August 31, 2025 • 9 mins
Fresh news and strategies for traders. SPY Trader episode #1354.
This episode prepares listeners for September's first trading week, focusing on the Federal Reserve's potential rate cut amid a softening labor market. However, persistent inflation and robust Q2 GDP growth create uncertainty. The August jobs report on Friday is highlighted as the ultimate market tiebreaker. The podcast offers tactical recommendations for navigating a market balancing rate cut optimism for growth stocks against historical September weakness and inflation concerns, including monitoring growth sectors, investing in infrastructure, hedging with gold, and exercising caution in defensive sectors.
Mark as Played
Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
(00:00):
Hello , Spy Traders , and welcome back to the only podcast that truly understands your portfolio's hopes and dreams !
I'm your host , Chuckles the Chartist , and it's 6 am on Sunday , August 31st , 2025 , Pacific time .
We're gearing up for the first full trading week of September , which historically has been a bit of a tricky month for stocks , but we've got some juicy data coming our way that could change the game .
(00:27):
This holidayshortened week , with Labor Day on Monday , is going to be all about the Fed and the August jobs report .
So , let's dive into what's been making waves and what to watch out for .
First up in our news roundup , the Federal Reserve is still the undisputed heavyweight champion of market sentiment .
Right now , the market is pricing in an 8089% probability of a 25basispoint rate cut in September 2025 .
(00:57):
This strong expectation is largely fueled by signs of a softening labor market .
We've seen a slowdown in job creation , some downward revisions to previous payroll reports , and the unemployment rate ticked up slightly to 4.2% in July .
Even some Fed officials , like Governor Christopher J.
Waller , have publicly hinted at easing monetary policy .
(01:20):
But hold your horses , folks , because it's not a clearcut case .
Inflation is still playing hard to get .
Core CPI stubbornly remained above the Fed's 2% target at 3.1% yearoveryear in July 2025 .
And get this (01:35):
the Producer Price Index , or PPI , saw a significant jump of 0.9% in July for both headline and core figures , which could really fan those inflationary flames .
On the flip side , the U.S.
economy showed some surprising muscle , with Q2 GDP growth revised upwards to a robust annual rate of 3.3% , a nice bounce back from a 0.5% decline in Q1 .
(02:05):
This resilience might just make the Fed less urgent about aggressive rate cuts .
Add to that the ongoing U.S.
tariffs , which continue to sprinkle a little uncertainty into the mix , affecting consumer confidence and contributing to those stubborn inflation pressures .
Looking ahead to this week , remember U.S.
markets are closed on Monday for Labor Day .
But things heat up quickly (02:27):
Tuesday brings us Markit PMI Manufacturing and ISM Manufacturing PMI , both key indicators of the factory floor's health .
The ISM Manufacturing PMI has been below the 50 level for months , signaling a slowdown .
Wednesday , keep an eye on the JOLTS Job Openings report , another crucial piece of the labor market puzzle for the Fed .
(02:53):
Thursday gives us the ADP NonFarm Employment Change and Weekly Unemployment Claims , often precursors to the main event , plus the ISM Services PMI .
And then , Friday , drumroll please , is the big one (03:03):
the August U.S.
Labor Market Data , including NonFarm Employment Change , Unemployment Rate , and Average Hourly Earnings .
A weakerthanexpected report here could solidify rate cut expectations and potentially give equities a boost .
A strong report , however , might temper that enthusiasm and lead to market uncertainty .
(03:29):
Now for our analysis and insights .
The market is truly at a crossroads , caught between the siren song of potential rate cuts , which generally pump up equities , and the nagging concerns of persistent inflation , lingering tariff uncertainties , and September’s historical reputation as the weakest month for U.S.
stocks .
(03:49):
The August jobs report on Friday is going to be the ultimate tiebreaker .
If it shows a cooling labor market , it's a green light for rate cut expectations , likely benefiting growth stocks .
But if it's surprisingly strong , the Fed might pump the brakes on easing , leading to some jitters .
Yeartodate , the S&P 500 has been a star , up 8.1% through July and about 10% through August , largely driven by megacap growth , technology , and communication services , all basking in the glow of AI optimism .
(04:25):
Technology and Consumer Discretionary sectors are typically ratesensitive and could really thrive if the Fed cuts rates , with AI plays continuing to lead the charge .
But let's not forget Materials and Industrials , which are showing impressive resilience thanks to strong demand from infrastructure spending , automation , and sustainability trends .
(04:48):
They've been quietly outperforming .
On the flip side , defensive sectors like Utilities and Healthcare might find themselves in the shade if interest rates decline , as investors often pivot towards highergrowth opportunities .
Real Estate , particularly REITs , has seen some growth deterioration , likely due to higher mortgage rates chilling residential demand .
(05:12):
In terms of company news , despite the shortened week , we've got some notable earnings reports .
On Tuesday , watch out for NIO Inc.
( NIO ) , Signet Jewelers Limited ( SIG ) , and Academy Sports and Outdoors , Inc.
( ASO ) before the market opens .
Wednesday , Salesforce ( CRM ) is a big one reporting after the close .
(05:34):
And Thursday , we'll get key insights from Broadcom ( AVGO ) , a significant chipmaker and AI player , when they release their fiscal thirdquarter results after the close , along with others like Guidewire Software , DocuSign , Ciena , ServiceTitan , and Toro .
These reports , especially Broadcom's , will offer a fresh look at AIdriven growth and overall corporate health .
(05:58):
Alright , Spy Traders , let's talk about how to navigate this intriguing week .
Given these mixed signals – potential rate cuts versus stubborn inflation and September’s historical slump – a balanced and tactical approach is your best friend .
Here are Chuckles' Concrete Recommendations:1 .
Monitor RateSensitive Growth Sectors with Caution (06:18):
If that August jobs report hints at a cooling labor market , solidifying a September Fed cut , growthoriented sectors like tech and consumer discretionary typically get a boost .
Lower borrowing costs and a potentially weaker dollar can really pump up valuations .
(06:39):
AIrelated megacaps are particularly interesting here .
My recommendation (06:43):
Consider the Invesco QQQ Trust ( QQQ ) for a focused play on large nonfinancial tech or the Technology Select Sector SPDR Fund ( XLK ) for broader tech exposure .
But remember , September has historically been tough for tech , so stay vigilant and actively monitor your positions.2 .
Look for Opportunities in Infrastructure and Materials (07:04):
The demand from infrastructure spending , automation , and sustainability isn't going anywhere .
These sectors are showing real resilience .
My recommendation (07:17):
The Vanguard Materials ETF ( VAW ) or the Industrial Select Sector SPDR Fund ( XLI ) are solid choices to gain exposure to these trends.3 .
Hedge with Gold and Diversify Internationally (07:29):
September can be a challenging month for U.S.
stocks , and gold often shines as a safe haven during uncertainty .
Plus , international diversification can help cushion against U.S.specific risks .
My recommendation (07:45):
Allocate a portion of your portfolio to the SPDR Gold Shares ( GLD ) .
For international exposure , consider the Vanguard Total International Stock ETF ( VXUS ) for comprehensive global equities , or if you're looking for international bonds , the iShares Core International Aggregate Bond ETF ( IAGG).4 .
Exercise Caution in Defensive Sectors (08:10):
While usually stable , defensive sectors like Utilities and Healthcare might not be the best performers in a ratecutting environment , as investors often chase higher growth opportunities .
My recommendation (08:26):
If you're holding positions in the Utilities Select Sector SPDR Fund ( XLU ) or the Health Care Select Sector SPDR Fund ( XLV ) , you might want to consider trimming them or reevaluating your allocation if a rate cut looks more certain .
Overall , the next week for the U.S.
stock market is going to be a fascinating ride , heavily influenced by the Fed’s signals .
(08:52):
A strong indication of rate cuts , especially after the jobs report , could provide a welcome lift .
But don't let your guard down ; inflation surprises and September’s historical tendencies mean vigilance is key .
Diversification and a tactical approach , focusing on sectors with strong underlying demand or those that directly benefit from potential rate cuts , while respecting historical seasonality , will be your winning strategy .
(09:19):
That’s all for this edition of Spy Trader !
I'm Chuckles the Chartist , wishing you profitable trades and a fantastic week ahead .
Catch you next time !
Hello , Spy Traders , and welcome back to the only podcast that truly understands your portfolio's hopes and dreams !
I'm your host , Chuckles the Chartist , and it's 6 am on Sunday , August 31st , 2025 , Pacific time .
We're gearing up for the first full trading week of September , which historically has been a bit of a tricky month for stocks , but we've got some juicy data coming our way that could change the game .
(00:27):
This holidayshortened week , with Labor Day on Monday , is going to be all about the Fed and the August jobs report .
So , let's dive into what's been making waves and what to watch out for .
First up in our news roundup , the Federal Reserve is still the undisputed heavyweight champion of market sentiment .
Right now , the market is pricing in an 8089% probability of a 25basispoint rate cut in September 2025 .
(00:57):
This strong expectation is largely fueled by signs of a softening labor market .
We've seen a slowdown in job creation , some downward revisions to previous payroll reports , and the unemployment rate ticked up slightly to 4.2% in July .
Even some Fed officials , like Governor Christopher J.
Waller , have publicly hinted at easing monetary policy .
(01:20):
But hold your horses , folks , because it's not a clearcut case .
Inflation is still playing hard to get .
Core CPI stubbornly remained above the Fed's 2% target at 3.1% yearoveryear in July 2025 .
And get this (01:35):
the Producer Price Index , or PPI , saw a significant jump of 0.9% in July for both headline and core figures , which could really fan those inflationary flames .
On the flip side , the U.S.
economy showed some surprising muscle , with Q2 GDP growth revised upwards to a robust annual rate of 3.3% , a nice bounce back from a 0.5% decline in Q1 .
(02:05):
This resilience might just make the Fed less urgent about aggressive rate cuts .
Add to that the ongoing U.S.
tariffs , which continue to sprinkle a little uncertainty into the mix , affecting consumer confidence and contributing to those stubborn inflation pressures .
Looking ahead to this week , remember U.S.
markets are closed on Monday for Labor Day .
But things heat up quickly (02:27):
Tuesday brings us Markit PMI Manufacturing and ISM Manufacturing PMI , both key indicators of the factory floor's health .
The ISM Manufacturing PMI has been below the 50 level for months , signaling a slowdown .
Wednesday , keep an eye on the JOLTS Job Openings report , another crucial piece of the labor market puzzle for the Fed .
(02:53):
Thursday gives us the ADP NonFarm Employment Change and Weekly Unemployment Claims , often precursors to the main event , plus the ISM Services PMI .
And then , Friday , drumroll please , is the big one (03:03):
the August U.S.
Labor Market Data , including NonFarm Employment Change , Unemployment Rate , and Average Hourly Earnings .
A weakerthanexpected report here could solidify rate cut expectations and potentially give equities a boost .
A strong report , however , might temper that enthusiasm and lead to market uncertainty .
(03:29):
Now for our analysis and insights .
The market is truly at a crossroads , caught between the siren song of potential rate cuts , which generally pump up equities , and the nagging concerns of persistent inflation , lingering tariff uncertainties , and September’s historical reputation as the weakest month for U.S.
stocks .
(03:49):
The August jobs report on Friday is going to be the ultimate tiebreaker .
If it shows a cooling labor market , it's a green light for rate cut expectations , likely benefiting growth stocks .
But if it's surprisingly strong , the Fed might pump the brakes on easing , leading to some jitters .
Yeartodate , the S&P 500 has been a star , up 8.1% through July and about 10% through August , largely driven by megacap growth , technology , and communication services , all basking in the glow of AI optimism .
(04:25):
Technology and Consumer Discretionary sectors are typically ratesensitive and could really thrive if the Fed cuts rates , with AI plays continuing to lead the charge .
But let's not forget Materials and Industrials , which are showing impressive resilience thanks to strong demand from infrastructure spending , automation , and sustainability trends .
(04:48):
They've been quietly outperforming .
On the flip side , defensive sectors like Utilities and Healthcare might find themselves in the shade if interest rates decline , as investors often pivot towards highergrowth opportunities .
Real Estate , particularly REITs , has seen some growth deterioration , likely due to higher mortgage rates chilling residential demand .
(05:12):
In terms of company news , despite the shortened week , we've got some notable earnings reports .
On Tuesday , watch out for NIO Inc.
( NIO ) , Signet Jewelers Limited ( SIG ) , and Academy Sports and Outdoors , Inc.
( ASO ) before the market opens .
Wednesday , Salesforce ( CRM ) is a big one reporting after the close .
(05:34):
And Thursday , we'll get key insights from Broadcom ( AVGO ) , a significant chipmaker and AI player , when they release their fiscal thirdquarter results after the close , along with others like Guidewire Software , DocuSign , Ciena , ServiceTitan , and Toro .
These reports , especially Broadcom's , will offer a fresh look at AIdriven growth and overall corporate health .
(05:58):
Alright , Spy Traders , let's talk about how to navigate this intriguing week .
Given these mixed signals – potential rate cuts versus stubborn inflation and September’s historical slump – a balanced and tactical approach is your best friend .
Here are Chuckles' Concrete Recommendations:1 .
Monitor RateSensitive Growth Sectors with Caution (06:18):
If that August jobs report hints at a cooling labor market , solidifying a September Fed cut , growthoriented sectors like tech and consumer discretionary typically get a boost .
Lower borrowing costs and a potentially weaker dollar can really pump up valuations .
(06:39):
AIrelated megacaps are particularly interesting here .
My recommendation (06:43):
Consider the Invesco QQQ Trust ( QQQ ) for a focused play on large nonfinancial tech or the Technology Select Sector SPDR Fund ( XLK ) for broader tech exposure .
But remember , September has historically been tough for tech , so stay vigilant and actively monitor your positions.2 .
Look for Opportunities in Infrastructure and Materials (07:04):
The demand from infrastructure spending , automation , and sustainability isn't going anywhere .
These sectors are showing real resilience .
My recommendation (07:17):
The Vanguard Materials ETF ( VAW ) or the Industrial Select Sector SPDR Fund ( XLI ) are solid choices to gain exposure to these trends.3 .
Hedge with Gold and Diversify Internationally (07:29):
September can be a challenging month for U.S.
stocks , and gold often shines as a safe haven during uncertainty .
Plus , international diversification can help cushion against U.S.specific risks .
My recommendation (07:45):
Allocate a portion of your portfolio to the SPDR Gold Shares ( GLD ) .
For international exposure , consider the Vanguard Total International Stock ETF ( VXUS ) for comprehensive global equities , or if you're looking for international bonds , the iShares Core International Aggregate Bond ETF ( IAGG).4 .
Exercise Caution in Defensive Sectors (08:10):
While usually stable , defensive sectors like Utilities and Healthcare might not be the best performers in a ratecutting environment , as investors often chase higher growth opportunities .
My recommendation (08:26):
If you're holding positions in the Utilities Select Sector SPDR Fund ( XLU ) or the Health Care Select Sector SPDR Fund ( XLV ) , you might want to consider trimming them or reevaluating your allocation if a rate cut looks more certain .
Overall , the next week for the U.S.
stock market is going to be a fascinating ride , heavily influenced by the Fed’s signals .
(08:52):
A strong indication of rate cuts , especially after the jobs report , could provide a welcome lift .
But don't let your guard down ; inflation surprises and September’s historical tendencies mean vigilance is key .
Diversification and a tactical approach , focusing on sectors with strong underlying demand or those that directly benefit from potential rate cuts , while respecting historical seasonality , will be your winning strategy .
(09:19):
That’s all for this edition of Spy Trader !
I'm Chuckles the Chartist , wishing you profitable trades and a fantastic week ahead .
Catch you next time !
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