Episode Transcript
Welcome back to Spy Trader , the podcast that dissects the market before the market dissects your portfolio .
I’m your host , Barry Cashflow , and it’s 5 am on Sunday , November 9th , 2025 , Pacific time , meaning we have just hours left before the opening bell rings in what promises to be one of the most stressful weeks of the quarter .
(00:21):
The short summary ?
We are at a critical inflection point , folks , and the market direction hinges entirely on inflation data .
Recent price action has been rough , marked by a techled selloff and investor sentiment is officially fragile .
The overall outlook starting the week is moderately bearish , but volatility will be extremely high .
(00:43):
The stage is set for a massive move in either direction .
The biggest news items dominating the calendar are the US Consumer Price Index , or CPI , and the Producer Price Index , PPI .
These reports are the only things that will either confirm or completely destroy the market's hopes for a nearterm pivot in Federal Reserve policy .
(01:05):
The most crucial date is Wednesday , which brings the CPI .
Consensus expects Core MonthoverMonth to tick up slightly to about 0.3% .
If we see a reading significantly above that , expect a sharp selloff in broad market and growth stocks like SPY and QQQ , as it reinforces the ' higher for longer ' rate stance .
(01:27):
Thursday brings the PPI , a leading indicator for CPI , and also Advance Retail Sales .
A largerthanexpected decline in Retail Sales , say minus 0.8% , would actually be viewed positively by the bond market , as it suggests the Fed's aggressive policy is working to cool demand .
(01:47):
When we look at sector performance , Technology , represented by XLK or QQQ , is the major risk zone .
This sector was the primary driver of the recent selloff due to stretched valuations .
Higher rates specifically punish the valuation of companies like those in the Nasdaq100 .
Longterm fundamentals are strong , especially around AI spending , but the nearterm technical setup is weak and volatile .
(02:16):
On the flip side , Healthcare , through the XLV ETF , is the classic defensive sector showing resilience .
It’s less sensitive to interest rate movements , and major holdings like Eli Lilly , which are strong due to new drug developments , keep it resilient .
Given this highstakes calendar , we need a strategy focused on defense and tactical entries .
(02:39):
First , for defense , increase exposure to defensive sectors .
The recommendation here is the Health Care Select Sector SPDR Fund , XLV .
It acts as a buffer against broad market volatility driven by the CPI report , thanks to stable holdings like Eli Lilly and UnitedHealth Group .
Second , the tactical tech trade (03:00):
prepare a plan to buy the dip in highquality growth , but only after the CPI release .
The instrument here is Invesco QQQ Trust , QQQ , or Technology Select Sector SPDR Fund , XLK .
If the CPI report comes in at or below consensus , a significant riskon rally will likely ensue , with QQQ being the primary beneficiary .
(03:27):
If CPI is hot , however , a further 5 to 10% drop in QQQ is possible , so patience is key .
Third , the inflation hedge trade (03:35):
maintain or add exposure to core fixed income .
Use the Vanguard Total Bond Market ETF , BND , or the iShares Core U.S.
Aggregate Bond ETF , AGG .
These ETFs will rally if inflation surprises to the downside , providing an excellent portfolio hedge .
(03:57):
Finally , consider Financials for relative value via the Financial Select Sector SPDR Fund , XLF .
This sector has stronger Q3 fundamentals than feared , attractive relative valuation , and is positioned well for an environment where rates stay high .
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