Latest / The SPY Trader / Navigating the ’Positively Cautious’ Market

Transcript

Navigating the ’Positively Cautious’ Market · The SPY Trader

• 0:00
  Hey there , Spy Traders !
• 0:02
  Welcome back to your favorite financial podcast , Spy Trader , with your host , Rocky Markets .
• 0:08
  It's 6 am on Wednesday , September 17th , 2025 , Pacific time , and wow , do we have a lot to unpack this morning !
• 0:17
  The market is buzzing , and we're here to break down what's happening and where the smart money is moving .
• 0:22
  Let's jump right into the key headlines .
• 0:25
  The biggest news everyone is watching today is the Federal Reserve meeting , where markets are pricing in a 96% chance of a 25 basis point interest rate cut .
• 0:37
  This would be the first cut of the year , and it’s largely been the fuel for our recent market rally .
• 0:44
  Speaking of rallies , the S&P 500 and Nasdaq Composite both hit alltime highs recently , though we saw a slight slip yesterday , Tuesday , September 16th , as investors took a little profit ahead of the Fed announcement .
• 0:59
  On the company front , we've had some big movers .
• 1:03
  Oracle , ORCL , absolutely soared on Monday after a ' blowout ' revenue growth forecast for its cloud infrastructure and a massive 300 billion dollar computing deal with OpenAI , really reinforcing that AI theme .
• 1:18
  Tesla , TSLA , also had a great run , surging 7.4% on Friday after its Chair publicly supported Elon Musk , and then another 3% on Monday when Musk himself bought a billion dollars in stock .
• 1:33
  Alphabet , GOOGL , joined the exclusive 3 trillion market cap club on Monday , partly thanks to a favorable antitrust ruling earlier this month .
• 1:44
  However , not everyone was up ; Nvidia , NVDA , slipped 1.6% yesterday on reports of Chinese antitrust accusations from 2020 .
• 1:56
  We also saw Seagate Technology Holdings , STX , and Western Digital , WDC , both hit record highs on Monday , driven by strong demand for large drives needed in AI data centers and reported price hikes .
• 2:12
  Even energy companies like APA and OXY rose yesterday as crude oil futures climbed due to concerns over global supply after Ukrainian drone strikes on Russian facilities .
• 2:25
  Good news for trade too , as positive developments in U.S.China trade talks , including an agreement on TikTok , helped boost investor sentiment on Monday .
• 2:35
  Now for the big picture and what it all means for your money .
• 2:38
  We're in a really interesting , delicate balance right now .
• 2:42
  On one hand , the expected Fed rate cut is generally bullish for equities , especially growth stocks like those in technology and communication services .
• 2:53
  These sectors have been leading the charge , with Communication Services up 24.7% yeartodate and Technology up 17.5% through September 12th .
• 3:04
  The AI enthusiasm , as seen with Oracle , Seagate , and Western Digital , continues to be a huge driver .
• 3:12
  On the flip side , the reason for the rate cut — a weakening labor market and persistent inflation — introduces caution .
• 3:20
  US consumer price index , CPI , rose to 2.9% yearoveryear in August , with core CPI at 3.1% , both still above the Fed's 2% target .
• 3:32
  And the labor market is clearly softening .
• 3:35
  We only added 22,000 jobs in August , far below expectations , and a massive downward revision showed 911,000 fewer jobs were created than previously reported through March 2025 .
• 3:50
  The unemployment rate also climbed to 4.3% in August , its highest since late 2021 .
• 3:57
  So , while GDP growth is looking decent , with the Atlanta Fed's GDPNow model estimating Q3 growth at 3.4% , consumer sentiment , particularly among lower and middleincome households , actually fell in September .
• 4:15
  This mixed bag leads to a ' positively cautious ' outlook , with some even whispering about the risk of ' stagflation ' – high inflation with slow growth .
• 4:24
  Now , let's talk about what this means for your portfolio .
• 4:28
  We've got some concrete recommendations for navigating these waters : First , maintain exposure to the broad market , but with a tilt towards growth and quality tech .
• 4:38
  The overall market is at record highs , and rate cuts historically favor equities .
• 4:45
  The technology and communication services sectors are still showing strong momentum , particularly those involved in AI .
• 4:53
  For broad exposure , consider ETFs like the Vanguard S&P 500 ETF ( VOO ) or the iShares CORE S&P 500 ETF ( IVV ) .
• 5:06
  If you want more concentrated tech and growth , the Invesco QQQ Trust ( QQQ ) is a solid choice , or specific stocks like Alphabet ( GOOGL ) which recently hit that 3 trillion market cap , showcasing its resilience .
• 5:21
  For a more targeted tech play , the Technology Select Sector SPDR Fund ( XLK ) is excellent , capitalizing on companies like Oracle ( ORCL ) with its strong cloud performance and AI deals .
• 5:35
  Second , consider rotational plays into potentially undervalued sectors .
• 5:40
  While largecap tech has led , we're seeing signs that the rally could broaden .
• 5:45
  Smallcap and value stocks have shown recent outperformance in August and remain attractive .
• 5:50
  The overall market shows smallcaps are at about a 15% discount to fair value .
• 5:56
  For broad market exposure across all market caps , the Vanguard Total Stock Market ETF ( VTI ) is a great option .
• 6:05
  For specific smallcap exposure , consider an ETF like the iShares Russell 2000 ETF ( IWM ) .
• 6:13
  We've also seen tactical opportunities ; for instance , the Energy Select Sector SPDR Fund ( XLE ) could be interesting , given how energy companies like APA Corp.
• 6:24
  ( APA ) and Occidental Petroleum ( OXY ) recently saw boosts from rising crude oil prices due to geopolitical concerns .
• 6:34
  Third , maintain a balanced portfolio with fixed income for stability , but be mindful of duration .
• 6:40
  Despite the rate cuts , inflation is still sticky , and the economic outlook carries risks .
• 6:47
  Fixed income provides a buffer .
• 6:49
  For diversified bond exposure , consider the iShares Core U.S.
• 6:53
  Aggregate Bond ETF ( AGG ) or the Vanguard Total Bond Market ETF ( BND ) .
• 7:01
  Given anticipated rate cuts , shorterduration bond ETFs might be preferred initially to reduce interest rate risk , as longterm yields have already fallen .
• 7:11
  And finally , hedge against inflation and geopolitical risks .
• 7:15
  With headline inflation at 2.9% and core at 3.1% , it's still a concern .
• 7:22
  Geopolitical tensions , like the drone strikes impacting oil , can also cause commodity price spikes .
• 7:29
  Gold remains a traditional safehaven asset , which has hit record highs recently .
• 7:35
  To gain exposure , the SPDR Gold Shares ( GLD ) is a widely used instrument .
• 7:41
  So , the bottom line for Spy Traders is a ' positively cautious ' approach .
• 7:45
  Focus on highquality growth , diversify across the broad market , but stay alert for shifts into undervalued segments and tactical plays .
• 7:54
  And don't forget those hedges !
• 7:56
  That's it for today's Spy Trader .
• 7:59
  Keep those portfolios diversified , stay sharp , and we'll catch you next time !