NVDA & Indices 'Battling' Key Technical Levels, Recapping Fed's Dot Plot

0:00Welcome back to Morning Trade Life. It's time now for the big picture. Let's welcome in the team from Charles Schwab, joined by Nathan Peterson, director of derivatives analysis, Schwab Center for Financial Research and Cooper Howard, director of fixed income research and strategy. Gentlemen, thanks so much for joining us. Look, I do want to start with you just because levels matter, obviously with that 200 day, which we've broken through now, the dial closing below. It's 200 day yesterday. Obviously looking at some of the levels out in Europe right now, just talk us through the technicals. Where's the next level of support here? Yeah, good morning, Sam. You know, if you look at just how this the evolution of the technicals on the candlestick chart, you know, at first, there was a lot of hope about Iran, you know, not being, you know, being short lived, you get a lot of div buyers, you get a lot of hammers on the chart. And there's been this gradual rollover as the war in the uncertainty persists. And at to your point, that brought us below the 200 day simple moving average on the Dow Jones, we are below the 200 day simple moving average on the S and

1:03P 500, as well as the NASDAQ as well. The Russell is still above, but the other thing that kind of the confluence, I guess, with this as well is Nvidia. Nvidia is basically battling. It's 200 day simple moving average right now. And that is more of really the, the sentiment like Nvidia would be kind of the poster child for AI infrastructure in the state of that. We saw micron blowout earnings, blowout guidance, stock trades down Nvidia, lackluster, price action, post earnings, Nvidia technically kind of rolling over a little bit. We'll see if it can hold its ground here. But Sam, the translation is that, you know, technically it's bearish. And we've talked before that, you know, if you're concerned that there might be additional downside, you can utilize callers, you know, protective put spreads is another consideration, but the VIX is at 27. So you likely want to be selling some volatility, some strikes, either

2:04calls or puts in there in order to offset the high prices. But what you would like to see, if you're bullish, obviously we'd like to see these indices get back above their 200 day simple moving averages. Okay, let's switch over to you, Cooper. We're seeing bond selling off as well off the back of what we got from Pal and Co yesterday. In fact, global yields rising guilt, surging over in the UK right now. Just talk us through what you're seeing up there. Yeah, so it's quite the morning this morning, the what we're seeing. If we look back in terms of what we saw yesterday, Sam, I'd really say we shouldn't put too much emphasis into that. Paul immediately came out and said that don't put too much emphasis in the dots plots. Don't put too much in the set. He said that there's 19 different members. There's 19 different stories for it. Really tried to downplay a lot of things. And I think that that's appropriate. I think right now, if you look at the fixed income markets, a lot of what is driving where yields are going is concerns about what's happening in the Middle East. And is that going to be a prolonged

3:06escalation or a prolonged war? And that concern over that is that if that is the case, we'd really see that translated into probably higher inflation and higher oil prices. So ultimately, that's what the fixed income markets are moving on. In terms of what we're suggesting the clients, we don't think that now is the time to be adding on excess risk to a portfolio. So for people who do already have some positions in riskier investments, we think it's probably appropriate to keep an eye on those. But if you are looking to take active bets, we'd say probably not now, there might be better opportunities down the road. Okay, just wondering what you made of what Powell had to say yesterday. I mean, you know, obviously a lot of confusion around some of the inflation expectations, the growth expectations, and then of course the the SEP. We did see a big reaction as of course that press conference went on. But just talk us through what you thought, what the team in over at Charishwaba thinking

4:08right now. Yeah, I would say if there was any time to skip a SEP in the doubts plot in the FOMC meeting, yesterday was it. So like I had mentioned earlier, I wouldn't put too much weight into it. And we really saw that they are trying to downplay a lot of what had happened. And if I were to summarize that meeting, I'd summarize it as uncertainty, uncertainty as the direction of the escalation in the Middle East and how long is it going to last. So trying to pin down where the Fed fund rates going to be at the end of this year or even the end of next year or the year after, that's a very difficult thing given all of the uncertainty that's happening in the markets right now in the global economies. What I do think was relatively notable though is that that terminal dot moved up 10 basis points. And so that terminal dot is looked at as kind of the ending point or the neutral rate and where the Fed can hold rates and not impact growth too much, not impact inflation too much. And given that that's moved up,

5:08it really suggests that the Fed is more in a weight and C mode than they have been prior to the meeting. So I do think that that was one notable little nugget that came from it. Yeah, he's being called a measured power, a constrained power and an uncertain power as well. So wearing lots of hats yesterday, no doubt, we'll be watching. Nathan Peterson and Cooper Howler, thanks so much for your time today. He had the director of derivatives analysis and the director of fixed income research over to Charles Schwab Center for Financial Research.