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.<\/p>\n
That wasn't the only disappointing employment data point this week.<\/p>\n We also had misses on:<\/p>\n The job market stinks.<\/p>\n And this has traders thinking about…<\/p>\n For years, small cap rallies have failed and failed again.<\/p>\n But a rebound is starting to feel real.<\/p>\n Growing expectations for Fed rate cuts pushed up rate-sensitive stocks on Friday, including small caps.<\/p>\n And the Russell 2000 is now up 9.6% in Q3, more than doubling the SPX's performance.<\/p>\n We also saw big strength in housing stocks, with the SPDR S&P Homebuilders ETF<\/strong> (XHB) up nearly 2%.<\/p>\n And XHB is now up over 24% over the past 3 months, so traders are already pricing in an improving housing market.<\/p>\n But, one high-profile stock is looking pretty sad:<\/p>\n Last week, you learned about Nvidia's growing “awareness problem.”<\/a><\/strong><\/span><\/p>\n Nvidia's earnings beats keep getting smaller because analysts have boosted estimates so much.<\/p>\n So those upside surprises have lost their oomph.<\/p>\n And then this week, Broadcom<\/strong> (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.<\/p>\n The street viewed this as a market share loss for Nvidia, so the stock showed relative weakness Friday.<\/p>\n So Nvidia is in the penalty box for the first time since the release of the DeepSeek AI model<\/a><\/strong><\/span>, which was allegedly so efficient that it would hurt demand for AI chips. (didn't happen)<\/p>\n A month ago, American Eagle Outfitters<\/strong> (AEO) came under fire for its “Great Jeans” ad campaign starring Sydney Sweeney.<\/p>\n Mainstream media critics hated the campaign.<\/p>\n Young denim buyers loved it, and American Eagle's strong earnings report sent the stock higher than Ozzy circa 1982.<\/p>\n So for now, American Eagle is the champion of “Culture War Earnings Season.”<\/p>\n 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.<\/p>\n Next up is\u00a0Cracker Barrel<\/strong> (CBRL), which has come under fire for alienating its core customers with its modern rebrand.<\/p>\n 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.<\/p>\n Despite the SPX hovering near all-time highs, and markets pricing in a September rate cut, there is little trust in this market.<\/p>\n The AAII Sentiment Survey came in at just 32.7% bullish this week.<\/p>\n That's the 5th straight week of below-average bullishness.<\/p>\n But this is healthy for the market.<\/p>\n Because it implies there is still capital on the sidelines ready to be deployed.<\/p>\n Factset<\/a><\/strong><\/span> reports that analysts raised estimates slightly for S&P 500 companies for Q3.<\/p>\n This is a big turnaround for Wall Street.<\/p>\n During the last 20 quarters, analysts CUT estimates by 1.0% on average in the first 2 months of a quarter.<\/p>\n But this time they are RAISING numbers.<\/p>\n This is bad bad bad.<\/p>\n In recent quarters, companies smashed estimates because the bar was so low.<\/p>\n The higher estimates go, the harder it is to come by beats.<\/p>\n Which you just learned is Nvidia's biggest problem.<\/p>\n And estimates have risen most in tech. +4.4% to be exact.<\/p>\n Lululemon<\/strong> (LULU) has been in freefall all year, and got destroyed on Friday after cutting guidance again.<\/p>\n One must wonder… are fellow “yoga pants demographic” stocks like Starbucks<\/strong> (SBUX) and Target<\/strong> (TGT) destined for lousy earnings in coming quarters?<\/p>\n The job market can't be helping, and these names have\u00a0been underperforming as it is:<\/p>\n It's been a banner year for gold bugs.<\/p>\n And on Monday, GLD cut through $317 resistance like a chainsaw through butter:<\/p>\n And it hit a record high at $331.44 Friday.<\/p>\n Why?<\/p>\n It's a perfect storm.<\/p>\n We have economic fears, geopolitical concerns, a weak dollar, and central bank\/ETF demand.<\/p>\n I've made fun of the gold bugs many times. Now I wish I was one.<\/p>\n Gold bugs: pic.twitter.com\/ejyEKIQfqv<\/a><\/p>\n \u2014 T3 Live (@t3live) September 5, 2025<\/a><\/p><\/blockquote>\n![\"\"](\"https:\/\/blog.t3live.com\/wp-content\/uploads\/2025\/09\/Screenshot-2025-09-05-at-12.42.33-PM.png\")
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2. Revenge of the Small Caps<\/h2>\n
<\/a><\/p>\n3. Nvidia Lost Its Shine<\/strong><\/h2>\n
4. Sydney Sweeney Turned Up the Heat on Cracker Barrel<\/strong><\/h2>\n
<\/a><\/p>\n5. There Is a Lack of Faith in the Market<\/strong><\/h2>\n
6. Earnings Estimates May Be Too High<\/strong><\/h2>\n
7. The Yoga Pants Economy Is in Freefall<\/strong><\/h2>\n
<\/a> So middle-to-upper-income consumers are tightening their wallets.<\/p>\n<\/a><\/p>\n8. Gold Is In Chainsaw Mode<\/strong><\/h2>\n
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