Let's get to the big story breakdown.
While US stocks surging to record highs on Thursday, fresh inflation and jobless data boosted expectations for rate cuts from the Fed.
Now August CPI showed inflation remains sticky with that reading coming in hotter than expected month over month, but annual inflation still meeting expectations, and we saw jobless claims tell a different story. applications for unemployment claims jumping to their highest level in nearly 4 years.
And despite the uptake.
Prices, traders now see a higher chance that the Fed cuts rates by 25 basis points next week, and most do expect 3 cuts by year end.
Well, joining me on this Friday morning is Peter Tuchman, senior floor trader at Trade Moss.
Peter, good morning.
Happy Friday.
Friday.
Where is your 46,000 Dow hat?
I have to be honest.
I have had a hat for every Dow since probably 16,000, and I did this one caught me off guard.
I have a 48,000, but I don't have a 46,000.
I know you have the records.
I apologize to you all.
It'll never happen again.
Well, let's talk about this, right, because we saw all-time highs for the Dow, Nasdaq and S&P 500.
Is this a melt up?
What's happening?
It's a complete melt up, you know, look, we know that we're in an interest rate cut cycle, right?
That is about to happen and it's happening because of these. numbers that we're seeing in the in the economics, we're seeing the impact of tariffs across the board on consumer spending on just the quality of the consumer's life in general, the impact is starting to be felt.
We haven't felt it up until now and so what we're setting the stage for, look, it's almost like a buyer the room or sell the news, you know, you look at the market, you keep as a trader, you're always looking like so.
Look, if you think about it, you know, markets, any big pullbacks that we've seen, right, and crashes, and I don't use that word lightly happened.
The only component that is the same about every crash or every pullback that we've had is that markets were trading at record highs before they happen.
Markets go up until they stop, right?
This one feels like it's just never going to stop.
Everyone is buying everything there is.
They're buying crypto, they're buying gold, they're buying equities, they're buying futures, and it's amazing.
So.
I think there's a bit of a rational euphoria going on, you know.
Markets are forward looking, right?
And so, you know, earnings have been 80% of the earnings have been beats, right?
Guidance has been super solid.
We're getting a lot.
We talked about this a while ago.
If we were able to get to this point and start checking off every box, right, as far as deals go, we had Mr.
Lutnick on the floor yesterday, right?
We've got deals with Japan, we've got deals with the EU, UK, a deal with.
India on the works, you know, maybe we'll get a deal with China.
So you know all of those deals, this has been what was what caused that what I call the mini crash February, March, April, right?
But we came out of that, we bounced back way higher than that.
You're also seeing a massive capex expenditure and promise by the Googles, by the Oracles, by the Microsoft.
Look what happened in Oracle the other day.
That was an AI play, right?
And you realize that that was the 2nd time that was the.
So it was the 2nd stock ever in history to have the largest capitalization growth in one day.
The value of Oracle went up $300 billion.
I don't care about Mr.
Ellis in all due respect, that he became the richest man on Earth.
That's fine and good.
It doesn't impact my life, but a $300 billion increase in value in the company, I think it's more important to note that it was all still about AI.
AI seems like the. that keeps on giving and we know when I speak to Dan all the time that we're only in the 2nd inning of this game that's going extra innings as far as that goes, each company from Apple, from Facebook, from all of these, they're all making massive promises in that space, and all of these things are showing, you know, if you're forward looking, all of this shows that the economy is going to be much better than it is right now.
Yeah, and Peter, you just mentioned Oracle.
In one day after they reported earnings, we saw that stock jump over 35% before pulling back, but it was very interesting, wasn't it, because they missed on the top and bottom line, and it was all about the forward looking aspect of it.
And since you mentioned Dana, I have to ask you another name that we watched earlier this week was AO, right?
It didn't just rally a single digit percentage. double digit, triple digits.
It was quadruple percentage gain, right?
Correct.
So I believe it went from $1 to $80 right?
I mean, look, you're seeing a number of things.
I believe Tom Lee also made, there's this big investment going in in in uh I don't even know what you call it, identification.
I think it well I don't know what the sector is, but you, you know, look, coins coins are big, the.
As I said, it's people are putting money into some.
These are all Dan Ives has always talked about it.
There is the Nvidia play, the big AI play, and then there's the secondary and tertiary derivative plays in the AI space, and these coins are those.
And so you're seeing people want to get exposure.
They may not be able to afford and buy some of the higher magnet 7 names, but they want exposure to anything that.
Relates to AI and it's now, you know, and it's now coming in the form of these coins world coin and a number of other and a code as well.
Yeah, and Peter, finally we have less than 60 seconds here, but next week it's all about the ed isn't it?
The two day meeting kicking off on Tuesday.
Great decision and press from Powell on Wednesday.
So ahead of the weekend, how are you going to go into the weekend and we're going to be back here on Monday.
So how are you getting ready?
You know what, look, I'm going to take it one day at a time here because you know it's fascinating to watch the way the markets are, as I said, as a trader we're always looking for when stocks trade at record highs for a long period of time.
It's got to pull back.
It's got to pull back.
This market is not pulling back yet, but my gut is that you know that there's very often it's like buy the rumor sell the news.
There's an old Wall Street adage.
We're coming into an event.
People are buying the market up and then once the event happens, the market tends.
Pull back.
We have, there were so many eyes on this Fed meeting, right, with anticipation and anxiety and all that.
And so I believe he will deliver, right?
My gut is it's going to be a 50% 50 basis point cut.
We don't know.
I think the economic data has shown us that 25%, we know that's a minimum, right, but 50% could be and because now they start talking about as many as 3 to 4 by the end of the year.
So how is that going to break down?
I believe in 20.
24 2024 we had a 50 and then 2 25s right we remember that from September we had a 100 basis point cut from September until the end of the year.
Maybe that's how we're going to do it now.
Sometimes it's better to rip the band-aid off and then get aggressive and then trickle down until the end of the year.
But you know what, all eyes are on Wednesday, and Peter, you and I will be together ahead of the open on Monday.
So let's see how markets close today.
Thank you so much.
Happy trading.
