Every Monday Greg Smith, our Investment Specialist at Generate, chats to Mike Hosking about what’s happening in the global economy and the New Zealand business world.
Listen to the 8 September 2025 recording from The Mike Hosking Breakfast on Newstalk ZB here:
Or read the transcript below:
From Generate. Greg Smith, good morning to you.
Good morning. Mike
Well, last time the job numbers came in, they weren't that good. He sacked people. He's got no one to sack this time. So how do we explain it?
Yeah, well, how's he going to explain it this time around? He might have to own the trend. The jobs market in the world's largest economy is clearly slowing down. It's not just about the massaging of the numbers. Non-farm payrolls, they rose by just 22,000 in August, so that was massively below the consensus forecast of 75,000. It was a slowdown from July, which was revised higher to 79,000.
But June was the shocker - it actually showed a contraction of 13,000 jobs, rather than growth. That was lower by 27,000. Unemployment, that hit 4.3%, the participation rate was 62%. If you look at a broader measure of unemployment that looks at discouraged workers and those holding part-time jobs for economic reasons, that hit 8.1% and that's the highest since October 2021.
Earnings are up .3%. Healthcare still led the way up 31,000 but federal government hiring was down 15,000 and manufacturing down 12,000. Worth noting that's the fourth monthly drop. So yes Trump he might have to own the trend. If you look at the after the revisions, total jobs added in May, June, July and August. They're about the same as what was added in August 2024, last year.
It is certainly going to put some pressure on the Fed to cut rates. A rate cut next week is now a lock in. It's probably also why the US market didn't react too severely. So there have been some notes that with that negative month, it's been a precursor to recessions in the past, in 2001 and 2007, but the big caveat is that downturns in the past have been avoided where the Fed embarked on a big easing campaign.
Jerome Powell is pretty dovish when he spoke a few weeks ago. So the bell might certainly have been rung for the Fed.
Now the tech companies, the numbers now just look ridiculous, don't they? I mean, they're amazing.
Absolutely. So it was still a big week for tech, despite bit of softness in Nvidia on Friday, for instance. But there are eight companies worth over a trillion dollars, and their combined value rose $420 billion last week to hit 21 trillion. They now account for more than 35% of S&P 500.
So what sparked it off? Well, Google's parent Alphabet, they got that positive ruling. So it doesn't look like they're going to be broken up anytime soon. They were up 10% over the week, and navigated efforts basically to break up the monopoly. All they really have to do is share data with competitors.
Basically, the courts have acknowledged that with generative AI, the search markets a lot more competitive than when people sort of first talked about anti-trust allegations a few years ago. It also means that Google can continue to pay Apple billions of dollars to be the default search engine on iPhones, clears a path for them to have a bigger deal with Gemini. So basically, the monopoly is sort of safe near term, maybe not longer term.
AI is obviously going to have more to say about that but investors sort of shrugged it off. They were also hit with a 3 billion euro fine from EU regulars on Friday. But investors overlooked that also.
Broadcom, they had a really good result as well. They're a big chip maker. They make chips for Google. Meta and TikTok. Revenues there 6 billion. Mike, they're actually growing at over 60% annually. And they announced a $10 billion contract with a customer believed to be Open AI. So their shares are up 9% on Friday. They've risen 120% over the past year. They're also in the trillion dollar club, 1.6 trillion, still less than half of Nvidia. But it's catching up on a few fronts.
And just on the subject of market caps. Tesla, up over 5% last week, they've approved a pay plan for Musk, or they want to approve one, that could be up to almost $1 trillion if they can get the company's market cap up towards two trillion. That's about double where it is now. So big numbers.
I wish them well with that, because it's not going to happen. Lululemon, now, I was talking to somebody about this over the weekend, so my understanding is the young kids all like baggy clothes now. They like cheap and there's dupes out there, and they've just lost their shine, basically.
Basically, I think, yeah, they sort of haven't kept up the times. And management made the point about that. They said they've become too predictable with their casual offerings, and they're going to accelerate innovation. So yeah, I suppose shoppers might they can expect some new leggings styles. They can increase their new styles from 23% of overall assortment to 35%.
But the shares had a shocker on Friday, down 19%. They actually beat on earnings, but revenues missed and they gave a worse than expected outlook. So they're also getting hit by tariffs as well. And they expect this to hit full year profits by $240 million. They're also being hit by the removal this de minimis exemption, which excluded smaller shipments from tariffs. So yeah, that's sort of going to affect them as well. But yeah, certainly they want to be more relevant, of course, as well, they're being hit by the so is the US economy and the US consumer, which is becoming increasingly more discerning, that includes includes yoga pants, it seems.
So, of course, cost of living, pressures and economic uncertainty. So yes, the stock was down heavily on Friday and down over 50% year to date.
Numbers please.
So the Dow actually held up pretty well on Friday despite those job numbers - down half a percent – 45400. S&P500 was down .3% - 6481. NASDAQ, pretty flat. 21700. Footsie, down .1% - -9206. Better news in Asia, Nikkei up 1%. ASX200 up half a percent. NZX50, we're up . 7% - 13, 223. Just in the commodity markets, gold up $40 - 3586 an ounce. Oil down $1.60 - 61.87. Currencies against the US dollar: Kiwi was 58.9, up .8%, Australian dollar, 89.9 up slightly as well, up also against the British pound, 43.6, and the Yen, 86.9.
This week plenty going on locally. Visitor arrivals, card spending, some manufacturing data, half-year results from Briscoes so it’ll be a good insight on the consumer. Offshore we've got Chinese trade data inflation, also inflation in the US and the European Central Bank meeting. We've got some results as well coming through – Oracle, Adobe and a sporting one from Manchester United.