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Issue No. 6  •  Thursday, May 28, 2026

THE TRADING ADDICT

NEWSLETTER

by Maria Helmick

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Today’s PCE Report Is More Than an Inflation Number

A confidence test for the rally, an early credibility test for Warsh, and a reminder that Powell’s shadow is still in the room.

Today’s market is walking into one of the most important data tests of the week.

At 8:30 AM ET, the government releases the April PCE inflation report, along with personal income, spending, GDP revision data, durable goods, and jobless claims. PCE matters because it is one of the Federal Reserve’s preferred inflation gauges, and Wall Street is already prepared for a firm number.

That means the market is not walking in blind.

Traders already know inflation may still be sticky. The real question is whether today’s number is manageable — or hot enough to challenge a rally that is already priced for a lot to go right.

And now there is another layer to the story: Kevin Warsh is the new Fed Chair.

That makes today’s PCE report one of his first major inflation tests as the new voice of the Fed. The Fed Chair does not need to change rates to move markets. Tone alone can matter. Investors listen for what the Chair emphasizes — inflation, jobs, rate cuts, rate hikes, financial conditions, and the balance sheet. A single shift in message can change how Wall Street prices risk.

So today is not just about the inflation number.

It is about how the market believes Warsh will respond to it.

If inflation comes in cooler than expected, bulls may argue the Fed has more room to be patient. If the number lands close to expectations, the market may absorb it and move on. But if inflation comes in hotter than expected, especially in the core number, the tone could change quickly.

A hot core PCE reading would make it harder for Warsh to sound market-friendly. It would tell investors inflation is still not fully under control, rate cuts may remain further away, and expensive stocks may have less room for error.

That is where the rally gets tested.

The bullish story right now is simple: inflation slowly cools, the consumer holds up, earnings stay strong, and the Fed eventually gets room to ease. Today’s report can either support that story or punch a hole in it.

Powell Is Still Hovering Over the Room

Warsh may have the chair, but Jerome Powell has not disappeared from the equation.

Powell led the Fed through the post-pandemic inflation fight, aggressive rate hikes, and the higher-for-longer era. His Fed spent years trying to rebuild inflation credibility. Markets may now be listening to Warsh, but they are still measuring him against the Powell framework.

That creates tension.

Warsh may want to establish his own tone, but Powell’s policy shadow is still in the room. If inflation stays sticky, the Fed may not be able to pivot softer just because leadership changed. The institution still has to protect its credibility.

That is the line traders should remember:

And that could matter today.

If inflation cools, Warsh gets more flexibility. If inflation comes in hot, the Fed may have little choice but to sound cautious. If the report lands in the gray area, the market may spend the day asking whether this is truly a new Fed regime — or Powell discipline with a new nameplate.

The Consumer Side Matters Too

This report is not only about inflation.

Personal income and spending will show whether households are still helping carry the economy or whether higher prices are starting to hurt demand.

The market wants a very specific setup: inflation easing while spending remains stable. That would suggest the economy is cooling without breaking.

The harder setup is sticky inflation plus a weakening consumer. That would tell Wall Street prices are still too high, households are getting squeezed, and the Fed has less room to help.

That is not the kind of mix investors want when stocks are already trading near highs.

Maria’s Take

Today is a confidence test for the rally, an early credibility test for Warsh, and a reminder that Powell’s inflation-fighting shadow is still hovering over the room.

The market can handle firm inflation if it is expected and contained. What it may not handle well is a hot core number that forces the Fed to stay cautious while traders are still hoping for easier policy.

For 0dte SPX traders, this is not a day to chase the first candle. The first move after the report may be emotion. The better read comes after the market has had time to digest the data and decide whether the rally still deserves support.

If inflation cools, bulls may stay in control. If the number is close to expectations, expect chop. If inflation comes in hot, respect the risk of a reversal.

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