We limped out of August in the classic summer doldrums fashion. But the overall script yesterday remained the same:

• Growth sectors higher
• Traditional defense sectors hammered

Market breadth was slightly bearish, although there were more new highs than lows on the New York Stock Exchange (NYSE).

Market Breadth	NYSE	NASDAQ
Advancers	1,375	1,941
Decliners	1,526	2,456
New Highs	78	90
New Lows	20	104
Up Volume	1.61 billion	2.32 billion
Down Volume	2.35 billion	2.27 billion

There was lots of red on the screen, including Broadcom (AVGO), which could have broken the record for financial results that beat revenue earnings and guided higher. It was about to beat the top and bottom lines record after the close, but guidance was subpar.

It's been a long time since Western Digital (WDC) led the pack – I need to see more to suspend disbelief.

Investor sentiment was essentially unchanged last week. Retail is now settled in three camps equally.

Banks & Financials

We exited August more concerned about banks and other financial entities than when we entered the month. Charles Schwab (SCHW) is of particular importance.

The Invesco KBW Bank ETF (KBWB) was off almost 9% and at a critical support point.

Is the Economy Really Growing at Five Percent?

Two things shocked me this week. The massive personal spending last week and the spike in the 2023 Gross Domestic Product (GDP) estimate at the Atlanta Fed.

Please put me down as a nonbeliever.

After the jobs report this morning, I suspect this number will begin to come down sharply.

Portfolio Approach

We are adding a new position to Industrial in the Hotline Model Portfolio.

Today’s Session

The jobs report came in about as expected, but overall, I think it was good news for Jay Powell and his quest for a soft landing.  The unemployment rate surge, while 736,000 folks reentered the labor force.

More details on jobs report in the afternoon note.

For now, equity futures are holding gains, and bond yields are generally lower, although the ten year is holding above 4.0%.

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