Will Rates Ever Fall?! 😨

WILL RATES EVER FALL?! 😨 

Markets started the day on a weak espresso. Perked up a bit, then quickly lost the buzz. By the closing bell:

• $SPX ( ▲ 0.47% ) S&P 500 - Flat

• $DJI ( ▼ 0.02% ) Dow -0.1%

• $QQQ ( ▲ 0.7% ) Nasdaq - Flat

Why the hesitation? One man. Jerome Powell.

The Fed Hit Pause (Again)

The Fed left interest rates untouched at 4.25% to 4.50%. No surprises there. But I find the real action always comes during Powell’s press conference.

It went a little something like:

“We're not moving. Yet. Maybe later. Probably. Who knows? Ask us in a few months.”

The Fed is still forecasting two rate cuts in 2025, but Powell made it clear they’re watching tariffs like a hawk.

He said they haven’t hit the economy yet. But they will. Probably. Eventually. Maybe. Basically, the Fed isn’t doing anything until they get some data that tells them what to do next.

New Projections: A Mixed Bag of Meh

The Fed also updated its crystal ball (aka SEP):

• GDP for 2025: Revised lower

• Inflation: Revised higher

• Unemployment: Yup, also higher

That’s three strikes. But they’re still holding onto hope for two cuts this year. Well, some of them are. The number of Fed officials saying “no cuts at all” jumped from 4 to 7 since March.

Sounds like the blind leading the blind to me.

Bond Market Had Whiplash

• 2-Year Treasury: Down 1 basis point to 3.95%

• 10-Year Treasury: Up slightly to 4.39%

Investors jumped into bonds right after the announcement, then realized they may have gotten ahead of themselves. Yields ended the day mostly where they started.

TL;DR

• The Fed is staying put for now

• Tariffs are the wild card

• Rate cuts are still on the table. But the table’s getting wobbly

• The market said “meh” and went back to watching reruns of CPI reports

1. Play the Fed's Uncertainty
The Fed is in “wait-and-see” mode. Tariffs could fuel inflation, but rate cuts are still on the table. That indecision means markets will likely chop sideways.
📌 Action: Accumulate dividend-paying ETFs like $SCHD ( ▲ 0.96% ) or $VYM ( ▲ 0.33% ) . They perform well in flat markets and generate cash while we wait for clarity.

2. Ride the Inflation Hedge
Tariffs + rising oil prices = potential inflation bump. The Fed even revised inflation up for 2025.
📌 Action: Add exposure to inflation-resistant assets like $TIP ( ▼ 0.05% )  (Treasury Inflation-Protected Securities) or commodity ETFs like $DBC ( ▲ 1.64% ) . Start small and build as CPI prints come in hot.

3. Lock in High-Yield Bonds Early
The Fed is still penciling in two cuts this year. That means today’s bond yields might be the best you’ll get for a while.
📌 Action: Lock in yields now with bond funds like $BND ( ▼ 0.11% ) or laddered bond ETFs like $IBDL $IBDU ( ▲ 0.27% ) . You get solid yield with lower volatility if rates fall.

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AI’s SECRET WEAPON: GAMERS 🎮️ 

I never thought I could use my gaming skills to change the world but I might be wrong.

Morgan Stanley ($MS ( ▲ 1.27% ) ) just gave their “Humanoid 100” stock list a makeover.

You can see how they mapped it out here.

And no, it’s not just full of chipmakers and robot arms anymore. Now it includes video game developers and cybersecurity firms. Would you of guessed the future of AI is part Call of Duty, part Fort Knox?

Why Gamers Matter for AI

Morgan Stanley added Unity ($U ( ▲ 1.13% ) ), Roblox ($RBLX ( ▲ 1.74% ) ), and Take-Two ($TTWO ( ▼ 0.25% ) ) — three companies known more for pixelated carnage than robot overlords.

But here’s the logic:

• Unity lets devs build hyperrealistic virtual worlds. Perfect training grounds for humanoid bots to practice tasks without falling down stairs in real life.

• Roblox & Take-Two have massive datasets showing how humans react to different scenarios. AI can soak that up to learn how to interact with us (or beat us in GTA).

Think of it like flight simulators… but for robot butlers.

Cybersecurity Steps In

The more AI spreads into the real world, the more things can go very wrong. Enter the cybersecurity squad.

Morgan Stanley just added:

• CyberArk ($CYBR ( ▼ 0.97% ) ): Protects digital identities and access. As physical AI grows, so does the attack surface. CyberArk wants to lock all the digital doors.

• Palo Alto Networks ($PANW ( ▼ 0.31% ) ): Already launched tools to secure AI traffic, access, and workloads. Basically building digital moats for the AI gold rush.

As AI agents move into factories, retail, and your grandma’s kitchen, cybersecurity becomes the new frontline.

Who Got Kicked Out?

Some familiar names got booted from the list:

• Micron, NXP, SK Hynix, Valeo, Zhongda Leader

• Why? Too small or not AI-core enough for the big leagues. Makes sense.

TL;DR

• AI is learning from gamers.

• It’s being guarded by cyber ninjas.

• And the money is flowing toward companies building both the worlds and the walls.

If your portfolio thinks AI = just chips and datacenters, it might be time for a DLC pack.

1. Buy the Gaming-AI Crossover
Video game companies are now being recognized as serious players in AI training. Their tech creates simulated environments for humanoid robotics.
📌 Action: Build positions in $U ( ▲ 1.13% )  (Unity), $RBLX ( ▲ 1.74% )  (Roblox), or $TTWO ( ▼ 0.25% )  (Take-Two). Hold as AI adoption accelerates across sectors. This isn’t just gaming anymore.

2. Add Cybersecurity Exposure
AI’s expansion into the physical world means more threat vectors. Cybersecurity is the new must-have defense layer.
📌 Action: Accumulate $CYBR ( ▼ 0.97% )  (CyberArk) or $PANW ( ▼ 0.31% )  (Palo Alto Networks) as AI security demand surges. Strong potential for long-term enterprise contracts.

3. Rotate Out of Dead Weight AI Stocks
Morgan Stanley dropped Micron, NXP, SK Hynix, and others from its “Humanoid 100” list due to weak AI relevance.
📌 Action: Reallocate capital from lagging chip stocks like $MU ( ▲ 0.7% ) or $NXPI ( ▲ 4.49% ) into high-conviction AI infrastructure plays. Keep your portfolio focused.