September 14, 2025 • 6 mins
Fresh news and strategies for traders. SPY Trader episode #1365.
This episode prepares investors for the Federal Reserve's FOMC meeting, where a 25basispoint interest rate cut is widely expected amidst mixed economic data—softening labor markets but persistent inflation. Midas Mike offers insights into market sentiment, the continued AI investment cycle, and historical September stock performance, advising listeners to expect a 'melt up' into the Fed announcement followed by potential volatility. Trading recommendations include maintaining exposure to Technology and Real Estate, considering SmallCap and Value stocks, and tactically allocating to Gold and Fixed Income for diversification and stability.
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Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
(00:00):
Welcome back , market mavens and curious investors , to Spy Trader !
I'm your host , Midas Mike , ready to help you navigate the week ahead .
It's 6 am on Sunday , September 14th , 2025 , Pacific time , and we've got a lot to unpack before the opening bell .
Grab your coffee , because the financial world is buzzing with anticipation .
(00:22):
First up , let's get you caught up on the headlines shaping our trading week .
The absolute biggest news item on everyone's radar is the Federal Reserve's Federal Open Market Committee , or FOMC , meeting this Tuesday and Wednesday , September 16th and 17th .
The market is overwhelmingly expecting a 25basispoint interest rate cut .
(00:46):
This move comes amidst a pretty mixed bag of economic data .
Inflation , while moderating slightly , is still above the Fed's target .
The Consumer Price Index , or CPI , rose 2.9% yearonyear in August , up from 2.7% in July , with core CPI at 3.1% .
(01:07):
Monthly CPI was up 0.4% in August , largely due to higher costs in gasoline , housing , and food .
On the flip side , the labor market is clearly softening .
August saw a rather meager 22,000 jobs added , following a modest 73,000 in July .
Plus , there was a massive downward revision of 911,000 fewer jobs created between April 2024 and March 2025 .
(01:35):
The unemployment rate actually ticked up to a fouryear high of 4.3% in August , and weekly unemployment claims surged to 263,000 , the highest in nearly four years .
Job growth this year has been almost entirely concentrated in healthcare , with other sectors stalling or even losing jobs .
(01:56):
Now for the analysis and insights .
The market has fully priced in that 25basispoint rate cut , which would move the federal funds rate target range from 4.25%4.50% down to 4.00%4.25% .
There's even some talk of a 50basispoint cut , though that's a longer shot .
(02:18):
The general sentiment is a classic ' don't fight the Fed' mentality , where signs of economic weakness are now being viewed as green lights for more monetary support , which is often a boon for stocks .
And let's not forget the persistent artificial intelligence , or AI , investment cycle , which continues to be a major driver , especially in tech .
(02:39):
Just look at Oracle , or ORCL , which recently reported strong earnings thanks to cloud demand .
However , we can't ignore those sticky inflation numbers .
They might put a cap on how dovish the Fed can sound in its forward guidance .
And here's a fun historical fact for you (02:54):
September has historically been the worst month for U.S.
stocks , with a 50/50 chance of losses .
Plus , the S&P 500 and Nasdaq 100 are currently showing ' overbought' readings on daily charts , suggesting that after a strong rally , future gains might be a bit harder to come by .
(03:17):
So , while we're anticipating a ' melt up ' into the Fed announcement , be ready for some potential volatility or consolidation afterward , depending on what Chair Powell says .
Now for the moment you've been waiting for (03:27):
my trading recommendations and the reasoning behind them .
For next week , I'm thinking about a few key areas .
First , Technology Sector , especially growthoriented companies .
Lower rates generally reduce the discount rate on future earnings , which is great for growth stocks .
(03:47):
The continued robust demand in AIrelated cloud services , as shown by Oracle's strong earnings , also supports this .
So , maintaining exposure to tech is a good idea .
Consider the Invesco QQQ Trust ( QQQ ) for concentrated exposure to the Nasdaq's top nonfinancial companies , or the Technology Select Sector SPDR Fund ( XLK ) for broader S&P 500 tech exposure .
(04:13):
Just watch out for a potential ' buy the rumor , sell the news' reaction postFed .
Next , the Real Estate Sector .
This sector is highly sensitive to interest rates .
Lower mortgage rates should boost the housing market , making homes more affordable and potentially increasing construction .
So , consider or maintain positions in the Vanguard Real Estate ETF ( VNQ ) , which focuses on Real Estate Investment Trusts , or REITs .
(04:42):
Third , let's talk about SmallCap and Value Stocks .
Morningstar noted in late August that smallcap stocks were trading at a 15% discount to fair value , and value stocks at a 3% discount .
A shift to monetary easing often helps smaller , more domestically focused companies .
For broader exposure that includes small and midcap companies , the Vanguard Total Stock Market ETF ( VTI ) is a solid choice .
(05:10):
Fourth , let's add some Commodities , specifically gold .
Historically , September has been a strong month for gold , and it can act as a hedge against persistent inflation concerns and potential market volatility .
Given the historical weakness of U.S.
stocks in September , a small , tactical allocation to SPDR Gold Shares ( GLD ) could offer some portfolio diversification .
(05:37):
And finally , Fixed Income , meaning bonds .
While much of the rate cut is priced in , if yields continue to decline , bond ETFs could offer stability and some capital appreciation .
J.P.
Morgan Research even anticipates lower Treasury yields as the Fed eases .
For broad fixedincome exposure , the iShares Core U.S.
(05:59):
Aggregate Bond ETF ( AGG ) or Vanguard Total Bond Market ETF ( BND ) can be great core holdings .
To sum up , the market is likely to ride this ' melt up ' wave into the Fed meeting , powered by rate cut hopes and the AI boom .
However , be ready for some choppiness right after the FOMC announcement .
(06:22):
While a 25basispoint cut is priced in , any hint of fewer future cuts or a stronger focus on stubborn inflation could temper that enthusiasm .
Given September's historical track record and those ' overbought ' indicators , a brief period of consolidation or a slight pullback after the initial Fed reaction wouldn't surprise me .
(06:45):
Stay nimble out there , folks !
That's all for this episode of Spy Trader .
I'm Midas Mike , and I'll catch you next time !
Welcome back , market mavens and curious investors , to Spy Trader !
I'm your host , Midas Mike , ready to help you navigate the week ahead .
It's 6 am on Sunday , September 14th , 2025 , Pacific time , and we've got a lot to unpack before the opening bell .
Grab your coffee , because the financial world is buzzing with anticipation .
(00:22):
First up , let's get you caught up on the headlines shaping our trading week .
The absolute biggest news item on everyone's radar is the Federal Reserve's Federal Open Market Committee , or FOMC , meeting this Tuesday and Wednesday , September 16th and 17th .
The market is overwhelmingly expecting a 25basispoint interest rate cut .
(00:46):
This move comes amidst a pretty mixed bag of economic data .
Inflation , while moderating slightly , is still above the Fed's target .
The Consumer Price Index , or CPI , rose 2.9% yearonyear in August , up from 2.7% in July , with core CPI at 3.1% .
(01:07):
Monthly CPI was up 0.4% in August , largely due to higher costs in gasoline , housing , and food .
On the flip side , the labor market is clearly softening .
August saw a rather meager 22,000 jobs added , following a modest 73,000 in July .
Plus , there was a massive downward revision of 911,000 fewer jobs created between April 2024 and March 2025 .
(01:35):
The unemployment rate actually ticked up to a fouryear high of 4.3% in August , and weekly unemployment claims surged to 263,000 , the highest in nearly four years .
Job growth this year has been almost entirely concentrated in healthcare , with other sectors stalling or even losing jobs .
(01:56):
Now for the analysis and insights .
The market has fully priced in that 25basispoint rate cut , which would move the federal funds rate target range from 4.25%4.50% down to 4.00%4.25% .
There's even some talk of a 50basispoint cut , though that's a longer shot .
(02:18):
The general sentiment is a classic ' don't fight the Fed' mentality , where signs of economic weakness are now being viewed as green lights for more monetary support , which is often a boon for stocks .
And let's not forget the persistent artificial intelligence , or AI , investment cycle , which continues to be a major driver , especially in tech .
(02:39):
Just look at Oracle , or ORCL , which recently reported strong earnings thanks to cloud demand .
However , we can't ignore those sticky inflation numbers .
They might put a cap on how dovish the Fed can sound in its forward guidance .
And here's a fun historical fact for you (02:54):
September has historically been the worst month for U.S.
stocks , with a 50/50 chance of losses .
Plus , the S&P 500 and Nasdaq 100 are currently showing ' overbought' readings on daily charts , suggesting that after a strong rally , future gains might be a bit harder to come by .
(03:17):
So , while we're anticipating a ' melt up ' into the Fed announcement , be ready for some potential volatility or consolidation afterward , depending on what Chair Powell says .
Now for the moment you've been waiting for (03:27):
my trading recommendations and the reasoning behind them .
For next week , I'm thinking about a few key areas .
First , Technology Sector , especially growthoriented companies .
Lower rates generally reduce the discount rate on future earnings , which is great for growth stocks .
(03:47):
The continued robust demand in AIrelated cloud services , as shown by Oracle's strong earnings , also supports this .
So , maintaining exposure to tech is a good idea .
Consider the Invesco QQQ Trust ( QQQ ) for concentrated exposure to the Nasdaq's top nonfinancial companies , or the Technology Select Sector SPDR Fund ( XLK ) for broader S&P 500 tech exposure .
(04:13):
Just watch out for a potential ' buy the rumor , sell the news' reaction postFed .
Next , the Real Estate Sector .
This sector is highly sensitive to interest rates .
Lower mortgage rates should boost the housing market , making homes more affordable and potentially increasing construction .
So , consider or maintain positions in the Vanguard Real Estate ETF ( VNQ ) , which focuses on Real Estate Investment Trusts , or REITs .
(04:42):
Third , let's talk about SmallCap and Value Stocks .
Morningstar noted in late August that smallcap stocks were trading at a 15% discount to fair value , and value stocks at a 3% discount .
A shift to monetary easing often helps smaller , more domestically focused companies .
For broader exposure that includes small and midcap companies , the Vanguard Total Stock Market ETF ( VTI ) is a solid choice .
(05:10):
Fourth , let's add some Commodities , specifically gold .
Historically , September has been a strong month for gold , and it can act as a hedge against persistent inflation concerns and potential market volatility .
Given the historical weakness of U.S.
stocks in September , a small , tactical allocation to SPDR Gold Shares ( GLD ) could offer some portfolio diversification .
(05:37):
And finally , Fixed Income , meaning bonds .
While much of the rate cut is priced in , if yields continue to decline , bond ETFs could offer stability and some capital appreciation .
J.P.
Morgan Research even anticipates lower Treasury yields as the Fed eases .
For broad fixedincome exposure , the iShares Core U.S.
(05:59):
Aggregate Bond ETF ( AGG ) or Vanguard Total Bond Market ETF ( BND ) can be great core holdings .
To sum up , the market is likely to ride this ' melt up ' wave into the Fed meeting , powered by rate cut hopes and the AI boom .
However , be ready for some choppiness right after the FOMC announcement .
(06:22):
While a 25basispoint cut is priced in , any hint of fewer future cuts or a stronger focus on stubborn inflation could temper that enthusiasm .
Given September's historical track record and those ' overbought ' indicators , a brief period of consolidation or a slight pullback after the initial Fed reaction wouldn't surprise me .
(06:45):
Stay nimble out there , folks !
That's all for this episode of Spy Trader .
I'm Midas Mike , and I'll catch you next time !
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