10 Things You Need to Know – Goodbye Rate Cuts Edition!
What a week! We just saw:
- Markets end Q2 on a positive note, showing no fear of the July 9 reciprocal tariff deadline
- A better-than-expected jobs report
- The US move closer to approving President Trump's Big Beautiful Bill
- A US-Vietnam trade deal
- Canada make a major concession to Trump with its immigration bill
- A sudden increase in bullishness among investors
And a whole lot more. So let's go over the 10 Things You Absolutely Need to Know Right Now – GOODBYE RATE CUTS EDITION.
1. Rate Cut Odds Slip
Following Friday's strong nonfarm payrolls report, which featured a lower-than-expected wage growth number, traders took a July rate cut off the table.
The CME's FedWatch tool implies a 6.7% chance of a July rate cut, down from 23.8% yesterday.
September odds are starting to slip as well.
The market is pricing in a 67.4% chance of a rate cut by September, down from 71.9% yesterday, and from 74.3% last week.
So let's ask a big question:
2. Why Is President Trump Attacking Jerome Powell?
President Trump keeps tossing verbal bombs at Fed Chair Jerome Powell, and you might be wondering why.
It's a simple game.
Assume we don't get rate cuts, and the economy and financial markets crash.
Trump assigns Powell the blame.
If we do get rate cuts, the odds favor ongoing strength — even with a recession.
According to Hartford Funds Research, cited by Bankrate
The Hartford team reviewed 22 occasions from 1929 to 2019 when the Fed first cut rates and how stocks, bonds and cash performed over the subsequent 12 months. The after-inflation return of stocks averaged 11 percent, but returns diverged when the cut was associated with a recession.
When the rate cut occurred and no recession took place, stocks averaged returns of 17 percent in the following year. But even when a recession took place, stocks were still 8 percent higher.
3. Traders Finally Turn Bullish… at an Inconvenient Time?
The latest AAII Sentiment Survey shows that 45.0% of investors are bullish.
This is well off the 19.1% lows from earlier this year.
And it's the first above-average bullish reading since January 30, 2025.
Right into the July 9 Trade Deadline.
Is that a bad thing?
We'll see. Interestingly enough…
4. Q2 Earnings Expectations Are Weird
Factset says that 110 S&P 500 companies issued guidance for the second quarter, with 59 of them being positive.
This is actually well above the 5 and 10-year averages.
So guidance was strong in the face of big fears over trade and the economy.
Meanwhile, earnings expectations are low. Which is GREAT news.
Analysts predict 5.0% Q2 earnings growth – the lowest since Q4 2023.
This is down from 9.4% on March 31.
And why is this great news?
Because there is plenty of room for companies to beat.
Which is exactly what happened in Q1.
Earnings grew 13.6% in Q1, which blew away estimates.
5. The Ultimate Trump Trade Rages On
We've talked a lot about the huge gains in brokerage stocks that benefit from increased trading volumes.
They are BOOMING this year:
- Robinhood (HOOD): +150%
- Coinbase (COIN) +43%
- Interactive Brokers (IBKR): +31%
- Webull (BULL) +22%
$SPY is up just 7%.
Why is this industry doing so well?
Because the environment is perfect. Markets are volatile but trending higher, and President Trump ensures heavy news flow.
All good for trading volumes – and these stocks.
But what's not good for these stocks? Next week's calendar:
6. Snoozefest?
What a sad, pathetic little calendar we have for next week:
Yes, we have the FOMC Meeting Minutes and a couple of bond auctions.
Maybe the big July 9 reciprocal tariff deadline will drive some action, but even that could be resolved soon.
7) Can We Talk About Bitcoin $200,000?
Bitcoin is getting lots of attention because it's flirting with key resistance around $110,000.
So let's ask a crazy question.
Is Bitcoin headed to $200,000?
JR Romero has an idea:
8. Small Caps Get a Start
So far this month, IWM is beating SPY:
3 days of action do not make a trend.
But it's worth watching because SPY has more than doubled IWM's performance over the last 10 years.
That has to flip eventually.
Right?
Put it on the radar.
9) It's Time to Write Your Trading Plan
A trading plan can't guarantee success.
But a lack of planning guarantees your failure.
So let Sami Abusaad take you through the process of writing a plan that sets you up for long-term success:
10) Happy Fourth of July!
Don't take the freedoms we have for granted.
And watch the single best scene from Saving Private Ryan:
ATTN: Serious Options Traders
There Is Just ONE Epic Trade Every Week