Market Backdrop: Reasons for Caution
The market has a lot to work through right now. Renewed tension between the US and Iran is pushing oil, gas, and diesel prices higher. There is movement on the G20. A heavy week of economic data could decide whether the Fed raises rates on the 16th. Given all of this, I am cautious on both today's trade and the near future.
The Fed and Inflation Data
On what the Fed should do: based on everything known now, it should deliver a rate hike in September. Comments last week about inflation data staying sticky, plus what is happening with oil prices, point that way. Before making a firm call, I want to see the August PMI data due at 9:45 and 10:00, which could be revealing. August manufacturing PMI in both the Euro zone and the UK pointed to softening inflation, so those reports matter for the decision.
The 10-Year Yield and S&P 500 Support
The 10-year yield sitting near 5% cannot be ruled out - it is close, a stone's throw from 4.8% at the moment. In moments like this the market tends to overreact, both up and down. With the mix of events ahead and September's reputation as the worst month of the year, hitting that level is very possible.
Key technical levels on the S&P 500 could bring buying opportunities. The index is currently below its 20-day moving average. Normally you want a positive test of that support level today or tomorrow, but developments suggest it will not hold. The next support is the 50-day moving average, a little over 1% away. After that is the 200-day moving average, a little over 3% away. That is not a lot of downside, but these support areas need to hold. If they do, they can create buying chances for the broader market and possibly for the Pro Portfolio.
Apple's Leadership Transition
Apple (AAPL) has a big event on September 9th. John Ternus is coming in after roughly 15 years of Tim Cook, during which the stock rose over 2,200% according to Barron's. Ternus has a reputation as a product person, an area where Tim Cook was not excellent - Cook's strength was operations. The open questions are how effective a communicator Ternus is and what he brings. This is a chance for him to reshape Apple and return it to its product roots. I am cautiously optimistic. A foldable phone is expected at the event; some doubted it, but it looks set to appear. Under Cook, Apple delivered the reality goggles, the AirPods, and the Watch.
Rare CEO Changes in the Mag 7
CEO changes among the Mag 7 are rare. Andy Jassy took over Amazon (AMZN) in 2021. Before that, Sundar Pichai came into Google (GOOGL) in 2015.
Where to Put Money to Work
Tech has led the market. The Pro Portfolio holds exposure mainly on the chip side, plus networking and other AI data center infrastructure plays such as Eaton (ETN). The plan is to increase exposure at better prices. A favored strategy is buying on weakness when there is a mismatch between the current stock price and the longer-term opportunity.
The software side points strongly to rising AI adoption and expanding usage, including Microsoft (MSFT) and the return of software. That should drive demand for AI and data center capacity and for the companies that help build it out. The view stays very constructive and optimistic; the task now is picking spots and rounding out position sizes.
Outside tech, some non-cyclical names appeal. Boeing (BA) - waiting to see how the current union talks resolve before adding shares. Paccar (PCAR) - supported by an EPA mandate for heavy trucks in early 2027. Healthcare and robotics ideas are also being weighed.
