This morning was all about one thing: the Fed’s favorite inflation gauge, the PCE. It hit right on expectations at 2.9%, but the bigger story is how the market’s already front-running what comes next—rate cuts, liquidity waves, and rotations that will make or break September. Beneath the surface, tech weakness clashed with strength in lower-cap names, while energy and commodities set up their own trades.
Key Takeaways
PCE confirms the Fed’s dovish lean
- With inflation steady at 2.9%, odds of a September rate cut sit near 87%.
- The real focus is October—where markets are already pricing in up to 50 bps of cuts. That’s a liquidity bomb waiting to go off.
Tech showing cracks under the surface
- Nvidia, Dell, and Marvel all flagged weakness despite earnings headlines.
- Traders are watching SOXS and FNGD closely—if those inverse ETFs break higher, semis and megacaps will drag the market lower.
Energy stretched, setup for reversals
- Oil trades are flashing overbought signals on RSI and MFI, right as OPEC supply ramps into September.
- That opens the door for contrarian shorts in upstream names like Apache or Devon, or bearish ETFs like DRIP.
What I’m Watching
The next two weeks are all about jobs data and rate expectations. A hot jobs print could slow the Fed’s hand, while a weak number locks in bigger cuts for October. I’m also eyeing uranium and natural gas—both are setting up for momentum trades as energy rotations shift. And in equities, watch the Russell 2000 for signs of true risk appetite; if small caps keep lagging, the “everything bubble” crowd might get louder.
This isn’t 1929—it’s 2025. The Fed’s playbook is built on liquidity, not austerity. That means every “crisis” is met with more capital, more leverage, and higher asset prices. Fight that, and you’ll miss the greatest wealth transfer of our lifetime.
Until next time,
Garrett Baldwin
TheoTRADE