VMware
migrations. And there's a countdown clock: VMware's vSphere 8
perpetual-license support ends in October 2027, which forces the
remaining holdouts to choose.

This past Wednesday night, Nutanix reported a blowout: revenue of $757
million, up 16%, earnings of 60 cents against 49 expected. The stock
jumped about 10% to around $72.

So why Watch and not Buy? Because the move already happened. The stock
is up more than 40% since late May and trades at roughly 32 times next
year's expected earnings, above the average analyst target of about
$65. Great business, freshly expensive ticket. Let the pop digest; if
Broadcom's Wednesday call confirms VMware pricing stays aggressive,
every dip in Nutanix is the landlord doing our marketing for us. What
kills it: Broadcom softening VMware pricing to stop the bleeding, or
the migration wave cresting.

-------------------------

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-------------------------

2) THE WALL GOES UP A WEEK FROM TUESDAY

While earnings grab the headlines, a deadline is ticking. Canada's
retaliatory tariffs — 15% to 50% on roughly 700 American products
worth about $27.6 billion, "dollar for dollar" in Prime Minister
Carney's words — take effect September 8, the day after Labor Day.
Steel, dairy, farm equipment, appliances, pulp and paper. This is the
last full trading week before that wall goes up.

We've already flagged this war's casualties (AGCO) and its umbrellas
(Eagle Materials). Now the biggest category on the list: steel —
taxed by Canada on the way north, and already walled off on the
American side by Washington's Section 232 steel tariffs, expanded
again in April.

When both neighbors are building the fence, own the lumberyard on your
side of it.

THE PAIRING: COMMERCIAL METALS (CMC) — BUY

Commercial Metals is America's rebar company. It collects American
scrap, melts it in American mini-mills, and sells the reinforcing bar
to American job sites — a business that barely notices a border,
because rebar is too heavy and too cheap per pound to cross oceans
anyway. Tariffs don't threaten this model. _They gift-wrap it._

The June quarterly report showed what a price umbrella does: sales up
23%, adjusted earnings per share up 147%. Steel selling prices rose
$130 a ton while the scrap feeding the mills rose just $19 — that
spread is the whole profit machine. And every data center in that $2
trillion AI backlog stands on a concrete slab laced with rebar.

The stock closed Thursday at $68.76 — a $7.6 billion company,
squarely in our wheelhouse — at roughly 9.5 TIMES next year's
expected earnings. The S&P 500: about 21. The average analyst target
sits at $81.55, and the board just added $600 million to the buyback.
The honest risks: rates staying high enough to freeze construction,
scrap costs catching up, or a sudden US-Canada handshake that folds
the umbrella — the same risk we flagged on Eagle Materials.

3) THURSDAY NIGHT: THE FALLEN KING OF ATHLEISURE

Lululemon was once the most admired name in retail. The stock has been
cut roughly in half from its peak near $226 — it sits around $117
now — after five straight years of decelerating sales growth and
five straight quarters of shrinking earnings. Management's own
guidance for the quarter it reports Thursday night: revenue down 2% to
3%, net income down 42% to 43%.

Here's what makes Thursday interesting. It's the old regime's final
report card — on September 8, Heidi O'Neill, the former Nike
executive, takes over as CEO. And the stock now trades at about 9
TIMES trailing earnings, roughly 77% below its own historical median.
Cheap? Plainly. But cheap is a fact, not a thesis.

THE PAIRING: LULULEMON (LULU) — WATCH

Think of a storefront with a 50%-off sign in the window. The question
is whether the problem is the merchandise or the location — a bad
season, or a fading brand. Thursday won't settle that, because new
coaches don't win their first game. They clean out the locker room.
O'Neill's incentive is to reset guidance low after she arrives, so the
bar may drop further before it rises — and Dick's just told us the
whole athletic-apparel aisle is fighting a promo war. Our entrance:
comparable sales stabilizing Thursday, or better, buying after
O'Neill's first kitchen-sink guide — even if it costs a few dollars
more. What kills it: another guide-down that reads like the brand, not
the cycle.

-------------------------

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-------------------------

4) FRIDAY, 8:30 A.M.: THE NUMBER THAT RUNS THE FED

Now the main event. Friday morning brings the August jobs report —
and Warsh just raised the stakes. In July, the economy didn't slow its
hiring. It _shed_ 23,000 JOBS, against expectations of roughly 90,000
added. Meanwhile inflation is running 3.7%. A shrinking labor market
and rising prices are pulling the Fed in opposite directions — and
at Jackson Hole on Friday, Warsh leaned toward the inflation side of
the rope, with futures now putting the odds of a September hike near a
coin flip. That makes this jobs report the tiebreaker: the first hard
labor data of his chairmanship. Two negative prints in a row, against
a Fed leaning hawkish, would change every argument on the table. (The
undercard: job openings Tuesday, ADP and the Beige Book Wednesday,
jobless claims Thursday.)

Temporary hiring is the first light companies switch off when they get
nervous — which is why we looked at the staffing firms and found a
stock priced for a party the data hasn't RSVP'd to.

THE PAIRING: ROBERT HALF (RHI) — SELL

Robert Half — the temp-staffing and recruiting firm — has rallied
about 31% IN THE PAST MONTH on hopes the staffing recession is over.
Here's what the hope costs: at about $39.50, the stock trades near 35
times trailing earnings. Last quarter, revenue fell 2% and earnings
dropped to 26 cents a share from 41 a year ago. And the dividend?
$2.36 a year — a 5.9% yield — against just $1.15 in twelve-month
earnings. That's a 205% payout ratio: _an allowance paid out of
savings, not salary._ Cash flow still covers it for now, but paying
out twice what you earn only works if the recovery actually shows up.

Sell, for those who hold it, means selling into this strength before
Friday's report grades the thesis. What proves us wrong: a genuine
payrolls rebound — staffing has vicious operating leverage on the
way up, and the firm's permanent-placement line did grow last quarter.
If you don't own it, this one isn't your fight this week.

-------------------------

_Sponsored by The Financial Newsletter_
GOLD IS BACK IN FOCUS — 4 STOCKS TO WATCH
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Gold has climbed back above $4,400 an ounce, and some of Wall Street's
biggest banks see significantly higher prices ahead. Goldman Sachs is
forecasting $5,400 gold, while J.P. Morgan sees prices approaching
$6,000 by late 2026. If gold's rally continues, select gold miners
could potentially see their earnings rise alongside the price of
bullion.

SEE 4 GOLD STOCKS POSITIONED FOR GOLD'S NEXT MOVE
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-------------------------

_BEFORE YOU GO_

That's the week ahead. Broadcom's ceiling on Wednesday, a tariff wall
rising behind the rebar trade, the old regime's last report at
Lululemon on Thursday — and then the moment the whole week bends
toward: Friday, 8:30 a.m. Eastern, when the August jobs report tells
us whether July's 23,000 lost jobs were a stumble or a turn. The first
real exam of the Warsh era. The headlines will chase the loud names
all week. As always, we'll be standing one step behind them.

Have a wonderful Sunday.

We'll see you tomorrow.

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