Things are Going Fine

"There has been a gradual cooling in labor market conditions to levels similar to those that prevailed in the years prior to the pandemic."

Summary: Labor markets are cooling, and that could put additional stress on the consumer. But for now, the consumer remains resilient. Bad news is good news with respect to interest rates--it looks highly likely that the Fed will begin to cut interest rates later this month. $7 trillion is expected to be spent on AI in the next 5 years. Broadcom is showing some strength in XPUs.

---

Editor’s Note: We have reserved the sections after Macro for our premium subscribers. If you’re not a premium subscriber already, please consider subscribing.

---

Macro

Labor markets remain stable
"Job growth continues at a healthy pace, averaging 135,000 over the last three months, in line with its 12-month average. Unemployment has been stable around its current low level of 4.2 percent." – Richmond Fed President Tom Barkin

"Here's the thing about the data on the job market. It feels to me like we get continuous months that emphasize we're pretty steady, stable, full employment kind of circumstance...what we've seen in the last year is stable, full employment, and nothing has changed with the UI claims or with the broader measures of the job market." – Chicago Fed President Austan Goolsbee

Labor markets are cooling
"Looking at the totality of the data over the past year, there has been a gradual cooling in labor market conditions to levels similar to those that prevailed in the years prior to the pandemic. You can see this pattern in the data on hiring and quits rates, vacancies, and survey measures of jobs’ and workers’ availability. And this cooling is consistent with the gradual slowing of wage growth that we’ve seen. In addition, there has been a notable slowdown in payroll employment growth in recent months, but this is likely the result of lower growth in both demand and supply, reflecting in large part the effects of reduced immigration on the labor force." – Federal Reserve Bank of New York President John Williams

Consumers are under stress
"As we look ahead, though, I think it's safe to say the consumer is definitely under stress, although they continue to have decently healthy incomes, et cetera, they're starting to see some -- they're afraid of inflation. They're starting to see a bit. And I think the thing that's most difficult is there's just so much uncertainty for them and a myriad of facets in their life. And so we think they're going to continue to be cautious." – The Clorox Company (CLX 0.00%↑) CEO Linda Rendle

But things are going fine
"I think every quarter for the last 12 quarters, I've been asked what's going to happen in the U.S. when the consumer goes away, you guys are too far over, right? And so for the same 12 quarters, we've said things are going fine." – Live Nation Entertainment (LYV 0.00%↑) President Joe Berchtold

Consumers are remarkably resilient
"So we just have not really seen any weakening in the consumer right now. We feel good about the macro environment and the consumer, and despite the headwinds of tariffs and sort of the headlines that are out there." – Urban Outfitters (URBN 0.00%↑) COO Francis Conforti

"From our view, the consumer is healthy and resilient, remarkably resilient. You think about the challenges the consumer has been through over the last 5, 6 years, and they've just been remarkably resilient through it. They've evolved, iterated, and adjusted based on the conditions, but GDP continues to be strong. Consumer spending continues to be strong. And that's what we see in our business." – Tractor Supply (TSCO 0.00%↑) CEO Harry Lawton

"Our consumer is an upper-middle-income consumer. So roughly 2/3 of what we sell is at a household level income of over $100,000. And so we continue to see that consumer healthy...The other side we've seen is certainly that you see a consumer that is strained, that is getting more constrained, particularly if tariff costs are passing through to the consumer." – La-Z-Boy (LZB 0.00%↑) CEO Melinda Whittington

"And the state of our consumer is very strong. I think that -- but it goes back to that compelling creating want and creating an emotional connection and making her feel something. So the intimates market has been soft for some period of time." – Victoria's Secret (VSCO 0.00%↑) CEO Hillary Super

"But I think of the broader lens, they've been surprisingly Uber resilient, right? And I think about in our lens, Sabrina alluded to getting rid of double stacking. And so you would think despite pulling back on some of that, you look at our second quarter results on sales versus first quarter on a 2-year stack, we actually had 100 basis point sequential improvement. And so that, to me, big picture allude to the consumers remain resilient as we've tightened." – Petco Health and Wellness (WOOF 0.00%↑) CEO Joel Anderson

Wage growth is still strong
"If you take like a 6-month view, 12-month view, it's a fairly consistent trend of a gradual slowing -- continued -- sorry, continued gradual slowing. And we've been talking about that, calling that out in our numbers, in our guidance, and so on. The underlying, I think, fundamentals are still quite good. We're still seeing employment growth. Wage growth, in particular, continues to be strong." – Automatic Data Processing (ADP 0.00%↑) CFO Peter Hadley

The Fed appears less worried about tariff-driven inflation
"Fortunately, I am not seeing signs of amplification or second-round effects of tariffs on broader inflation trends. In particular, recent readings of the New York Fed’s Global Supply Chain Pressure Index are near historical averages." – Federal Reserve Bank of New York President John Williams

People are expecting the Fed to cut
"When does consumer spending actually come back. Obviously, I think interest rates going down, which everyone is forecasting for the next couple of quarters, and we'll see how that plays, but that would certainly be a big benefit. Interest rates going down, bump to consumer confidence, a bump to consumers' cash flow can only be a good thing." – Brown-Forman (BF.B) CEO Lawson Whiting

"That's a matter of time getting used to the rates, whether they come down dramatically or not what people anticipate is Fed cuts on the horizon. We need to get turnover up. That would be nice to get off 40-year lows. But all things being equal, feel much better sitting here with you this year than a year ago." – The Home Depot (HD 0.00%↑) CEO Edward Decker

"There is pent-up demand for housing. And over time, that will unlock. Exactly when, my crystal ball isn't working as well. But certainly, beginning to see interest rates come down will be one of those big steps." – La-Z-Boy (LZB 0.00%↑) CEO Melinda Whittington

International