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Transcript

The Hawkish Cut: AI Leads Market into FOMC Decision · The SPY Trader

• 0:00
  Welcome back to Spy Trader , the podcast that helps you navigate the market while everyone else is still hitting the snooze button .
• 0:07
  I'm your host , Barry Cashflow , and it's 5 am on Tuesday , December 9th , 2025 , Pacific Time .
• 0:15
  The market is currently in a highstakes staring contest with the Federal Reserve , consolidating near alltime highs and waiting to see which way the rate decision goes .
• 0:25
  Let's jump straight into the headlines .
• 0:27
  Yesterday saw caution across the board .
• 0:31
  The S&P 500 and the Nasdaq Composite were both slightly lower , down about zeropointthree to zeropointfour percent , while the Dow Jones Industrial Average lagged , shedding nearly half a percent .
• 0:44
  The big story driving performance is a massive divergence between sectors .
• 0:49
  Technology , tracked by XLK , was the sole S&P 500 sector in the green , while Communication Services and Consumer Discretionary saw significant declines .
• 1:01
  The action was all about individual stocks and AI tailwinds .
• 1:05
  Nvidia shares climbed after receiving approval to resume shipments of its highend H200 AI chips to China under certain conditions .
• 1:14
  Keeping the AI party going , Broadcom showed strength on reports that it’s in talks to supply chips to Microsoft .
• 1:21
  Meanwhile , we saw some M&A drama play out : Warner Bros.
• 1:26
  Discovery shares surged on a new hostile takeover bid , causing competitor Netflix shares to decline .
• 1:33
  On the downside , Tesla stock dropped after a major bank downgrade , contributing to the weakness in Consumer Discretionary .
• 1:41
  The entire market focus is glued to the upcoming FOMC meeting concluding tomorrow .
• 1:48
  The bond market is pricing in a near ninety percent probability of a twentyfive basis point interest rate cut , which would be generally positive for asset prices .
• 1:59
  However , here's the caution : Core PCE inflation remains elevated at twopointeight percent , still above the Fed's two percent target .
• 2:07
  This suggests that while we might get the cut , the Fed's forward guidance for 2026 could be cautious .
• 2:13
  We call this a ' hawkish cut .
• 2:15
  ' Adding to the headwind , the 10Year Treasury Yield has been rising , climbing to around fourpointoneseven percent .
• 2:22
  Higher yields make bonds more competitive and increase borrowing costs , especially for growth stocks .
• 2:29
  Our analysis shows concentrated market leadership , largely defined by the AI and technology names .
• 2:36
  This narrow rally means the market's strength is brittle , relying heavily on just a few megacaps .
• 2:41
  We recommend a balanced approach here .
• 2:43
  First , maintain your core exposure .
• 2:46
  Despite the caution , the S&P 500 is still near record highs .
• 2:50
  Keep a foundational position in a diversified ETF like VOO or VTI to capture the overall market upside .
• 2:58
  Second , target the confirmed strength Since the rally is concentrated , utilize instruments that capture that concentrated growth , such as the Invesco QQQ Trust or the Technology Select Sector SPDR Fund , XLK .
• 3:14
  For individual stocks , Broadcom , or AVGO , looks compelling given the recent news regarding its potential Microsoft partnership .
• 3:23
  Third , consider fixed income for stability .
• 3:27
  With bond yields backed up and the Fed preparing to cut rates , longterm bonds could provide a hedge and capital appreciation .
• 3:35
  The iShares 20 Year Treasury Bond ETF , TLT , is a specific instrument that would benefit if yields fall significantly in 2026.Finally , be cautious in specific sectors .
• 3:48
  Avoid highly discretionary names or those facing companyspecific headwinds , such as the recently downgraded Tesla , or Netflix , until their competitive outlook clears up .
• 4:00
  That's it for this edition of Spy Trader .
• 4:02
  Stay disciplined , keep your powder dry , and we'll catch you on the next episode .