News and analysis

The Federal Reserve can now clearly burn itself the looming victory over inflation into an asset. The recent data by the U.S. Bureau of Labor Statistics’ on CPI (consumer price index) contains its annual indication at 2.7% on August 12, which matches its level in June exactly. Wall Street expert estimates suggested some faster pace of 2.8%. On a monthly basis, the CPI only rose by a modest 0.2%, which was slower than 0.3% in June. Thus, month-on-month inflationary pressure for the end consumer, if we multiply this 0.2% rate by 12 months, does not go beyond 2.4% in total. This level of 2.4% already corresponds to the annual figure shown during a three-month period from April to June, and apparently, the CPI statistics will return to this 2.4% station soon.

The S&P 500 immediately soared by 0.85% to touch and retest its historical highs' area above 6,430 to keep the mid-term rally stage in play. The tech-heavy NASDAQ Composite already surpassed its all-time high by 150 points in the first half hour to follow the CPI release. It is now set above 21,600, and is unlikely to be stopped somewhere on the way to its first power point of 22,000. That corresponds to 23,775 for the USTech100, a select index for a group of largest companies on Nasdaq, keeping 25,000 and then 27,500 further in mind. The U.S. Dollar Index against a basket of other reserve currencies has acquired a very distinct negative momentum, so far limited within a 0.5% slide, but more speculative deals until the end of August may promise more profit in the bearish bet here for the Greenback short-term. A test of at least 95.50 support for USD seems inevitable over time as well as the continuing Wall Street climb. The extension of no extra tariff trade pass for China by U.S. president Trump for another 90 days will add much to the bullish pattern for stocks.

A 73,000 jobs in the Nonfarm payroll report on August 1, with as much as 258,000 downward revision to June and July numbers already led to a nearly 80% bets for the Fed's rate cut two times in a row, in September and December. If we take into consideration today's weak CPI data, then the coming Fed's gathering on September 17. CME FedWatch tool shows this chance is approaching 95%. The market also estimates the chance of a bold 0.5% reduction in borrowing costs by December at only 40%, while more than 50% of traders expect a 0.75% rate cut. In fact, this means either two cuts of 0.25%, or one of 0.25% plus one of 0.5%. The second scenario sounds extreme, however. Anyway, the Fed has nowhere else to go. They will simply have to bite the bullet and cut rates, otherwise they will be the ones to blame for the slowdown in the economy or for the stock market fall which could be provoked if the regulator's steps would not match at all the crowd's expectations which are clearly formed. Again, any future heads of the Fed to replace Jerome Powell are unlikely to want to ruin their odds by voting against rate cuts while waiting for a possible appointment next spring.

Fed's chair Jerome Powell and his colleagues will, of course, say that they achieved this by keeping interest rates high to keep price pressure in check, even though inflation has been more likely restricted due to natural economic causes as well as slowing consumer spending. The Fed will now have a harder time in terms of further insisting on elevated rates drug for the imaginary economic stability, since the central bankers' endlessly vocal worries that Trump's tariff wars might fuel inflation have proven unfounded. While they won't admit it, they will stand there in anti-inflation victory laps whether they are its architects or not. In the end, the reason for Fed's future actions is not so important. What actually matters is only that the already stagnating or probably even cooling labour market, now combined with declining consumer price indicators, give them reason to launch the rate cut cycle with their heads held high. The Fed's new dovish stance could be carved in granite as early as the Jackson Hole policy symposium, scheduled on August 21-23.

VeChain (VET) is down 3.2% this week to $0.0242, underperforming the broader crypto market, where Bitcoin (BTC) has slipped a marginal 0.1% to $118,500. The market is cooling after Monday’s jump, when Bitcoin spiked 3.1% to $122,300 before closing at $118,670. That surge was fuelled by increased capital inflows from pension funds following U.S. President Donald Trump’s executive order allowing digital assets in retirement plans. However, the optimism was tempered by expectations of rising U.S. inflation.

VET attempted its own rally, climbing 3.5% to $0.02593 on Monday, but ended the day down 1.8%. Prices are now hovering near recent lows, casting doubt on any near-term upside. From a technical perspective, the token would need to reclaim and hold above $0.0300 to join any broader market rally, which could then carry it towards $0.0400. At present, however, there are few signs pointing to such a move.

Apple (AAPL) rebounded from trend support at $190–200, surging 14.2% last week to $229. The move places the stock in the middle of its upward channel, with momentum strengthened by news that part of iPhone production will be relocated to the United States. This development adds a long-term bullish impulse, increasing the likelihood of continued gains toward trend resistance.

Buying at the current $225–230 range remains attractive, even though the stock is approaching its all-time high of $259, as it is still well below the trend resistance at $280. A reasonable stop-loss level could be placed at $199 to manage downside risk.

Micron Technology surprised Wall Street by sharing its very positive business forecast on August 11, even though its next quarterly report is scheduled only on September 25. The fundamentals and the technical patterns on daily, weekly and monthly charts look like the semiconductor maker could see steady growth until then. I would say that a retest over $150 is inevitable, even assuming some new price records for Micron share price during this short period.

Micron is no more a skunk at the tech garden party (as I once described its then-sad and corrective mood before Christmas). It noticeably perked up back already in early summer, when Micron share price quickly recovered to the $120+ area as the company was going to release its record-ever quarter in terms of both profit and sales. On June 25, the actual figures of $1.91 per share on revenue of $9.3 billion more than justified and even exceeded the crowd's average expectations of $1.59 per share on $8.85 billion. However, the forward guidance by Micron's own managing team for the rest of the year were more or less cautious, and so a brave rally that time stopped at $130, followed by another month of sideways move. The price touched a new strong support around $105 on August 1, being rather flat or slightly rebounding right up to the present moment.

Micron shares have soared to knock at its technical resistance territory as the strong outlook has given markets the only one missing piece to make the whole bullish puzzle ready. Giving Micron a fair valuation looks natural once the company itself is no longer shying. It cited a surge in orders for Micron's high-bandwidth memory chips, thanks to their intensive data-processing capabilities. Other giant techs are scaling up their commitment to artificial intelligence (AI) data centers, which lead to growing demand to Micron's production, so that the company itself now officially expects increasing current quarterly sales up to $11.2 billion, plus or minus $100 million, which is much better compared to Micron's previously modest forecast of $10.7 billion, plus or minus $300 million. Micron projected its next EPS reading at $2.85 per share, plus or minus $0.07, vs its earlier expectation of $2.50, plus or minus $0.15.

At the same time, they substantially raised adjusted gross margin inner projections from 42%, plus or minus 1%, to 44.5%, plus or minus 0.5%, due to improved pricing for dynamic random access memory (DRAM) chips. Marginality is just a potentially troubling point for the memory chip market, so updating forecasts in this particular field is very important. By a curious coincidence, Reuters just exclusively reported the same day that Nvidia's supplier SK Hynix said the market for specialized AI memory chips may grow on average as much as 30% per year until 2030.

Potentially large levies on chips imported into the US could damage the market growth but Donald Trump promised the tariff will not bite manufacturers inside the country or even those businesses who have committed to do so. Well, only two months ago Micron said it is going to expand its US investments by $30 billion, totalling $200 billion. So they seem to be safe from tariff attacks as well. My conclusion is that I see no reason not to invest in Micron now, even after its stock price jumped 4.5% above $124 a share at one intraday point and ended this Monday's regular session with a more than 3% daily surplus.