Episode Transcript
Welcome back to Spy Trader , the podcast that wakes up before the opening bell , even when there isn't one .
I'm your host , Chip ' The Chart' Changer , and it's 5 am on Saturday , December 6th , 2025 , Pacific time .
We've got a lot to unpack from a week where the market decided Christmas came early , driven by soft inflation data and the expectation of lower rates .
(00:23):
The US stock market finished the week moderately positive , reinforcing the ' soft landing' narrative .
The S&P 500 was up about 0.3% , finishing just shy of its alltime closing high , while the Nasdaq Composite led the way , rebounding with a 0.9% gain .
The primary engine driving instruments like the SPDR S&P 500 ETF Trust ( SPY ) was favorable inflation news .
(00:52):
A tame core Personal Consumption Expenditure , or PCE , price index report boosted hopes that the Federal Reserve’s inflation fight is succeeding .
This has solidified market expectations , with financial markets now pricing in an approximate 87% probability of a 25 basis point rate cut at the upcoming December FOMC meeting .
(01:15):
This anticipated shift to looser monetary policy is the main driver of optimism .
However , beneath the surface of the broad indices , we are seeing a significant ' change of leadership .
' While the megacap tech stocks dominated most of the year , we saw rotation in November .
Valueoriented stocks and smallcap indices outperformed the S&P 500 , indicating improving market breadth .
(01:42):
The Healthcare sector , captured by the Health Care Select Sector SPDR Fund ( XLV ) , was the absolute best performer in November , rising over 9% .
Tech , represented by the Technology Select Sector SPDR Fund ( XLK ) , consolidated , exemplified by a significant decline in Nvidia ( NVDA ) shares during the month , which we can call ' AI stock fatigue .
'On the company front , we had blockbuster news (02:09):
Netflix ( NFLX ) announced an agreement to buy Warner Bros.
( WBD ) in a deal valued between 72 billion and 83 billion .
As is common , Netflix shares fell while Warner Bros.
Discovery stock jumped .
Conversely , in AI hardware , Hewlett Packard Enterprise ( HPE ) reported strong Q4 results , raising its FY26 guidance , driven by a massive 150% jump in networking revenue , highlighting the continued strength in data center investment .
(02:46):
So , how do we trade this environment where a rate cut is almost certain and leadership is broadening ?
We recommend embracing the rotation .
First , maintain your core exposure to the entire US market , using instruments like the Vanguard Total Stock Market ETF ( VTI ) , which naturally captures the outperforming smallcap universe .
(03:09):
Second , actively capitalize on the value rotation .
Look towards the Financial Select Sector SPDR Fund ( XLF ) , as this sector is sensitive to economic health and benefits from improved credit conditions under lower rates .
Third , if you want exposure to the certainty of rate cuts , consider longduration fixed income .
(03:31):
Since the market is 87% confident in a rate cut , funds like the iShares 20 Year Treasury Bond ETF ( TLT ) are wellpositioned to capture price appreciation as yields fall .
Finally , regarding growth (03:45):
while the Invesco QQQ Trust ( QQQ ) may face continued volatility as the market digests the AI hype , the recent drop in stocks like Nvidia ( NVDA ) could be viewed as a potential buying opportunity , but only if it fits into your existing highconviction , longterm tech strategy .
(04:06):
Remember , investment in stocks and ETFs involves risk , so always consult a qualified advisor .
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