Is The Stock Market About To Get Worse? (Don't Panic!)
In a Nutshell
Markets are volatile after PPI came in hotter than expected, pushing rate-hike odds to 69-70 % and keeping the Nasdaq pinned at its 700 support level ahead of tomorrow’s CPI print. Traders who shorted semis/SanDisk captured 3–4 % intraday but are advised to stay flat until direction and momentum align; holding cash is the safest stance in consolidation. A CPI beat would raise borrowing costs for debt-heavy AI names, while a miss would ease pressure and could trigger a relief rally.
These notes were generated by AI and may contain inaccuracies.
Inflation came in higher than expected. The NASDAQ market was down 1.2% to lows of 706 following the PPI data report. The PPI report was released at 5.4%, exceeding the 5.3% expectation. This increase raises the probability that the Federal Reserve will raise interest rates next week from 60% to 69-70%.
The next rate decision is scheduled for Wednesday, September 16th at 2:00 p.m. Eastern time. A Federal Reserve rate increase would be bearish for markets as it increases borrowing costs for individuals and businesses. This is particularly relevant to the AI sector, which is heavily financed through debt in the billions. Higher interest rates would increase financing costs, reduce margins, and lower earnings for these companies.
The CPI data report is scheduled for the following day. The LPP trading team shorted SanDisk and semiconductor/memory chip stocks during the live trading session. Some traders achieved gains of 3-4% on SanDisk shorts, with individual profits ranging from $2,500 to $7,000. However, short positions should only be maintained if markets show continuation into the downside.
The NASDAQ has established support around the 700 level. Markets are currently consolidating rather than showing clear directional movement. Shorting is not advisable during consolidation phases when markets are looking for recovery reasons. The speaker emphasizes patience and avoiding early entries, noting that direction and momentum must align for profitable trades.
Trump announced plans to offer $5,000 dividend checks to every adult US citizen if Republicans win the midterms. This proposal would cost approximately $1.225 trillion (245 million citizens × $5,000). The speaker references previous unfulfilled promises, including a $2,000 tariff check that was never delivered. The speaker notes this would add to the existing $40 trillion deficit.
The 10-year Treasury yield is rising, which affects mortgage rates as it serves as the benchmark for mortgages. The 30-year bond yield has reached its highest level since 2007. Lenders and real estate professionals are concerned about increased borrowing costs.
Recent CPI reports have consistently performed well relative to expectations:
- July report: Expected 3.8%, actual 3.5%
- August report: Expected 3.4%, actual 3.4%
These reports have been coming in either in line with or below expectations, showing a pattern of declining inflation.
When uncertain about market direction, holding cash is the safest position. Markets at strong support levels require careful analysis before shorting. If the CPI report comes in worse than expected, markets may break below 700, potentially filling a gap down. The key principle is avoiding early entries and ensuring direction and momentum align before taking positions.
The CPI report outcome directly affects Federal Reserve policy expectations:
- Higher than expected CPI: Increases rate hike probability, causing markets to drop
- Lower than expected CPI: Decreases rate hike probability, increasing likelihood of Federal Reserve pausing rate increases
The inflation reports are crucial specifically because of their impact on Federal Reserve rate decisions.
The speaker plans to livestream coverage of the CPI report the following day. Viewers are encouraged to subscribe for updates. The LPP team offers live trading sessions every morning with a one-time payment of lifetime access. Current pricing is $299 off using promo code "deal26," bringing the cost to approximately $299 for lifetime access. Some members who joined in 2018 continue to access live sessions today.
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