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The Goldilocks Rally: Cooling Inflation Sparks Market Surge · The SPY Trader

• 0:00
  Top of the morning to you , market enthusiasts !
• 0:03
  This is your host , Sunny Sideup , and you are listening to Spy Trader .
• 0:08
  It is currently 6 am on Saturday , May 30th , 2026 , here on the Pacific coast .
• 0:15
  I hope you have your favorite breakfast treat ready because we just wrapped up a week that felt like a big , warm hug for our portfolios .
• 0:23
  We are seeing a real shift in the air , moving away from that nagging inflation anxiety we have been dealing with and toward some genuine , cautious optimism .
• 0:34
  The final trading days of May turned into a relief rally , as the data suggests our economy is cooling down just enough to let the Federal Reserve breathe a sigh of relief and maybe , just maybe , start looking at interest rate cuts later this year .
• 0:49
  Let’s look at the scoreboard for the week ending May 29th .
• 0:54
  The broad market , which we track through the SPDR S&P 500 ETF Trust , or SPY , ended the week up 1.8 percent .
• 1:02
  That effectively erased the losses we saw earlier in the month .
• 1:06
  Tech fans had even more to celebrate , as the Invesco QQQ Trust outperformed the rest of the pack , rising 2.4 percent .
• 1:14
  When we look at the different sectors , the Technology Select Sector SPDR Fund , known as XLK , was the clear leader .
• 1:23
  With Treasury yields cooling off , those highgrowth software and semiconductor companies finally found the support they needed .
• 1:31
  On the flip side , the energy sector , represented by XLE , lagged behind .
• 1:37
  Crude oil softened to about 74 dollars per barrel because of supply increases from nonOPEC producers , which put a bit of a damper on companies like ExxonMobil and Chevron .
• 1:50
  The big story of the week , the one everyone was waiting for , was the release of the Personal Consumption Expenditures Price Index on Friday .
• 1:58
  This is the Fed’s favorite inflation gauge , and it gave us exactly what we wanted .
• 2:03
  Core PCE rose just 0.1 percent for the month , bringing the yearoveryear rate to 2.3 percent .
• 2:10
  It is what we call a Goldilocks scenario : cool enough to show inflation is heading toward that 2 percent target , but not so cold that it screams recession .
• 2:21
  This sparked a massive surge in the iShares 20 plus Year Treasury Bond ETF , or TLT .
• 2:27
  When yields fall , bond prices rise , and TLT was the star of the show on Friday .
• 2:33
  We also had some exciting news from individual companies .
• 2:37
  Nvidia , the market's favorite AI bellwether , rose 4 percent this week .
• 2:42
  Investors are buzzing about the massive deployment of their new Rubin architecture , which is the successor to the Blackwell chips .
• 2:50
  It seems the demand for specialized AI chips is not slowing down one bit .
• 2:55
  Meanwhile , Costco reported earnings on May 28th and showed a 7 percent growth in sales .
• 3:02
  This tells us that even folks with more money are looking for a bargain right now , which helps stabilize broad holdings like the Vanguard Total Stock Market ETF , or VTI .
• 3:13
  Salesforce also managed a 3 percent rebound on Friday after some initial worries about how they are making money from AI .
• 3:21
  So , what does this mean for your wallet ?
• 3:23
  First , we are looking at the duration play .
• 3:26
  With inflation trending down , the risk of more rate hikes has basically vanished .
• 3:31
  If you have been sitting on a lot of cash , it might be time to look at the Vanguard Real Estate ETF , or VNQ .
• 3:38
  Real estate is very sensitive to interest rates , and as rates fall , the dividends on REITs look much more attractive , which usually drives the price up .
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  Second , we have the growth quality play .
• 3:51
  We are moving into a phase where companies have to prove they can make money from AI .
• 3:55
  I recommend using the Invesco QQQ Trust for broad exposure , but if you want something a bit more focused on the software winners , look at the Technology Select Sector SPDR Fund .
• 4:07
  For a specific stock , Nvidia remains the king of AI infrastructure , but if you want a little less volatility , Microsoft is a great core component of both SPY and XLK .
• 4:20
  Finally , do not forget about international diversification .
• 4:24
  A cooling U.S.
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  inflation rate usually makes the U.S.
• 4:27
  dollar a bit weaker , which is great news for emerging markets .
• 4:31
  I would suggest looking at the Vanguard FTSE Emerging Markets ETF , or VWO .
• 4:38
  It offers a nice discount compared to the U.S.
• 4:40
  market right now .
• 4:42
  In summary , the last week of May has given us a green light .
• 4:47
  Between cooling inflation and solid earnings from companies like Costco and Nvidia , the environment is looking favorable for the summer .
• 4:55
  It might be time to move away from heavy cash and into assets like TLT and VNQ that benefit from falling rates .
• 5:03
  Thanks for tuning in to Spy Trader .
• 5:06
  I am Sunny Sideup , wishing you a fantastic weekend and happy trading !