Markets welcomed President Trump’s appointment of CEA Chair Miran as temporary Fed Governor through January, interpreting his dovish stance as a sign that September rate cuts are more likely. Utilities (XLU) have gained 9% over the past six months on the belief that falling rates will boost high-dividend, rate-sensitive sectors. Gold (GLD), meanwhile, is up 16.65% over the same period, signaling concern that aggressive easing could reignite inflation and undermine the Fed’s credibility. The split reflects a market hedging its bets—allocating capital to both beneficiaries of lower yields and assets that protect against the consequences of cutting too soon.
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The push for easier policy is also feeding speculative behavior. Retail trading volumes in options and high-beta equities have picked up, with flows concentrating in AI leaders and other momentum names. The market is in an odd place where companies posting strong growth are either trading flat or popping at the open only to sell off sharply later in the day—often a sign that retail flows are dominating while institutions sit on the sidelines waiting for better entry points or clearer economic data. When that pattern coincides with financial media pushing “valuations are getting out of hand” headlines, it has historically marked a temporary top before a 5-10% pullback.