🚀 POWELL PIVOTS, MARKETS EXPLODE: THE GREAT ROTATION BEGINS

Rate Cut Reality Triggers Historic Sector Shift - Next Week's NVIDIA Earnings Could Seal the Deal

Author

Jamar James
August 22, 2025

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⚡ KEY THINGS TO KNOW FOR NEXT WEEK'S TRADING:

  • Powell delivered the dovish pivot markets craved - rate cuts are coming

  • Historic sector rotation underway: Small caps, banks, real estate leading

  • NVIDIA earnings August 27th - The ultimate test for AI momentum

  • Apple-Google AI partnership reshapes Big Tech landscape

  • Trump's Intel stake deal signals new government-business model

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🎯 MARKET THEME RECAP: THE GREAT ROTATION

Today marked a seismic shift in market leadership as Powell's Jackson Hole speech triggered the most significant sector rotation we've seen all year. The "old guard" mega-cap tech names stepped aside as rate-sensitive sectors exploded higher, with small caps (IWM) and regional banks leading the charge.

Key Stats That Tell the Story:

  • SPY: New highs, up 1.2%

  • VIX: Crushed -12.5% to 14.50 (lowest close of year)

  • IWM Small Caps: +2.8% - massive breakout

  • XLF Financials: +2.1% - rate cut beneficiary

  • ITB Homebuilders: YTD highs on mortgage rate plunge

  • 184 New 52-week highs vs 0 new lows on NYSE

📊 POWELL'S DOVISH PIVOT: GAME CHANGER

Powell Jackson Hole speech August 22 2025 rate cuts dovish

Perfect! Powell delivered a dovish pivot signaling rate cuts are coming, which triggered the massive market rally. Key quotes:

  • "Downside risks to employment are rising"

  • "The shifting balance of risks may warrant adjusting our policy stance"

  • Markets now pricing 89% chance of September rate cut (up from 75%)

This explains the huge rally and sector rotation today.
Powell's Key Quotes That Moved Markets:

  • "Downside risks to employment are rising, and if those risks materialize, they can do so quickly"
    Powell suggests rate cuts are coming — but not because Trump demanded them "The baseline outlook and the shifting balance of risks may warrant adjusting our policy stance"
    Market Reaction:

  • September rate cut probability: 89% (up from 75% pre-speech)

  • Mortgage rates: Plunged to 10-month low of 6.52%

  • Barclays shifted stance: Now expects cuts from September vs December

💥 TRUMP'S MARKET-MOVING ANNOUNCEMENTSIntel Government Partnership Bombshell

Trump announced US will take 10% equity stake in Intel (INTC), representing a historic shift in government-business partnerships:

Key Details:

  • Government gets 10% stake in exchange for CHIPS Act funding

  • No board seats or governance role for government

  • Template for future deals - "Will do more deals like that"

  • INTC surged 8%+ on the announcement

🤝 Apple-Google AI Partnership

Apple exploring Google Gemini AI to power revamped Siri - reshaping Big Tech alliances:

  • AAPL jumped 2.5%, GOOGL up 3.8%

  • Also considering Anthropic and OpenAI

  • Google training models specifically for Apple servers

🔥 SECTOR ROTATION EXPLOSION

🏆 WINNERS: Rate-Sensitive Sectors

  1. Small Caps (IWM): +2.8% - Breaking multi-month resistance

  2. Regional Banks: +3-5% across the board (FHN, OZK, etc.)

  3. Homebuilders (ITB): YTD highs, +4.2%

  4. Real Estate (REITs): Surging on lower rate expectations

  5. Materials & Energy: FCX, XOM, PSX all breaking higher

📉 LAGGARDS: Mega-Cap Tech

  • NVDA: Only +1.8% vs market +1.3% (underperforming)

  • Quality rotation: From growth to value/cyclicals

🚀 HOT TRADES TODAY

⚡ Massive Options Flows

  • SOFI: 15,000 October $30 calls bought ($0.85-$0.92)

  • LYFT: Up 8% on massive March 2027 call accumulation

  • CRWV: 2,000x4,000x Jan $95/$165 call ratios ($11.40 debit)

  • DASH: 10,000x20,000x Nov butterfly spreads

  • APP: 1,300 Sept calls + puts in bullish delta strangles

🏅 Earnings Winners

  • ZM: +10% on earnings beat + guidance raise

  • UI: +43% massive surprise + $500M buyback

  • WDAY: AI acquisition momentum

🎯 KEY CATALYST TRADES FOR NEXT WEEK

🥇 #1 Priority: NVIDIA Earnings (August 27th)

  • The ultimate AI test - 90% of analysts upgraded targets

  • Options pricing: $15+ move expected

  • Market impact: Could determine if AI rally continues or rotates

🥈 #2: Rate-Sensitive Momentum Plays

  • SOFI/AFRM: Banking beneficiaries of rate cuts

  • IWM Small Caps: 39% EPS growth forecast for next year

  • ITB Homebuilders: Mortgage rate plunge catalyst

🥉 #3: China Recovery Play

  • BABA: +3% pre-earnings momentum next week

  • PDD: $82M in calls vs $1M puts pre-earnings

💰 CRYPTO EXPLOSION

ETH leading the charge: +12% to $4,794 as rate cut reality hits

  • BTC: Steady at $111k+

  • SBET: +13% on buyback authorization

  • BMNR: +12% premium expansion

Crypto beneficiaries of rate cuts:

  • Lower rates = risk-on sentiment

  • COIN, MSTR, IBIT all surging

  • Weekend ETH target: $5,000 if momentum continues

📈 MONEY ROTATION INSIGHTS

🔄 The Great Rotation Map:

FROM: Mega-cap tech, growth stocks TO: Small caps, banks, real estate, energy, materials

Key Ratios Today:

  • Value vs Growth: Value leading significantly

  • Small vs Large: IWM outperforming SPY by 150bps

  • Rate-sensitive vs Tech: Financials +2.1% vs Tech +1.1%

⚡ Weekend Risk Factors:

  • Geopolitical: Trump-Putin World Cup meeting announced

  • China tensions: NVDA H20 chip production halt

  • Fed follow-up: Additional dovish commentary possible

🎯 NEXT WEEK'S MAJOR CATALYSTS

📊 Economic Data:

  • Tuesday, Aug 26: Consumer Confidence

  • Wednesday, Aug 27: GDP Second Estimate

  • Thursday, Aug 28: Initial Claims

  • Friday, Aug 29: PCE Inflation (Fed's preferred measure)

📈 Earnings Lineup:

  • Monday: MDB, BOX

  • Tuesday: PDD (China momentum), KSS

  • Wednesday: NVIDIA (THE big one), SNOW, CRWD

  • Thursday: DELL, MRVL, ULTA, BBY

  • Friday: WSM, HPQ

🔮 WEEKEND STRATEGY

🌙 Overnight Holds:

  • Rate-sensitive names: SOFI, regional banks, homebuilders

  • China plays: BABA, PDD into earnings

  • Crypto proxies: COIN, MSTR if BTC holds $111k

📱 Monday Watchlist:

  • Gap-up continuation: Small caps, banks if overseas follows

  • NVDA setup: Watch for pre-earnings positioning

  • Sector rotation confirmation: Does rate-sensitive momentum continue?

🎯 TRUMP MOMENTUM TRADES

🇺🇸 Government Partnership Plays:

  • INTC: Government stake model could expand

  • Defense/Infrastructure: Potential beneficiaries

  • CHIPS Act recipients: TSM, AMAT, LRCX

🏛️ Policy Impact Trades:

  • Tariff beneficiaries: Domestic manufacturing

  • Immigration plays: Labor-intensive sectors

  • Energy independence: XOM, CVX, domestic producers

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🚨 FINAL THOUGHTS & MONDAY GAMEPLAN

Today marked a historic shift from the Powell Pivot. The era of defensive positioning is over - we're entering a new phase where rate cuts meet economic resilience, creating the perfect storm for risk assets.

Monday's Key Themes:

  1. Continuation or Pause? Will rate-sensitive momentum continue?

  2. NVIDIA Setup: How does the AI king position for Wednesday?

  3. International Follow-Through: Does global money chase US rate cut story?

Risk Management:

  • VIX at 14.50: Complacency setting in, be ready for volatility

  • Positioning: Don't chase everything - focus on strongest catalysts

  • Powell Follow-Up: Watch for any additional Fed commentary

Bottom Line:

The great rotation has begun. Position accordingly.

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