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Pricing In The Cut: How To Trade A Fed Pivot · The SPY Trader

• 0:00
  Welcome back to Spy Trader , the podcast that decodes the market before your first cup of coffee .
• 0:06
  I'm your host , Barry Bullish , and it's 5 am on Monday , December 8th , 2025 , Pacific .
• 0:14
  We are starting the week in a state of elevated optimism , fueled almost entirely by the prospect of cheaper money .
• 0:23
  All major indices wrapped up the previous week with strong gains , with the S&P 500 now up approximately seventeen percent yeartodate and the Nasdaq Composite leading the charge , up about twentytwo percent .
• 0:37
  The big story driving this buoyancy is the Federal Reserve .
• 0:41
  The market is pricing in an approximately eightyeight percent chance that the Fed will cut interest rates by twentyfive basis points in its meeting this week .
• 0:51
  This is largely supported by recent data showing the Core PCE , the Fed’s preferred inflation gauge , coming in soft at point two percent monthovermonth , and a visibly cooling labor market , which saw the largest monthly drop in private payrolls since March 2023 .
• 1:08
  These weakening signs are paradoxically great news for equity investors hoping for monetary easing .
• 1:15
  On the company front , the AI theme remains dominant .
• 1:20
  Analysts are still crowning NVIDIA the ' AI hardware king , ' raising price targets on sustained bullishness .
• 1:27
  We also saw Salesforce jump over five percent on strong earnings results , signaling continued strength in enterprise software spending .
• 1:36
  Meanwhile , Meta Platforms gained ground after reporting cost cuts in its capitalintensive metaverse division , suggesting a focus on operational efficiency .
• 1:48
  However , there was a hiccup : Netflix fell nearly three percent following reports of heavy skepticism from the Trump administration regarding regulatory approval for its massive seventytwo billion dollar deal for Warner Bros Discovery .
• 2:01
  Now , let’s talk strategy .
• 2:03
  This rally has been incredibly concentrated , following a Kshaped pattern .
• 2:09
  The leaders are Information Technology , up twentysix point four percent , and Communication Services , up twenty point four percent .
• 2:18
  Industrials are also performing well , rated Outperform as they benefit from government infrastructure spending .
• 2:24
  On the other end of the Kshape , we have the laggards .
• 2:28
  Real Estate is highly interestrate sensitive and rated Underperform , barely up one point seven percent yeartodate .
• 2:36
  Consumer Staples are also lagging , rated Marketperform , facing sticky inflation and limited growth upside in this riskon environment .
• 2:46
  Given the heavy anticipation of a Fed cut , our trading recommendations lean toward tactical growth and selective cyclicals .
• 2:53
  First , capitalize on those rate cut hopes .
• 2:56
  We recommend maintaining a core position in broad market funds like Vanguard S&P 500 ETF , VOO , but tactically overweighting the Communication Services Select Sector SPDR Fund , XLC , which is rated Outperform , featuring giants like Meta .
• 3:15
  Also look for highquality industrials like Caterpillar or Deere .
• 3:19
  Second , employ a barbell strategy .
• 3:22
  Keep your exposure to the primary growth engine of the market through the Invesco QQQ Trust , which is heavily tech focused , and specifically maintain a position in NVIDIA .
• 3:34
  To balance the high valuation risk , use the expected rate cuts to enter the bond market for diversification .
• 3:41
  Initiate or increase positions in broad bond ETFs like the iShares Core U.S.
• 3:46
  Aggregate Bond ETF , AGG .
• 3:49
  Finally , know what to avoid .
• 3:51
  We recommend underweighting sectors facing structural and interest rate headwinds , specifically the Vanguard Real Estate ETF , VNQ , and the Utilities Select Sector SPDR ETF , XLU , both of which are rated Underperform .
• 4:06
  That's your fiveminute market briefing .
• 4:09
  Stay sharp and trade smart .