Let's get to the big story breakdown.
While Wall Street is trying to inch higher after the jobs report this morning, ongoing concerns about the US labor market continue to fuel expectations that Fed rate cuts are on the horizon now.
Fed officials remain cautious, but the softening jobs figures are shaping the outlook.
Joining me on this Friday morning is Peter Tuchman, senior floor trader at Tradeos.
Peter, good morning.
Good morning to you.
What a week it's been.
It's a week, but we got that weaker than expected jobs figures.
So what does This mean for the Fed and the market?
Well, look, you know, look, we, we, it's really important for us to know, look, and I know everyone's talking about the seasonality about September, and I did a piece yesterday about the fact that seasonality is out the door in my opinion, because if you think about it, August literally was one of those months where everything possible happened to the markets, whether it was tariffs, the high high, the low lows, record highs across the board, every possible thing globally, economically happened in August.
So forget seasonality.
Let's just talk about these jobs numbers ever since.
That Fed meeting that we had a couple of Wednesdays ago when the Fed decided not to talk about interest rate cuts literally based off of there was not enough economic data at that time, literally 2 days later and almost every other day since then we've been setting the stage and unpacking a bag all around economic numbers that were weaker.
We've had unemployment going up a little bit, jobs creation is a little bit softer.
The consumer spending is a little bit softer.
So what we're seeing is the impact of tariffs on.
The consumer on the economy and on the markets is being shown.
And so therefore we set the stage with, with I'm just going to say Jacob's pillow with what's it called?
Jackson Hole, sorry, we set the stage with Jackson Hole for a complete pivot in his policy.
And so I think right now, obviously the numbers with this economic data that came out today which just puts a little bit of whipped cream on top of this Sunday, that you know easily 25% is going to be a cut on September 17th at the next Fed meeting.
I don't know whether we get any more economic data between now and then that may give them, you know, we've seen in the historically that when things set up like this, they do sometimes step in and do an earlier cut.
I don't know if that's going to happen, but I surely think that 25% is a guarantee as much as what we said, 88 to 98% probability whether we're going to have a 50% that's starting to grow up to as much as 12%, that would be super exciting.
And then clearly we're going to have another 50%, you know. at least a 100 point basis point cut by year end.
Yes, and Peter, you just mentioned the probabilities.
If we look at the CME Fed watch tool right now, we are pricing in 87.8% chance of that 25 basis point cut at the September meeting and a 12.2%% expectation for that 50%.
But as we move forward, we're going to be paying attention to inflation figures next week.
But with the market.
That record highs, what levels are you watching?
Well, you know, look, I mean, we're trading at record highs, and what I'm seeing is, you know, that I'm trading the market here on a daily basis, and one of the things that I track is the amount of order flow that comes in on the S&P 500.
And very often when the runway seems clear and there's enough economic data to show that people are comfortable investing in the stock market in the beginning of the month, you start to see allocations, whether it's mutual funds or pension funds, whatever.
Money comes in at the beginning of the month when people are comfortable with that allocation, and what I've seen since the beginning of September, we're 3 days into the month we've seen a huge influx, almost $10 billion has come in over the first three days, Tuesday, Wednesday, and Thursday each.
3.5, 6.5, and $1.7 billion came in market on close.
That is our largest auction here on the floor of the NYSE, and that's a lot of money.
That's a lot of do notional dollar value coming into the marketplace.
Contributed to the S&P eking out a record close yesterday.
We've had record closes.
We're off to about 28 record closes this year in 2025 already.
In 2024 we had 58 record closes.
Think about it.
These are real numbers.
This is real money, you know, this is with an economy that I don't think it's faltering, but it's showing the effects of tariffs.
We knew that was going to happen, whether it was going to be an interruption of the supply chain or basically the effect.
It had on consumers, it was going to affect the market.
It was going to affect the people and what that did was that sets our stage up for for the for the cut in interest rates, you know, as far as the numbers go, I mean, we're above 45,000.
The Dow, that's a record, 6500 record high.
Never seen that number in the S&P.
Nasdaq's on fire.
Mag 7 it's gone through a couple of weeks of weakness.
We're back in the game hitting record highs.
Broadcom, all that, it looks good.
Yeah, and speaking of which, Peter, on this Friday morning we are looking at gold holding about 3600 and even in crypto we're looking at Bitcoin and reclaiming key levels here.
So where's the smart money going?
You know what, look, I'm very, I'm curious to watch what retailers are doing.
The retailers are now the smart money in my opinion.
I've seen them mature retail audience from the days of COVID when they got, got smacked around by the GameStop craze and all that kind of, you know, the mean phenomenon.
They've done a lot of good work, right, and they've matured as investors and traders in this market.
We saw them not be the sellers back in February, March, April.
They were the buyers buying the dip.
OK.
What I'm seeing is that everyone is buying anything they can get their hands on because there's a good quick return on investment, gold trading at record highs each day.
Normally you'll see gold and you'll see crypto as sort of an inverse hedge against the market.
We're not seeing that.
We're seeing people buy crypto.
We're seeing them buy gold and we're seeing them buy equities and futures and so that means that people have a confidence that we are going higher.
They're putting their money to work, right?
There's nowhere else that they're going to be able to get the return that they're getting on all of these indices and all of these commodities.
And so you know it looks good, you know, and the market seems super strong.
OK, Peter, great having you on the show on this Friday and we'll have you back bright and early on Monday.
Thank you.
Happy training everybody.
