Jobs Report
The September jobs report showed a sharp slowdown in hiring. US employers added just 29,000 jobs, far below the more than 80,000 expected. The unemployment rate rose to 4.2%. July and August payrolls were revised lower by a combined 60,000 jobs. Wage growth slowed to 3% year over year, the weakest pace since 2021.
The softer labor market pushed Treasury yields lower and lifted stocks as investors scaled back expectations for another Fed move this month. The CME FedWatch tool now puts the chance of an October move at just 21%. For December, it jumps to almost 85%.
Paramount Skydance - Warner Brothers Discovery
Paramount Skydance is set to complete its roughly $110 billion purchase of Warner Brothers Discovery (WBD). The combined company will be called Skydance and trade under the ticker SKYD. David Ellison will lead it. Mattel's (MAT) CEO will join as co-CEO.
Management is looking for roughly $6 billion in cost savings while taking on more than $80 billion of debt. The deal comes after Paramount Skydance shares fell sharply following the pricing of $41.4 billion in acquisition-related debt, with some new bonds carrying interest rates as high as 9.125%. The open question is whether Ellison can combine two major media companies, cut costs and leverage, and build a stronger streaming and entertainment business while protecting the valuable Paramount and Warner Brothers brands.
Tech Financing: Broadcom and Amazon
Broadcom (AVGO) is reportedly putting together $60 billion of fresh chip financing, according to Bloomberg. The company and a handful of banks want a debt package to help Anthropic and other firms get chips and other key infrastructure. The financing has been forming for weeks and is seen as a test of investor appetite for the AI buildout. After recent public backlash, tech companies have raised hundreds of billions in debt to build data centers, chips, and servers; this adds to that.
Amazon (AMZN) is getting creative with financing. The company is reportedly looking to move about $8 billion worth of Nvidia (NVDA) chips to investors through a new vehicle to strengthen its balance sheet, according to the Financial Times. Amazon has talked to investors to gauge interest in the deal, which would have the company lease the chips back from a special purpose vehicle. The chips have either been bought or leased by Amazon and are installed in data centers across five states.
The Week Ahead
Next week brings earnings and a broad look at the consumer, travel demand, and AI infrastructure. Reports are due from Constellation Brands (STZ) for a read on alcohol consumption, AppLovin (APP), Levi Strauss (LEVI) for consumer spending on jeans, PepsiCo (PEP), and Delta (DAL), a top airline that will show how fuel prices are affecting carriers.
On the macro side: services PMI on Monday, exports and imports on Tuesday (feeding into GDP), FOMC minutes on Wednesday, and a University of Michigan consumer update on Friday. It is a much lighter week than this one. The market has been unusually sensitive to data lately, including soft data, so the Treasury market is worth watching next week, especially after Monday's services PMI.
