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Table of Contents
🔥 Here’s What’s Happening Now
So green to red after a FOMC meeting usually isn’t a good sign, neither is green to red after blowout earnings from 2 of the Mag 7. This suggest further downside risk, which we are seeing so far this morning.
AMZN earnings were the latest data to drop last night, and they disappointed a bit and are trading down over 8% at the moment.
Was feeling pretty bad about myself for adding hedges pre market yesterday, not so much now.
Still have jobs this morning, which could be a game changer one way or the other. My sense is that this “selloff” will be light, take out some froth, and end up being a decent buying opportunity.
Watch the moving averages here. Everyone has their favorite and there’s no magic to it. For short term I like the 10 day, which SPY closed under yesterday. I also like the 20 day EMA, which it is trading under this morning…..
Still a clear uptrend, but risk is now higher.
🧠 FOMC JULY 30 RECAP: Powell’s Hawkish Hold Meets Fragile Markets
Core PCE, the Fed’s preferred measure of inflation, accelerated in June. This could be reinforcement for Powell’s wait and see stance. The problem for the Fed, and the markets, is do we see tariffs and a stretched consumer mess up the economy, or do we see AI capex and development keep the momentum going? What the Fed is trying to figure out is are tariffs inflationary?
Someone has to pay the skyrocketing levies the U.S. is collecting on imports—and companies say some of the burden will fall on consumers
Bottom line, which one of these narratives is going to dominate?
or
Today we go over what the Fed’s somewhat hawkish stance means for markets.
🔥 Key Takeaways
Fed held rates at 4.25–4.50%, but Powell was notably hawkish in tone
Two dissents — first time since 1993 — signal growing pressure to ease
Tariffs flagged as a structural inflation risk
Data quality flagged as a risk due to government budget cuts
Markets had expected a dovish lean → got a cold dose of reality
🧭 Big Picture: What Changed?
🟠 Repricing of Rate Expectations
Market odds of a September cut dropped from 64% → 44%
First cut now expected in December
Dollar spiked → best weekly gain since 2022
Equities wobbled but were stabilized by tech earnings strength
🟠 Data Uncertainty Adds Volatility Risk
Powell explicitly warned that statistical agencies are underfunded
This undermines the Fed’s own tools → greater policy missteps possible
Market may need to price in not just policy error but data blindness
🟠 Tariffs = Embedded Inflation Risk
Powell: tariffs could create a permanent inflation shift
Aligns with Trump’s agenda: 50% copper tariffs, 25% on India, tariff threats on China/Europe
Reaccelerating protectionism = stagflation tail risk
🧩 Implications for Markets
✅ Likely Winners
Theme | Ticker | Reason |
|---|---|---|
Rate-resilient AI/tech | $MSFT, $META, $NVDA | Strong earnings help decouple from macro |
Insurance / P&C | $CB, $PGR, $WRB, $MKL | Rising yields, low beta, pricing power |
Defense & Trump Trades | $BWXT, $EUAD, $LMT | Aligned with protectionist and reindustrialization agenda |
Domestic infrastructure | $VST, $NEE, $CEG | Tariff-driven inflation + AI power demand boosts utilities |
Tariff hedges | $WY, $CF, $SMCI | Resource and infra names benefit from strategic stockpiling |
❌ Likely Losers
Theme | Ticker | Risk |
|---|---|---|
Global Materials | $FCX, $RIO, $VALE | Copper whipsawed by sudden tariff exemptions |
India exposure | $INFY, $WIT, $TTM | Tariffs on India exports (25%) = margin pressure |
High-duration tech | $ARKK, $SQ, $SNOW | Rising real yields + Powell’s hawkish tone = valuation pressure |
Export-heavy cyclicals | $CAT, $DE, $DAN | Uncertainty in trade policy clouds demand from key markets |
🏛️ Thematic Interpretation
🧠 1. Data Degradation = Macro Model Breakdown
Powell's mention of federal data quality deterioration is seismic. Macro models depend on clean inputs. If CPI, payrolls, and other indicators become unreliable, it opens the door to:
Policy missteps
Trading edge for firms that track alt data / private indicators
Higher volatility premium priced into risk assets
🧬 Consider AI/data firms like $PLTR (gov + modeling) and alt-data players in hedge fund infrastructure.
🔗 2. Tariffs Are Now Policy Tools, Not Just Headlines
Tariffs are no longer “tail risks” — they are becoming core instruments of inflation and geopolitical engineering. This has several effects:
Strengthens reshoring, defense, industrial themes
Re-rates P&C insurers as defensive yield plays
Disrupts supply chains → volatility in materials, autos, pharma
📈 3. Earnings Shield Fragile Positioning
Tech earnings from $MSFT, $META saved the tape. Positioning was long, but not overstretched. The AI trade remains the most durable equity bid even as macro tightens.
Continue to lean into picks-and-shovels AI names like $MOD (data center cooling), $VRT, and $SMCI (but hedge China exposure risk).
🔐 Strategic Positioning Playbook
Core Themes to Lean Into:
P&C insurance: $CB, $PGR, $KNSL, $WRB
Domestic AI infrastructure: $MOD, $VRT, $AMRC
Data resilience: $PLTR, $SNOW (with rates caveat)
Defense + Trump industrial complex: $FLR, $BWXT, $DJT
Soft landing barbell: AI + Utilities + Insurers
Trades to Watch:
Long: $MOD (post-earnings strength + AI infra), $CB/$PGR (rates + pricing)
Short or underweight: $FCX, India-exposed tech/services, $ARKK-style high-duration names
Volatility edge: Use Powell’s data degradation signal as a thesis to trade around macro releases
🧭 TL;DR: Market Outlook
Powell didn’t blink. But the FOMC cracked.
The data is fading. But tariffs are embedding.
And in a fragile, bifurcated market — policy mispricing = opportunity.
Look for low-beta alpha (insurers), real yield beneficiaries (infra, utilities), and asymmetric trade edges around volatility spikes and data release distortions.
A new report from Brendan Wood & Partners
📈 Stock Corner
Today’s stock is ARM, which cratered on earnings yesterday, but is becoming more integral to AI…..
Would watch the 200 day MA for signs of support.
From Chat GPT…..
From an investment standpoint, Arm is less about quarter-to-quarter revenue beats and more about structural positioning. With nearly half of data center CPU designs now Arm-based, the company is reaching escape velocity. Importantly, they’re not just licensing cores anymore—they’re moving up the stack into chiplets, boards, and possibly full systems, setting up a vertically integrated moat around compute performance per watt.
📬 In Case You Missed It
Always fun to see one of your ETFs make headlines……
🤝 Before You Go Some Ways I Can Help
ETFs: The Antidote to Wall Street
Inside HEAT: Our Monthly Live Call on What Wall Street Doesn’t Want You To Know
Financial HEAT Podcast https://www.youtube.com/@TuttleCap Freedom from the Wall Street Hypocrisy
Tuttle Wealth Management: Your Wealth Unshackled
Advanced HEAT Insights: Matt’s Inner Circle, Your Financial Edge
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