Inflation Overheats! Where Next for Rates?

Chart of the Day — QQQ extreme extension
Trade of the Day — BTC rejected at key level
Alpha Leaks — Anthropic and OpenAI stock shock
News Roundup — Inflation hot as Trump lands in China
Degen Play — Reddit is a buy here

QQQ Surging Above Bollinger Bands

How frothy are markets right now? Well, take a look at the QQQ to get an idea. On the weekly chart it has now closed four weeks in a row above its upper Bollinger Band, and is still clearly above that upper level–in fact, it seems to be pushing further away from the range–meaning we could be looking at a fifth straight close above the upper bounds.

And while it’s true that overextension can continue for longer than anyone expects, this looks like the kind of precarious territory that comes before a necessary correction, although that doesn’t mean that the broader uptrend cannot then resume.

BTC Meets Resistance

BTC has rejected at its 200-day SMA, the key indicator that’s currently acting as resistance, and after price pushed up to $82K, it’s now sitting back just below 80K.

RSI in back in the low 60s after approaching overbought territory, and the rejection itself came with selling pressure. That combination suggests that further downside may now follow.

So from here, short positions can target a move back down towards $72K. However, if BTC manages to reclaim and hold above the 200-day SMA at around $82K, then the short thesis is invalidated.

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Inflation Hot: Are Rate Hikes on the Table?

US inflation data released this week is coming in over expectations, and it will be all eyes on the Fed to see where rates go next.

On Tuesday, the April CPI data showed:

● April CPI rose to 3.8%, above 3.7% expectation

● Core CPI rises to 2.8%, above 2.7% expectation

And then yesterday, April PPI data showed:

● Monthly change at +1.4% (+0.7% in March)

● Annual rate at 6.0% (4.3% in March)

This is the highest that wholesale inflation has been since 2022, and ordinarily would suggest that the Fed might hike rates.

The complicator right now is that new Fed Chair Kevin Warsh is entering the picture (his appointment was confirmed yesterday and Jerome Powell’s tenure ends on Friday), and Trump has made it clear that he wants rates lower. That puts Warsh in a tough spot, and the market is now more expectant of hikes than cuts this year.

Tech and Finance Execs Join Trump in China

President Donald Trump has touched down in China for a three-day state summit, and investors will be paying close attention.

A major talking point is that Trump is accompanied not only by politicians and bureaucrats, but is also flanked by a squad of corporate executives from some of the biggest American firms, with a bias towards tech and finance.

These names include Elon Musk, Tim Cook, and Larry Fink, and Jensen Huang of Nvidia was a late addition to the entourage.

Trump has specifically stated that he plans “to ‘open up’ China”, and it looks like the US president is approaching the visit as a high-stakes deal-making summit. And this seems to be working so far, with Chinese President Xi Jinping using opening remarks to state that China and the US “should be partners, not rivals”.

Clarity Act Vote Today

The Senate Banking Committee is voting today on the Clarity Act, with the latest draft of the act backed by Coinbase and seen as constructive for the crypto industry, while banking lobby groups are opposed.

If the act makes it through, then it will head next for a full Senate vote, although keep in mind here that the Trump family’s recent close involvement in the crypto industry–from which they have personally profited–means there is a partisan political angle at play.

Underlining that point, Senator Bernie Moreno, who supports the Act, posted earlier this week that “the banking cartel is in full panic mode”, while aiming fire at Elizabeth Warren, who is vehemently anti-crypto.

Reddit Under the Radar

It may not be the trendiest stock in the world–it’s not biotech, robotics or space exploration–but Reddit (RDDT) may just be a buy here.

It’s sitting at around $154, just below the 50-day EMA at $155.71, and there are reasons to be bullish, including:

● Growth momentum: Q1 2026 revenue +69% YoY to $663M (above $610 million expectation), with DAUq +17% to 126.8 million.

● Monetization: ARPU +44% YoY to $5.23, a seventh consecutive quarter of 60%+ revenue growth, with 91% gross margins.

● Profitability: Net income of $204 million, EPS at $1.01 (a massive beat above a $0.57 estimate), record FCF over $300 million with minimal capex. A strong cash position ($2.77 billion), alongside $1 billion buyback authorization.

● AI data licensing: Potential for AI data deals.

Overall then, Reddit looks very robust, but that said, the 50-day EMA is important: if price can reclaim and hold that level, then a sustained upward climb is possible.

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