August 7, 2025 • 10 mins
Fresh news and strategies for traders. SPY Trader episode #1330.
This episode covers the latest market movements, with major US indices closing higher, led by strong performance in technology and communication services, especially in AI and cloud computing sectors. It details the impact of new 'reciprocal' tariffs, Q2 earnings reports from key companies like Apple, Nvidia, Eli Lilly, and Duolingo, and macroeconomic factors including the 'concerning' July jobs report, rising inflation, and strong expectations for Federal Reserve rate cuts. The episode concludes with investment strategies, recommending diversified portfolios with a focus on resilient technology, strategic defensive plays like bonds, and a cautious approach to overvalued sectors.
Mark as Played
Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
(00:00):
Hello , Spy Traders , and welcome to another actionpacked episode of Spy Trader !
I'm your host , Market Maverick Mike , and it's 6 am on Thursday , August 7th , 2025 , Pacific time .
We've got a lot to cover this morning as the market continues its fascinating dance of optimism and economic reality .
(00:21):
Let's jump right into our market rundown .
Yesterday , Wednesday , August 6th , the major US indices closed higher , with the S&P 500 gaining a respectable 0.7% to 6,345.06 , the Dow Jones Industrial Average rising 0.2% to 44,193.12 , and the Nasdaq Composite climbing a solid 1.2% to 21,169.42 .
(00:54):
This positive momentum comes after a bit of volatility , and as of this morning , US stock futures are pointing even higher .
Tech and Communication Services are truly leading the charge , driven by insatiable demand for artificial intelligence and cloud computing .
We saw Apple , ticker AAPL , surge 5.1% yesterday after announcing another massive 100 billion investment in US companies and suppliers .
(01:24):
Semiconductor giants like Nvidia , NVDA , and Advanced Micro Devices , AMD , are also looking strong , especially with those critical new tariff exemptions for USbased manufacturing .
And don't forget Arista Networks , ANET , which has been on a tear , up 34% over the last month , clearly benefiting from the boom in data centers .
(01:50):
On the flip side , the Energy sector is expected to be a significant drag on secondquarter earnings , looking at a 25% yearoveryear decline .
Healthcare stocks , while appearing undervalued , are facing headwinds from policy uncertainties and disappointing earnings , particularly in Medicare Advantage .
(02:10):
Financial Services , Utilities , and Consumer Defensive sectors are broadly considered overvalued by many analysts .
Smallcap stocks , however , are looking attractively valued , though they might take some time to really shine .
We're seeing a mix in individual stock performance too , with 22 S&P 500 stocks hitting 52week highs , while 15 are at 52week lows , including names like Gartner , IT , Centene , CNC , and Molina Healthcare , MOH.Big news on the trade front (02:25):
President Donald Trump's new ' reciprocal ' tariffs went into effect today , Thursday , August 7th .
(02:49):
This includes a 50% tariff on Indian goods , citing continued imports of Russian oil , and a 100% tariff on computer chips .
But here's the kicker , and why tech is breathing a sigh of relief (02:59):
there's a crucial exemption for companies manufacturing in the United States , which has definitely eased investor concerns in the tech and semiconductor space .
Q2 earnings season is in full swing .
Eli Lilly , LLY , shares are plummeting despite strong earnings , thanks to disappointing results from a Phase 3 trial of its oral weightloss drug .
(03:28):
On the brighter side , Duolingo , DUOL , is soaring after beating estimates and raising its bookings guidance , and DoorDash , DASH , shares are surging after hitting several quarterly records .
Super Micro Computer , SMCI , tumbled after missing both earnings and revenue expectations , while Oportun Financial , OPRT , reported a Q2 earnings beat , showing GAAP profitability .
(03:56):
Traeger Inc.
, TRAE , missed Q2 forecasts , with revenues down 14% partly due to tariff impacts .
Finally , last week's July jobs report from the Federal Reserve was called ' concerning ' due to weakerthanexpected job additions , only 73,000 jobs , and significant downward revisions for May and June .
(04:19):
This suggests a potential turning point for the economy .
Now , for the deeper dive into our macroeconomic conditions .
Inflation is back on the radar , with the US annual rate ticking up to 2.70% in June from 2.40% in May .
Core inflation stood at 2.9% in June .
(04:39):
This uptick is largely due to businesses passing on higher import costs from the new tariffs and a rebound in gasoline prices .
Analysts are actually expecting headline and core CPI to climb above 3% by the end of 2025.The Federal Reserve , at its July 30th meeting , maintained the federal funds rate target range at 4.25%4.50% for the fifth consecutive meeting .
But here's where it gets interesting (05:07):
the market is pricing in a high probability , over 80% , of a rate cut in September , with expectations for two 25basispoint cuts this year , in September and December , and two more in 2026 .
That weaker July jobs report and moderating economic activity in the first half of the year are really intensifying the pressure on the Fed to start cutting rates .
(05:35):
As for GDP , real Gross Domestic Product saw a slight decrease of 0.5% in the first quarter of 2025 , but then rebounded nicely with a 3.0% increase in the second quarter .
Overall , growth in the first half of 2025 averaged 1.25% , which is slower than the 2.8% rate we saw in 2024 .
(06:00):
The US trade deficit for goods and services decreased in June to 60.2 billion , down from 71.7 billion in May .
However , the overall trade imbalance for the first half of the year was a hefty 38% higher than in 2024 , as businesses accelerated imports to get ahead of those impending tariffs .
(06:25):
Given all these moving parts , characterized by resilient tech , easing trade fears in specific segments , and growing expectations for Fed rate cuts despite recent inflation and slowing job growth , a diversified approach makes a lot of sense , with a lean towards growth and some smart defensive plays .
First , for exposure to that resilient technology and AI growth , because it's a primary market driver and benefiting from those new tariff exemptions for USbased manufacturing .
(06:58):
You could look at ETFs like the Invesco QQQ Trust , QQQ , for concentrated exposure to the Nasdaq's largest nonfinancial companies .
Or , for broader tech , the Technology Select Sector SPDR Fund , XLK .
For individual stocks , Nvidia , NVDA , remains a key AI player and has been positively impacted by the tariff news and investment incentives for US production .
(07:26):
Arista Networks , ANET , is also a compelling option , given its strong earnings and crucial role in data center networking , directly benefiting from AI proliferation .
Second , let's talk about strategic defensive plays with income potential .
Macroeconomic uncertainties are still out there , like inflationary pressures from tariffs and a potentially slowing labor market .
(07:51):
Balancing your portfolio with defensive assets can provide stability .
Plus , the market's anticipation of Fed rate cuts could benefit bond investments .
For ETFs , consider the iShares Core U.S.
Aggregate Bond ETF , AGG , or the Vanguard Total Bond Market ETF , BND , for diversified exposure to US investmentgrade bonds .
(08:16):
They act as a nice counterbalance to equity volatility .
As for individual financial instruments , short to mediumterm US Treasury bonds could be a smart move .
If the Fed does cut rates , the prices of existing bonds with higher yields could rise , offering capital preservation amidst economic uncertainty .
(08:37):
Finally , a cautious approach to overvalued or underperforming sectors , but with an eye for selective opportunities .
Sectors like Financial Services and Utilities appear broadly overvalued , limiting their upside .
The Energy sector faces nearterm headwinds but has a longerterm improving outlook .
(08:58):
Healthcare is undervalued but still dealing with policy uncertainty .
While the Financial Select Sector SPDR Fund , XLF , might seem tempting , analysts generally consider the sector overvalued , so be highly selective within financials .
For a potential contrarian play , monitor the Health Care Select Sector SPDR Fund , XLV , for signs of a turnaround , especially if policy clarity emerges or valuations become even more compelling .
(09:27):
However , proceed with caution .
As an example of a resilient individual stock , Walmart , WMT , has shown recent strength , breaking out and receiving positive analyst notes , indicating potential stability in consumer staples .
Overall , your strategy should include a core allocation to broad market ETFs like the Vanguard S&P 500 ETF , VOO , or the iShares CORE S&P 500 ETF , IVV , for diversified exposure .
(09:59):
Then , supplement that with tactical allocations to strong performing sectors like technology via QQQ or XLK , and defensive assets like AGG or BND .
Be selective with individual stocks , favoring those with robust earnings , strong market positions , or benefiting from specific tailwinds like AI demand or domestic investment incentives .
(10:25):
And try to avoid sectors that are broadly overvalued or facing significant , unresolved headwinds , unless you have a clear , compelling reason for a contrarian investment .
That's all for this episode of Spy Trader !
I'm Market Maverick Mike , signing off .
Stay smart , stay informed , and happy trading !
Hello , Spy Traders , and welcome to another actionpacked episode of Spy Trader !
I'm your host , Market Maverick Mike , and it's 6 am on Thursday , August 7th , 2025 , Pacific time .
We've got a lot to cover this morning as the market continues its fascinating dance of optimism and economic reality .
(00:21):
Let's jump right into our market rundown .
Yesterday , Wednesday , August 6th , the major US indices closed higher , with the S&P 500 gaining a respectable 0.7% to 6,345.06 , the Dow Jones Industrial Average rising 0.2% to 44,193.12 , and the Nasdaq Composite climbing a solid 1.2% to 21,169.42 .
(00:54):
This positive momentum comes after a bit of volatility , and as of this morning , US stock futures are pointing even higher .
Tech and Communication Services are truly leading the charge , driven by insatiable demand for artificial intelligence and cloud computing .
We saw Apple , ticker AAPL , surge 5.1% yesterday after announcing another massive 100 billion investment in US companies and suppliers .
(01:24):
Semiconductor giants like Nvidia , NVDA , and Advanced Micro Devices , AMD , are also looking strong , especially with those critical new tariff exemptions for USbased manufacturing .
And don't forget Arista Networks , ANET , which has been on a tear , up 34% over the last month , clearly benefiting from the boom in data centers .
(01:50):
On the flip side , the Energy sector is expected to be a significant drag on secondquarter earnings , looking at a 25% yearoveryear decline .
Healthcare stocks , while appearing undervalued , are facing headwinds from policy uncertainties and disappointing earnings , particularly in Medicare Advantage .
(02:10):
Financial Services , Utilities , and Consumer Defensive sectors are broadly considered overvalued by many analysts .
Smallcap stocks , however , are looking attractively valued , though they might take some time to really shine .
We're seeing a mix in individual stock performance too , with 22 S&P 500 stocks hitting 52week highs , while 15 are at 52week lows , including names like Gartner , IT , Centene , CNC , and Molina Healthcare , MOH.Big news on the trade front (02:25):
President Donald Trump's new ' reciprocal ' tariffs went into effect today , Thursday , August 7th .
(02:49):
This includes a 50% tariff on Indian goods , citing continued imports of Russian oil , and a 100% tariff on computer chips .
But here's the kicker , and why tech is breathing a sigh of relief (02:59):
there's a crucial exemption for companies manufacturing in the United States , which has definitely eased investor concerns in the tech and semiconductor space .
Q2 earnings season is in full swing .
Eli Lilly , LLY , shares are plummeting despite strong earnings , thanks to disappointing results from a Phase 3 trial of its oral weightloss drug .
(03:28):
On the brighter side , Duolingo , DUOL , is soaring after beating estimates and raising its bookings guidance , and DoorDash , DASH , shares are surging after hitting several quarterly records .
Super Micro Computer , SMCI , tumbled after missing both earnings and revenue expectations , while Oportun Financial , OPRT , reported a Q2 earnings beat , showing GAAP profitability .
(03:56):
Traeger Inc.
, TRAE , missed Q2 forecasts , with revenues down 14% partly due to tariff impacts .
Finally , last week's July jobs report from the Federal Reserve was called ' concerning ' due to weakerthanexpected job additions , only 73,000 jobs , and significant downward revisions for May and June .
(04:19):
This suggests a potential turning point for the economy .
Now , for the deeper dive into our macroeconomic conditions .
Inflation is back on the radar , with the US annual rate ticking up to 2.70% in June from 2.40% in May .
Core inflation stood at 2.9% in June .
(04:39):
This uptick is largely due to businesses passing on higher import costs from the new tariffs and a rebound in gasoline prices .
Analysts are actually expecting headline and core CPI to climb above 3% by the end of 2025.The Federal Reserve , at its July 30th meeting , maintained the federal funds rate target range at 4.25%4.50% for the fifth consecutive meeting .
But here's where it gets interesting (05:07):
the market is pricing in a high probability , over 80% , of a rate cut in September , with expectations for two 25basispoint cuts this year , in September and December , and two more in 2026 .
That weaker July jobs report and moderating economic activity in the first half of the year are really intensifying the pressure on the Fed to start cutting rates .
(05:35):
As for GDP , real Gross Domestic Product saw a slight decrease of 0.5% in the first quarter of 2025 , but then rebounded nicely with a 3.0% increase in the second quarter .
Overall , growth in the first half of 2025 averaged 1.25% , which is slower than the 2.8% rate we saw in 2024 .
(06:00):
The US trade deficit for goods and services decreased in June to 60.2 billion , down from 71.7 billion in May .
However , the overall trade imbalance for the first half of the year was a hefty 38% higher than in 2024 , as businesses accelerated imports to get ahead of those impending tariffs .
(06:25):
Given all these moving parts , characterized by resilient tech , easing trade fears in specific segments , and growing expectations for Fed rate cuts despite recent inflation and slowing job growth , a diversified approach makes a lot of sense , with a lean towards growth and some smart defensive plays .
First , for exposure to that resilient technology and AI growth , because it's a primary market driver and benefiting from those new tariff exemptions for USbased manufacturing .
(06:58):
You could look at ETFs like the Invesco QQQ Trust , QQQ , for concentrated exposure to the Nasdaq's largest nonfinancial companies .
Or , for broader tech , the Technology Select Sector SPDR Fund , XLK .
For individual stocks , Nvidia , NVDA , remains a key AI player and has been positively impacted by the tariff news and investment incentives for US production .
(07:26):
Arista Networks , ANET , is also a compelling option , given its strong earnings and crucial role in data center networking , directly benefiting from AI proliferation .
Second , let's talk about strategic defensive plays with income potential .
Macroeconomic uncertainties are still out there , like inflationary pressures from tariffs and a potentially slowing labor market .
(07:51):
Balancing your portfolio with defensive assets can provide stability .
Plus , the market's anticipation of Fed rate cuts could benefit bond investments .
For ETFs , consider the iShares Core U.S.
Aggregate Bond ETF , AGG , or the Vanguard Total Bond Market ETF , BND , for diversified exposure to US investmentgrade bonds .
(08:16):
They act as a nice counterbalance to equity volatility .
As for individual financial instruments , short to mediumterm US Treasury bonds could be a smart move .
If the Fed does cut rates , the prices of existing bonds with higher yields could rise , offering capital preservation amidst economic uncertainty .
(08:37):
Finally , a cautious approach to overvalued or underperforming sectors , but with an eye for selective opportunities .
Sectors like Financial Services and Utilities appear broadly overvalued , limiting their upside .
The Energy sector faces nearterm headwinds but has a longerterm improving outlook .
(08:58):
Healthcare is undervalued but still dealing with policy uncertainty .
While the Financial Select Sector SPDR Fund , XLF , might seem tempting , analysts generally consider the sector overvalued , so be highly selective within financials .
For a potential contrarian play , monitor the Health Care Select Sector SPDR Fund , XLV , for signs of a turnaround , especially if policy clarity emerges or valuations become even more compelling .
(09:27):
However , proceed with caution .
As an example of a resilient individual stock , Walmart , WMT , has shown recent strength , breaking out and receiving positive analyst notes , indicating potential stability in consumer staples .
Overall , your strategy should include a core allocation to broad market ETFs like the Vanguard S&P 500 ETF , VOO , or the iShares CORE S&P 500 ETF , IVV , for diversified exposure .
(09:59):
Then , supplement that with tactical allocations to strong performing sectors like technology via QQQ or XLK , and defensive assets like AGG or BND .
Be selective with individual stocks , favoring those with robust earnings , strong market positions , or benefiting from specific tailwinds like AI demand or domestic investment incentives .
(10:25):
And try to avoid sectors that are broadly overvalued or facing significant , unresolved headwinds , unless you have a clear , compelling reason for a contrarian investment .
That's all for this episode of Spy Trader !
I'm Market Maverick Mike , signing off .
Stay smart , stay informed , and happy trading !
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