10AM Hour: A Tough Stretch for Lululemon, Goldman Sachs Chief Economist, Zscaler CEO on Earnings 9/4/26

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**Carl Quintanilla** (1:06)
Good Friday morning. Welcome to Squawk on the Street. I'm Carl Quintanilla with Leslie Picker and Mike Santoli. Live at Postal Night of the New York Stock Exchange, Sara Eisen and David Faber are off today. Stock's a little bit lower here, 10-year holding steady as August jobs comes in much stronger than expected. We will get Goldman's first take on the number with Chief Economist Jan Hatzius, Lulu shares plunging after earnings. We'll talk to an analyst who says there is a long road ahead, and he'll outline the key questions that he wants answered, and the CEO perplexity on the company's latest AI agents, its valuation and some updates on plans to go public.
Let's begin though with the market today as we're hovering in this range here right above 7,700. Mike, we've talked about where we've been last couple of weeks.

**Mike Santoli** (1:47)
Yeah, I mean, obviously, we sort of held the bottom end of this range this week, and actually we're still below last Friday's high in the S&P. So it's kind of this compressed range that we're in at the moment. Although I do think the jobs number, it's not translating as a pure, you know, good news is bad news, which I think is a net positive, but it absolutely means the Fed is only focused on inflation here. If you actually had any thought that you had to be mindful of what's happening in the labor market, you probably don't think that today. So rates also staying just a little bit under the recent highs. One of those elements we were just discussing is the MAG-7 and how it is essentially on a six month basis now started to outperform the S&P again. So there you see it kind of taking charge a little bit. The valuations got compressed. We got through the earning season. It feels like that's all we needed to know in terms of having people return to this group. But that being said, the dispersion within the MAG-7 is massive. It's just not really a helpful cohort anymore, except to say these are MAGACAP kind of tech platforms. And then Semi's versus Software has been this constant, it's still kind of this constant toggle back and forth. And you see they've come closer together over the last six months, but still Semi's kind of hanging in there above those lows. So the other piece of it, and I don't know how it fits into the Fed either, but you can't ignore what's going on broadly in commodities. So if you look at a five-year, this is a commodity, ETN, it tracks the index, you're pretty much at those highs. It's not a direct translation into what happens in broad inflation, but it's notable.
It's a change in tone to this market.

**Sara Eisen** (3:24)
Definitely notable. What do you make of what's going on with momentum specifically? There are a lot of notes with big question marks surrounding momentum, which had been such a key driver several months ago, and now it's just back and forth.

**Mike Santoli** (3:36)
Historic extremes of crowding and the momentum of momentum in June almost total unwind, the biggest liquidation in history. Then history says after that, you probably have a frustrating churn bouncing around period until it reasserts itself as a leading source of returns. I think that's where we are. It's been hard to disentangle that from semis and what's going on with memory because they were overrepresented there.
I think it's fascinating because those stocks, they've done nothing but if you believe the numbers gotten cheaper, and people have greater certainty about the total spend, it's really about how much are we going to extrapolate after next year for the spend, and what valuation are we going to put on this kind of maybe short-term over earning by this sector and the economy.