The market rolls out a red carpet for Powell

Markets don’t always wait for the Fed to speak; sometimes they shove the chair out and set the table themselves. Yesterday’s PPI miss was one of those moments — a velvet rope pulled back, a red carpet unfurled straight to the September FOMC, with Powell cast as the reluctant guest of honour.

The S&P 500 powered to fresh highs as if the stage lights were dimmed just right: inflation cooled, bond yields softened, and the AI-trade orchestra struck up another soaring movement after Oracle’s moon-shot cloud guidance.

The PPI slip was modest — minus 0.1% — but in this theatre, nuance matters. What markets heard wasn’t just a tick lower in input prices; it was confirmation that the worst inflation ghost stories aren’t materializing. Producers aren’t shoving tariffs straight onto consumers; they’re eating some of it to stay competitive. That’s not exactly a victory march — more like a poker player bleeding chips slowly to stay in the game — but it buys the Fed breathing room.

Still, the real showstopper hasn’t hit the stage yet. CPI is tomorrow’s main act, the twin dragons of food and energy stripped away so the Fed can stare straight into the core. If that number comes in tame, the conversation tilts from a careful quarter-point shuffle to the possibility of a half-point swing. Traders are already sketching their playbooks: a weak CPI could be the cue for Powell to trade in his measured shuffle for a bold paso doble.

Behind the curtain, the labour market is whispering warnings. Payroll revisions have already stripped away illusions of strength, and recent reports hint at momentum draining faster than many believed. In that context, softer producer prices are both a blessing and a curse — relief on inflation, yes, but also evidence that demand is thinning. The Fed’s dual mandate is starting to resemble a tug-of-war rope fraying in the middle.

Equities, meanwhile, are behaving like carnival daredevils, climbing higher even as the net below — the equity risk premium — all but disappears. Valuations are hanging in midair, supported not by cheapness but by faith that Powell’s safety net will appear on cue. Treasuries now yield as much as the index’s earnings stream, and yet stocks levitate, daring gravity to prove it still works.

What drives this bravado? Two things: the AI boom is still inflating sails, and the belief that Powell will ultimately err on the side of cushioning jobs. Oracle’s 36% surge lit up the sector again, pulling Nvidia, AMD, and Palantir back into full-throttle mode. The Nasdaq 100 has nearly doubled since ChatGPT’s debut — and as long as the Fed’s blade keeps trimming rates, investors are willing to keep riding this rocket, even at oxygen-thin valuations.

Make no mistake: this rally isn’t powered by fundamentals. It’s a forward-dated bet — a market drinking tomorrow’s champagne today, confident the Fed will refill the bottle. Consensus now sketches the S&P finishing 2025 north of 6,600 and even brushing 7,000 before Powell’s cycle is done. That isn’t sober analysis; that’s a gambler pushing chips across the felt, daring the dealer to flip the wrong card.

The irony is evident: falling producer prices signal less inflation pressure, but they also hint at slack demand. It’s the paradox of this cycle — good news for the Fed is often just bad news dressed in softer colours. For now, though, traders only see the spotlight: CPI tomorrow, Powell next week. The market has written the script, rolled out the carpet, and all that’s left is for the Chair to step forward and deliver his lines.

Asia’s silicon surge in full swing, everybody wants some

Van Halen’s title says it all—everybody wants some. And in Asia right now, it’s tech that has the crowd rushing the stage. This isn’t just a single stock pop; it’s an orchestra of breakouts across the region, each feeding into the next, amplifying momentum.

China has been the first mover. HSTECH has extended yesterday’s breakout, tearing through resistance levels that had capped it for months. The tone of the move matters: this isn’t low-volume noise, it’s buyers with size, real participation that suggests speculation is being joined by allocation. That’s an important shift. For years, foreign capital has stayed cautious around China tech—regulatory overhangs, delistings, the endless “Beijing risk.” But price heals fear, and breakouts like this force money off the sidelines.

Cambricon, often labeled “China’s Nvidia,” is emblematic. After an extreme short squeeze, the stock has cooled on the 21-day moving average, but the key point is that buyers stepped in exactly where they were supposed to. That’s the kind of technical respect that tells you there’s institutional flow sniffing around. The AI theme is too powerful for even the regulatory risk crowd to ignore. Everybody wants a piece of the monopoly rents that could accrue to China’s domestic chip champions if the U.S. keeps tightening export bans.

Alibaba is another case in point. It’s taken out recent highs in a powerful breakout that puts the stock back on the radar for global managers who had written off China ecommerce as dead money. When a name like BABA clears levels that have frustrated it for months, the potential for follow-through is substantial. Big caps lead when a theme turns from trade to trend.

And it’s not just China. Taiwan’s semiconductor sector is exploding higher, breaking through resistance with authority. With TSMC already priced as the beating heart of the global chip supply chain, the fact that the broader cohort is now surging suggests money isn’t just chasing the index giant—it’s looking for secondary plays, the kind of move that signals a more durable rotation.

Then there’s Korea. The KOSPI has ripped to fresh all-time highs, turbocharged by Seoul’s announcement of a $100 billion fund dedicated to AI, chips, and robotics. That kind of state-sponsored capital injection isn’t a headline you fade. It puts a floor under the sector and validates what private investors are already pricing: Asia intends to be more than just a supply chain in the AI era, it wants to own the intellectual property, the fabs, the robotics ecosystems.

Put it all together and you have synchronized breakouts across multiple markets and subsectors. That’s rare. Usually, you see rotation—China up, Taiwan down, Korea lagging. But right now the tide is lifting all boats. It’s a classic momentum loop: breakouts attract flows, flows fuel further breakouts. Hedge funds chase it, long-onlys are forced in, benchmarks get repriced.

The question traders should ask is not “why now?” but “how far can it run before it exhausts?” With U.S. tech stretched and rates markets swinging violently on Fed repricing, Asia tech is suddenly the relative value play. In an environment where liquidity is king and AI is the secular narrative, you don’t fight the tape.

Van Halen had it right—everybody wants some. And right now, everybody wants Asian tech.