A week ago we would have said that the Magnificent 7 were the only thing holding the market back from all time highs. Now most of those stocks have come ROARING back as the dust from NVDA’s post-earnings selloff settles and lazy investors are once again gravitating toward the easiest tech names to trade.

This is not a mark of fresh enthusiasm about Mega Tech. Only Apple came out with anything new in the past week and it’s already old news . . . iPhone with better camera and maybe now Siri is useful.

And a lot of these stocks are struggling to grow as fast as the S&P 500 (AAPL, GOOG and META are at best matching the broad market) while the others are expensive.

What’s going on: the overweight on Mega Tech has turned into a tale of two markets, a classic pair trade. Some days, stocks associated with the real economy go up and the Magnificent 7 go down.

Some days, the mood flips. This week Silicon Valley got the spotlight as the banks crumbled. Next week the story could flip again with the Fed on deck.

And guess what? JPMorgan shocked the market this week by warning that interest income will come in a little light next year. That’s because interest rates are going down! Lower rates come as a relief for borrowers but mean lower interest revenue for banks and other lenders.

But Powell wants rates to come down. That starts this week. The market currently projects that rates will drop about 2% in the next 12 months, maybe 2.5%. That’s a lot of easing.

Consider: when rates plunged to zero in the pandemic, they only dropped 1.5%. Some investors are asking how much pain the Fed sees ahead that would justify that kind of dramatic rate cuts. Is an apocalyptic recession on the horizon?

We don’t think so. The economy is obviously slowing but this could be one of those “soft spots” like early 2022 or the polar vortex of 2014 when so many people stayed home that the economy shrank 1% and energy prices crashed.

Nobody called those recessions. The world did not end. And if the Fed sees disaster, they aren’t admitting it. Atlanta Fed still thinks GDP is up 2.5% in the current quarter and expectations are actually rising.

Maybe it’s time to move past “recession” as nightmare fuel. The government has only called one recession since 2008 and like 2008 it was a severe one.

But there have been a lot of hot and cold cycles within that 16-year stretch . . . including several market downturns that hit bear territory. That’s what investors need to focus on.

There’s always a “recession” for some stocks and a boom for others. Avoid the recession. Grab the boom.

Every rate cut gives stocks about 3% of support relative to bonds. The floor will start rising soon and won’t stop in the foreseeable future. So will the ceiling. The Fed is engineering the next bull phase.

And remember, there’s $11 TRILLION in cash, CDs and money markets that isn’t going to be earnings 5% much longer. If you own these instruments, you’re a lender. Lower interest rates are NOT your friend.