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September Showdown: Jobs Report & The Fed · The SPY Trader

• 0:00
  Hello , Spy Traders , and welcome back to the only podcast that truly understands your portfolio's hopes and dreams !
• 0:07
  I'm your host , Chuckles the Chartist , and it's 6 am on Sunday , August 31st , 2025 , Pacific time .
• 0:16
  We're gearing up for the first full trading week of September , which historically has been a bit of a tricky month for stocks , but we've got some juicy data coming our way that could change the game .
• 0:27
  This holidayshortened week , with Labor Day on Monday , is going to be all about the Fed and the August jobs report .
• 0:35
  So , let's dive into what's been making waves and what to watch out for .
• 0:39
  First up in our news roundup , the Federal Reserve is still the undisputed heavyweight champion of market sentiment .
• 0:46
  Right now , the market is pricing in an 8089% probability of a 25basispoint rate cut in September 2025 .
• 0:57
  This strong expectation is largely fueled by signs of a softening labor market .
• 1:02
  We've seen a slowdown in job creation , some downward revisions to previous payroll reports , and the unemployment rate ticked up slightly to 4.2% in July .
• 1:13
  Even some Fed officials , like Governor Christopher J.
• 1:15
  Waller , have publicly hinted at easing monetary policy .
• 1:20
  But hold your horses , folks , because it's not a clearcut case .
• 1:24
  Inflation is still playing hard to get .
• 1:27
  Core CPI stubbornly remained above the Fed's 2% target at 3.1% yearoveryear in July 2025 .
• 1:35
  And get this : the Producer Price Index , or PPI , saw a significant jump of 0.9% in July for both headline and core figures , which could really fan those inflationary flames .
• 1:50
  On the flip side , the U.S.
• 1:52
  economy showed some surprising muscle , with Q2 GDP growth revised upwards to a robust annual rate of 3.3% , a nice bounce back from a 0.5% decline in Q1 .
• 2:05
  This resilience might just make the Fed less urgent about aggressive rate cuts .
• 2:09
  Add to that the ongoing U.S.
• 2:11
  tariffs , which continue to sprinkle a little uncertainty into the mix , affecting consumer confidence and contributing to those stubborn inflation pressures .
• 2:22
  Looking ahead to this week , remember U.S.
• 2:24
  markets are closed on Monday for Labor Day .
• 2:27
  But things heat up quickly : Tuesday brings us Markit PMI Manufacturing and ISM Manufacturing PMI , both key indicators of the factory floor's health .
• 2:38
  The ISM Manufacturing PMI has been below the 50 level for months , signaling a slowdown .
• 2:44
  Wednesday , keep an eye on the JOLTS Job Openings report , another crucial piece of the labor market puzzle for the Fed .
• 2:53
  Thursday gives us the ADP NonFarm Employment Change and Weekly Unemployment Claims , often precursors to the main event , plus the ISM Services PMI .
• 3:03
  And then , Friday , drumroll please , is the big one : the August U.S.
• 3:08
  Labor Market Data , including NonFarm Employment Change , Unemployment Rate , and Average Hourly Earnings .
• 3:15
  A weakerthanexpected report here could solidify rate cut expectations and potentially give equities a boost .
• 3:23
  A strong report , however , might temper that enthusiasm and lead to market uncertainty .
• 3:29
  Now for our analysis and insights .
• 3:31
  The market is truly at a crossroads , caught between the siren song of potential rate cuts , which generally pump up equities , and the nagging concerns of persistent inflation , lingering tariff uncertainties , and September’s historical reputation as the weakest month for U.S.
• 3:48
  stocks .
• 3:49
  The August jobs report on Friday is going to be the ultimate tiebreaker .
• 3:55
  If it shows a cooling labor market , it's a green light for rate cut expectations , likely benefiting growth stocks .
• 4:02
  But if it's surprisingly strong , the Fed might pump the brakes on easing , leading to some jitters .
• 4:08
  Yeartodate , the S&P 500 has been a star , up 8.1% through July and about 10% through August , largely driven by megacap growth , technology , and communication services , all basking in the glow of AI optimism .
• 4:25
  Technology and Consumer Discretionary sectors are typically ratesensitive and could really thrive if the Fed cuts rates , with AI plays continuing to lead the charge .
• 4:36
  But let's not forget Materials and Industrials , which are showing impressive resilience thanks to strong demand from infrastructure spending , automation , and sustainability trends .
• 4:48
  They've been quietly outperforming .
• 4:50
  On the flip side , defensive sectors like Utilities and Healthcare might find themselves in the shade if interest rates decline , as investors often pivot towards highergrowth opportunities .
• 5:02
  Real Estate , particularly REITs , has seen some growth deterioration , likely due to higher mortgage rates chilling residential demand .
• 5:12
  In terms of company news , despite the shortened week , we've got some notable earnings reports .
• 5:19
  On Tuesday , watch out for NIO Inc.
• 5:22
  ( NIO ) , Signet Jewelers Limited ( SIG ) , and Academy Sports and Outdoors , Inc.
• 5:27
  ( ASO ) before the market opens .
• 5:29
  Wednesday , Salesforce ( CRM ) is a big one reporting after the close .
• 5:34
  And Thursday , we'll get key insights from Broadcom ( AVGO ) , a significant chipmaker and AI player , when they release their fiscal thirdquarter results after the close , along with others like Guidewire Software , DocuSign , Ciena , ServiceTitan , and Toro .
• 5:50
  These reports , especially Broadcom's , will offer a fresh look at AIdriven growth and overall corporate health .
• 5:58
  Alright , Spy Traders , let's talk about how to navigate this intriguing week .
• 6:03
  Given these mixed signals – potential rate cuts versus stubborn inflation and September’s historical slump – a balanced and tactical approach is your best friend .
• 6:13
  Here are Chuckles' Concrete Recommendations:1 .
• 6:18
  Monitor RateSensitive Growth Sectors with Caution : If that August jobs report hints at a cooling labor market , solidifying a September Fed cut , growthoriented sectors like tech and consumer discretionary typically get a boost .
• 6:33
  Lower borrowing costs and a potentially weaker dollar can really pump up valuations .
• 6:39
  AIrelated megacaps are particularly interesting here .
• 6:43
  My recommendation : Consider the Invesco QQQ Trust ( QQQ ) for a focused play on large nonfinancial tech or the Technology Select Sector SPDR Fund ( XLK ) for broader tech exposure .
• 6:56
  But remember , September has historically been tough for tech , so stay vigilant and actively monitor your positions.2 .
• 7:04
  Look for Opportunities in Infrastructure and Materials : The demand from infrastructure spending , automation , and sustainability isn't going anywhere .
• 7:14
  These sectors are showing real resilience .
• 7:17
  My recommendation : The Vanguard Materials ETF ( VAW ) or the Industrial Select Sector SPDR Fund ( XLI ) are solid choices to gain exposure to these trends.3 .
• 7:29
  Hedge with Gold and Diversify Internationally : September can be a challenging month for U.S.
• 7:34
  stocks , and gold often shines as a safe haven during uncertainty .
• 7:39
  Plus , international diversification can help cushion against U.S.specific risks .
• 7:45
  My recommendation : Allocate a portion of your portfolio to the SPDR Gold Shares ( GLD ) .
• 7:52
  For international exposure , consider the Vanguard Total International Stock ETF ( VXUS ) for comprehensive global equities , or if you're looking for international bonds , the iShares Core International Aggregate Bond ETF ( IAGG).4 .
• 8:10
  Exercise Caution in Defensive Sectors : While usually stable , defensive sectors like Utilities and Healthcare might not be the best performers in a ratecutting environment , as investors often chase higher growth opportunities .
• 8:26
  My recommendation : If you're holding positions in the Utilities Select Sector SPDR Fund ( XLU ) or the Health Care Select Sector SPDR Fund ( XLV ) , you might want to consider trimming them or reevaluating your allocation if a rate cut looks more certain .
• 8:43
  Overall , the next week for the U.S.
• 8:45
  stock market is going to be a fascinating ride , heavily influenced by the Fed’s signals .
• 8:52
  A strong indication of rate cuts , especially after the jobs report , could provide a welcome lift .
• 8:58
  But don't let your guard down ; inflation surprises and September’s historical tendencies mean vigilance is key .
• 9:05
  Diversification and a tactical approach , focusing on sectors with strong underlying demand or those that directly benefit from potential rate cuts , while respecting historical seasonality , will be your winning strategy .
• 9:19
  That’s all for this edition of Spy Trader !
• 9:23
  I'm Chuckles the Chartist , wishing you profitable trades and a fantastic week ahead .
• 9:28
  Catch you next time !