Financial News vs. Noise

SPY bounced right at support Wednesday and kept going yesterday. Nickileaks wrote an article yesterday that seems to put 50 bps next week on the table, not sure if that contributed or not....

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The Fed’s Rate-Cut Dilemma: Start Big or Small?-WSJ

The central bank is set to reduce rates for the first time since 2020 at its meeting on Sept. 17-18. Because officials have signaled greater confidence that they can make multiple rate cuts over the next several months, they are confronting questions over whether to cut by a traditional 0.25 percentage point or by a larger 0.5 point.

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With the FOMC and BOJ next week, and fear out the window, I would probably pick up some VIX calls if I wasn't playing golf today. If I don't today, probably will on Monday, just in case. Not really sure how the Fed can disappoint but perhaps a 25 when 50 is on the table would be negative. Or, perhaps 50 would signal that they see some problems. BOJ probably has more potential for trouble.

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In the Magnificent 7 names keep an eye on GOOGL. It held at 150 and looks like it wants to do an undercut and rally at the 200 day. I have long term positions in GOOGL and would probably look to add today if I wasn't playing golf.

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In power generation NNE continued to rally, though it did fail at the 50 day. It could probably use a break. I probably won't add dips because it doesn't have options, which allows me to cap my risk.

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I continue to think AI power generation is going to be one of the best themes going forward. Berenberg published a piece yesterday, where they said....

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While investor knowledge levels about AI DCs appear to have increased markedly in recent months, the market continues to underappreciate what lies ahead in terms of underlying volume growth, in our view – both within the four walls of DCs, and well beyond those walls too. We remain unwaveringly bullish about the electricals sub-group on a medium- to long-term view.

We appear to be witnessing something of an arms race among trillion-dollar US companies, which are showing an apparent desire to invest in the upstream power generation and infrastructure, as well as the land and DC facilities, to get these GPU’s online at a breakneck speed. This is likely to be inflationary for power pricing.

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DM me if you want a copy of the report.

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Speaking of power, this is interesting. I wouldn't be putting on any Presidential trades at the moment as this race is too close to call, but remember solar and other clean energy stocks are really a rate play. These guys have to borrow a ton so they got crushed when the Fed raised rates in 2022. Guess what, the Fed is going to start cutting.....

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A stock-market ‘Harris trade’ is starting to take shape-MarketWatch

Although they have struggled under Biden, solar stocks appeared to get a boost following Kamala Harris’s debate performance

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Haven't paid much attention to China lately, but this was interesting out of Jefferies this morning....

The IEA report on falling demand from China is interesting. We have remained in the camp that a big bazooka from China is unlikely. However, we also believe that the start of rate cutting cycle from the Fed will give some space for China to enact more stimulus measures. We are not at a stage to be positive yet, but we do not want to be bearish on China anymore.

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I haven't traded China names in a while and don't think I will go back to doing so any time soon.