Morning Brew: U.S. Job Market Strengthens, Broadcom Forecasts $50B Revenue

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U.S. nonfarm payrolls surpassed expectations in November, with an increase of 199K jobs compared to the anticipated 180K, and an uptick from October's 150K. The health care sector added 77K jobs, while government positions rose by 49K. Manufacturing jobs also saw a boost with 28K new roles, largely due to the return of auto workers post-strike. However, retail trade employment dipped by 38K. The unemployment rate edged down to 3.7%, slightly better than the 3.9% forecasted. Analyst David Alton Clark commented on the wage growth of 0.4% M/M, suggesting these figures support the 'soft landing' narrative and hint at the end of the Fed's rate hike cycle. (AVGO, DOCU, TSM, QRVO, QCOM, LRCX, SPY, IWM, RIVN, TSLA, GME, MA, BMY, WMT, DELL, AIG, DVN, HON, CARR, EFTR, ETSY, MBI, LULU, BECN, BLD, BLDR, CNM, NVR, TMHC, KBH, LMT)

Stock index futures indicated a slight downturn as investors processed the employment data. Nasdaq 100 futures were down by 0.6%, S&P futures by 0.3%, and Dow futures also by 0.3%. Deutsche Bank's Jim Reid noted that the previous session's rally had significantly eased financial conditions, but with the upcoming U.S. CPI and the final Fed and ECB decisions of the year, the market is at a critical juncture. The 10-year Treasury yield rose by 10 basis points to 4.24%, with the 2-year yield also climbing. (US10Y, US2Y)

Broadcom (AVGO, Financial) experienced fluctuations in pre-market trading after announcing quarterly results that exceeded expectations and provided a strong outlook for the next fiscal year. Despite acknowledging a cyclical slowdown in certain semiconductor businesses, the company projects $50B in revenue for 2024 with EBITDA margins at 60%. Wall Street remains optimistic about Broadcom's performance later in the year. (AVGO)

Taiwan Semiconductor (TSM, Financial) reported a decline in November revenue by 15.3% M/M and 7.5% Y/Y, with a YTD revenue decrease of 4.1%. The company is working on a 2nm process technology, aiming for production in 2025. Despite outperforming the broader market index, TSMC has lagged behind its peers this year. (TSM)

Morgan Stanley made several rating changes in the semiconductor sector, upgrading Qorvo (QRVO, Financial) and downgrading Qualcomm (QCOM, Financial) and Lam Research (LRCX, Financial). Qorvo's stock rose 1.5% in premarket trading following the upgrade, with analysts highlighting its attractive catalysts linked to 5G and Chinese Android phones. (QRVO, QCOM, LRCX)

Investors continued to inject funds into the market for the seventh consecutive week, with money market funds receiving a significant $54.7B. Equity funds saw modest inflows, while mixed-assets, fixed income, alternatives, and commodity funds experienced outflows. The SPDR S&P 500 ETF Trust (SPY, Financial) and the iShares Russell 2000 ETF (IWM, Financial) led the inflows among equity ETFs. (SPY, IWM)

J.P. Morgan's global markets strategy team warned of a potential recession where risk assets could underperform cash by 20%. Strategist Marko Kolanovic anticipates the Fed will begin cutting rates in the second half of the year, with a possible decline in the 10-year Treasury yield to 3.75%. (US10Y)

Rivian Automotive (RIVN, Financial) reportedly laid off members of its team working on long-range battery cells, including lead cell engineer Victor Prajapati. This move could indicate a shift in Rivian's strategy regarding the production of its own batteries at its new Georgia factory. (RIVN, TSLA)

GameStop Corp. (GME, Financial) is in the spotlight after its Q3 earnings report revealed that the company's management can now invest excess cash in other companies' shares. Analysts criticized this strategy, suggesting that GameStop should focus on buying back its own stock if it believes in its value. (GME)

The Biden administration announced a new framework to combat price gouging by pharmaceutical companies, potentially allowing federal agencies to seize patents of drugs developed with taxpayer funds if they are deemed too expensive. This move could significantly impact drug pricing and accessibility. (MA, BMY)

Unusual options trading activity was observed in Cerevel Therapeutics (CERE) days before its acquisition by AbbVie (ABBV) for $8.7B. The spike in options contracts raised suspicions of insider trading, as the stock had seen significant gains prior to the acquisition announcement. (CERE, ABBV)

Dividend activity this week included increased payouts from Mastercard (MA, Financial) and Bristol-Myers Squibb (BMY, Financial), with declarations from Walmart (WMT, Financial) and Dell Technologies (DELL, Financial). Upcoming ex-dividend dates for AIG (AIG, Financial) and Devon Energy (DVN, Financial) were also noted. (MA, BMY, WMT, DELL, AIG, DVN)

Honeywell (HON, Financial) announced the acquisition of Carrier's (CARR, Financial) Global Access Solutions business for $4.95B, aiming to become a leading provider of security solutions. The deal is expected to be accretive in the first full year of ownership. (HON, CARR)

eFFECTOR Therapeutics (EFTR, Financial) shared updated data from a Phase 1/2 study for its breast cancer candidate zotatifin, showing a median progression-free survival of 7.4 months in patients. The therapy was well tolerated, with a low rate of treatment discontinuation due to adverse events. (EFTR)

B. Riley initiated coverage on Etsy (ETSY, Financial) with a buy rating, highlighting its significant customer base and potential for growth in ads and other services. The firm set a price target of $100, indicating a substantial upside from the current stock price. (ETSY)

MBIA Inc (MBI, Financial) declared an extraordinary cash dividend of $8.00 per share, totaling approximately $409 million. The New York Department of Financial Services approved a $550 million dividend from National Public Finance Guarantee Corporation to MBIA. (MBI)

Stock futures edged lower on Friday, with MBIA (MBI, Financial) and Lululemon Athletica (LULU, Financial) among the notable movers. MBIA's stock surged after its dividend announcement, while Lululemon's shares fell following its holiday quarter guidance. (MBI, LULU)

Deutsche Bank added Beacon Roofing Supply (BECN, Financial) to its list of top picks, while upgrading NVR (NVR, Financial) and Taylor Morrison Home (TMHC, Financial). The bank downgraded KB Home (KBH, Financial) primarily based on valuation. (BECN, BLD, BLDR, CNM, NVR, TMHC, KBH)

Lockheed Martin (LMT, Financial) is set to unveil the first F-35A Lightning II fighter jet for the Belgian Air Force, marking Belgium's entry into the F-35 program. (LMT)

Broadcom (AVGO, Financial) shared a positive outlook for 2024, with Summit Insights Group upgrading the stock to buy. The company's guidance reflects confidence in new product cycles and potential financial outperformance in the latter half of the year. (AVGO)

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