📊 Score Holds Neutral at 5.17 — 70% Cash While the Market Burns
The Edge Of Markets score closed Friday at 5.17 — Neutral territory (30% QQQ / 70% Cash). It spent most of the day bouncing between 5.15 and 5.17, ticking up from 5.16 at 7:05 AM ET before the PPI bomb dropped at 8:30 AM, briefly dipping to 5.15 at 11:48 AM as the damage sank in, then recovering back to 5.17 by 3:08 PM.
QQQ closed at $607.29, well below the 70-day EMA of $613.89. That's the second straight day below the EMA after Tuesday's one-day reclaim fizzled instantly. No override — we follow the score directly.
Final Recommendation: 30% QQQ / 70% Cash
When PPI comes in at more than double expectations and your model already has 70% in cash? That's not luck. That's the data doing its job.
🔥 The PPI Gut Punch: Double the Expected Inflation
Here's the number that wrecked everything: Core PPI rose 0.8% in January. The Street expected 0.3%. That's not a miss — that's a two-and-a-half-times overshoot on wholesale inflation. Headline PPI wasn't much better at 0.5% vs. 0.3% expected.
Why does this matter? PPI feeds directly into PCE — the Fed's preferred inflation gauge. If producers are paying more, consumers will too. The immediate market reaction was violent:
- Dow Jones: Down 521 points (-1.05%) to 48,977
- S&P 500: Down 0.43% to 6,878
- Nasdaq: Down 0.92% to 22,668
- QQQ: Down to $607.29
But the real damage was in rate expectations. The probability of a May rate cut plummeted from 65% to under 15% in a matter of hours. The "rate cuts are coming" trade that propped up so much of this market just got its legs kicked out.
🤖 Block Fires 4,000 Workers for AI — Stock Rips 24%
In the most dystopian headline of the day, Jack Dorsey's Block announced it's cutting nearly half its workforce — from over 10,000 employees to under 6,000. The reason? AI can do their jobs now. Dorsey framed it as "a new way of working."
The stock surged 24%. Let that sink in. Fire half your people, replace them with robots, and Wall Street throws you a parade. This is the market we're in — where human capital is a liability and AI replacement is the ultimate catalyst.
Whether you find this inspiring or terrifying probably depends on whether you're an investor or an employee. For markets, it signals something bigger: companies are done experimenting with AI and are now deploying it to fundamentally restructure their operations. The AI capex cycle is becoming an AI headcount-reduction cycle.
🌐 Trump Slaps Another 10% on China, Global Tariffs Hit 15%
As if hot inflation wasn't enough, Trump announced today that tariffs on China will increase another 10% starting March 4, bringing the total rate on Chinese imports to 20%. This comes after the Supreme Court ruled 6-3 against his use of IEEPA emergency powers for tariffs — so naturally, his response was to raise them even higher through other channels.
The global tariff rate is now 15%, up from 10%. The effective average tariff rate across all imports sits at 13.7% for February. For context, here's what this means for inflation: tariffs are a tax on imports. Higher import costs flow through to producer prices (hello, PPI), which flow through to consumer prices. Today's hot PPI and new tariff escalation are not unrelated stories — they're the same story.
Manufacturing was finally showing signs of recovery after the longest stretch of weak industrial demand on record. These tariffs risk killing that recovery before it starts.
📉 February Ends in Red — Dow Snaps 8-Month Win Streak
Today was the last trading day of February, and all three major indexes finished the month in the red. The Dow snapped an eight-month winning streak. The theme of the month was clear: AI anxiety (DeepSeek scare, Block layoffs, capex concerns) combined with sticky inflation and tariff uncertainty created a toxic cocktail for risk assets.
In other notable moves today:
- Netflix jumped 8% after walking away from the Warner Bros. Discovery deal
- Nvidia dropped another 4.2% — two-day losses from earnings now exceed 9%
- OpenAI raised a staggering $110 billion from Amazon ($50B), Nvidia ($30B), and Softbank ($30B) at a $730B valuation
Defensive sectors — utilities, consumer staples — led the month. Tech, the sector that dominated 2025, is suddenly the one everyone's running from.
🎯 My Take: The Score's Been Right All Week — And Nobody Wanted to Hear It
Let's zoom out for a second. The score has been sitting in Neutral territory (5.15-5.17) since Sunday, with 70% cash the entire time. Monday the market dipped. Tuesday it bounced (QQQ briefly reclaimed the EMA — lasted one day). Wednesday Nvidia reported blowout earnings and the stock cratered 5%. Thursday QQQ lost the EMA again. Friday, hot PPI nuked what was left.
Through all of that? 70% cash. The model wasn't trying to be a hero. It wasn't shorting aggressively. It wasn't chasing the Nvidia earnings pop. It was just... sitting there, mostly in cash, letting the chaos play out. And that was exactly the right call.
The inflation data is the real problem here. When core PPI comes in at 0.8% — nearly triple expectations — it's not noise. It's signal. Tariffs are feeding into producer costs, and those costs will reach consumers. The Fed isn't cutting rates anytime soon, and the market is just now waking up to that reality. May cut probability went from 65% to 15% in one morning.
QQQ is $6.60 below its 70-day EMA. The score is barely holding Neutral. Everything about this setup says "be patient, stay light." The model agrees. So do I.
⚠️ Bottom Line: Inflation Is Back, Rate Cuts Are Gone, and Cash Is King
The math is simple. PPI says inflation is re-accelerating. Tariffs are pouring gasoline on it. The Fed's hands are tied. Rate cuts — the single biggest market prop of the last six months — just got pulled off the table.
Key levels to watch:
- QQQ 70-day EMA ($613.89): Need to reclaim this to shift the trend back to positive. Currently $6.60 below.
- Score 5.15: The floor of Neutral. One tick below and we're in Cautious territory with SQQQ exposure.
- March 4: New China tariffs take effect. Watch for more inflation pass-through.
- March 13: PCE data release — if it confirms the PPI overshoot, markets will get hit again.
70% cash into a month where inflation is running hot, tariffs are escalating, and rate cuts are evaporating. The score says patience. I say listen to it.