Finimize - 🦷 This is FAANG 2.0

Hi Reader, here's what you need to know for September 5th in 3:13 minutes.

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Today's big stories

The US economy added more jobs than expected in August
Forget Facebook and the rest: the next generation of FAANG stocks are built for a low-growth, high-uncertainty era – Read Now
Chipmaker Broadcom boasted stand-out quarterly results

The US Jobs Market Might Be Slowing Down

What’s Going On Here?

Data out on Friday showed that the US economy added more jobs than expected last month, but there are signs the searing hot market might be cooling down.

What Does This Mean?

The US counted 315,000 new starters in August, just ahead of the 300,000-odd economists expected. Still, that’s a far cry from July’s 526,000 uptick and marks the lowest monthly gain since April 2021 (tweet this). At the same time, there was a bump in the number of folk looking for work, likely because higher prices pushed them to search for extra income. That matters: it brought the “labor force participation rate” – the share of people either in work or looking for it – up to 62.4%, its highest since March 2020. That higher supply of workers meant employers didn't need to bump wages up quite so much in a bid to bag scarce talent, which might be why wage growth came in at a lower-than-expected 5.2% from the same time last year.

Why Should I Care?

The bigger picture: Hit the brakes..?
The data will have been welcome news for the Federal Reserve (the Fed): after all, lower-than-expected wage growth should help take some of the wind out of inflation’s sails, and the jobs market healthily ticking along won’t hurt either. But let’s not get ahead of ourselves: that’s just one month, and data out last week showed there are still roughly two vacancies for each unemployed worker. So it's probably not time for the Fed to take its foot off the gas: most traders are betting it’ll still hike interest rates by 0.75% this month.

For markets: The June blues.
Investors initially sent the US stock market up after the data was released but it didn’t help much: it’s still on track to notch its third negative week in a row. And there could still be more pain to come: September is historically a bad month for the market, and some traders are even worried that stocks might revisit their June lows.

You might also like: September tends to be bad for stocks. Here’s how this one is shaping up.

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Analyst Take

Is FAANG 2.0 What Your Portfolio Needs Now?

By Theodora Lee Joseph, Analyst

The FAANG superstars – Facebook (now Meta), Amazon, Apple, Netflix, and Google (now Alphabet) – might’ve given you some great returns over the past decade.

Thing is, they aren’t likely to be the ones you’ll want to depend on over the next one.

Instead, we’re headed into a new era of high rates, high inflation, and high uncertainty.

So it’s time for FAANG 2.0, full of all the companies that are poised to profit from robust global energy demand.

That’s today’s Insight: all the new FAANG stocks, and how you might invest for the next decade.

Read or listen to the Insight here

Broadcom’s Broad Appeal

What’s Going On Here?

US chipmaker Broadcom reported impressive quarterly results late last week.

What Does This Mean?

Chipmakers all over are facing dwindling demand as inflation-stricken shoppers cut back on nice-to-haves like PCs and gaming devices. But not Broadcom: the US chipmaker hasn’t been as plagued by the pains of everyday consumers, since its chips are more commonly used in data centers, routers, and WiFi modems – all things companies are still investing in to optimize hybrid working. Broadcom’s chips also kit iPhones out with short-range connectivity, and demand’s stayed steady as Apple’s typically higher-income customers haven’t felt as pinched.

Broadcom not only reported better-than-expected revenue and profit last quarter, but went on to give a better-than-expected revenue outlook for this quarter too. After all, the chipmaker’s boasting a mounting backlog of guaranteed orders worth $31 billion, and investors gleefully sent its shares up after the news.

Why Should I Care?

The bigger picture: So far, so good.
Rival Nvidia said last week that new restrictions around exporting its chips to China could hurt sales even more, prompting a 12% fall in its stock. And while Broadcam said it’s yet to – and doesn’t expect to – hear from the US government that its chips will be affected, any potential shift could jeopardize the roughly 30% of its chip revenue that comes from China. So it’s a good thing Broadcom’s, ahem, broadening its horizons: its acquisition of VMWare means it can delve into things like cloud technology and become less reliant on chips.

Zooming out: An Apple a day…
Broadcom will be loving that Apple contract: data out on Friday showed Apple’s overtaken Android devices and now makes up over half of all US smartphones – the iPhone’s highest share since its 2007 launch. More Americans have been switching to Apple in the last four years, and analysts reckon that trend could echo around the world soon. More good news for Broadcom, then.

You might also like: Is Broadcom right to invest in the cloud?

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💬 Quote of the day

“All are lunatics, but he who can analyze his delusions is called a philosopher.”

– Ambrose Bierce (an American short story writer, journalist, and poet)

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Finimize - 🦷 This is FAANG 2.0

Today's big stories

The US Jobs Market Might Be Slowing Down

What’s Going On Here?

What Does This Mean?

Why Should I Care?

Is FAANG 2.0 What Your Portfolio Needs Now?

Broadcom’s Broad Appeal

What’s Going On Here?

What Does This Mean?

Why Should I Care?

🎉 Coming Up Soon…

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