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SmallCaps, Tariffs, and the Flight to Safety · The SPY Trader

• 0:00
  Good morning , early birds and market watchers !
• 0:03
  You are listening to Spy Trader , your goto guide for navigating these wild market waters .
• 0:08
  I am your host , Penny Bags , and I have already had my third cup of coffee so you do not have to .
• 0:14
  It is currently 5 am on Friday , January 23rd , 2026 , here on the Pacific coast .
• 0:21
  If you are just waking up , grab your mug and let us see what the charts are telling us this morning .
• 0:26
  We are coming off a bit of a rollercoaster week .
• 0:29
  The S&P 500 , which we track through the SPY and IVV ETFs , is currently trading near 6,916 .
• 0:39
  That is down about one percent from the alltime high of 6,994 we hit back on January 12th .
• 0:47
  The market is trying to stabilize after a volatile Sell America week triggered by international trade tensions .
• 0:55
  Over in the tech world , the Nasdaq100 , or the QQQ , is trading around 25,518 .
• 1:03
  We are seeing the dominance of the Magnificent Seven , like Apple , Microsoft , and Nvidia , start to stall as investors pivot toward value and income .
• 1:14
  One of the biggest standouts so far in 2026 has been the Russell 2000 , ticker IWM .
• 1:21
  Smallcap stocks have really popped as investors bet on domestic growth following the passage of the One Big Beautiful Bill Act tax cut legislation .
• 1:30
  Looking at the sectors , Health Care is the star of the show .
• 1:34
  The XLV ETF has been a top performer this month .
• 1:38
  Companies like Johnson and Johnson , ticker JNJ , and Eli Lilly , LLY , have benefited from a flight to safety .
• 1:47
  Even though JNJ took a small one percent dip recently after a government drugpricing deal , the sector remains a favorite .
• 1:55
  Industrials , tracked by XLI , are also doing well thanks to domestic manufacturing .
• 2:02
  Boeing , ticker BA , even hit its highest level since 2024 .
• 2:07
  On the flip side , Information Technology is struggling with valuation sensitivity .
• 2:13
  Intel , ticker INTC , recently plunged twelve percent after a cautious outlook and supply constraints , which really dragged down the semiconductor sentiment .
• 2:23
  In the broader economy , the Fed funds rate sits at 3.50 to 3.75 percent after three cuts late last year .
• 2:32
  While we expect a hold at the meeting next week , there is a lot of talk about inflation sitting at 2.7 percent while unemployment has ticked up to 4.5 percent .
• 2:43
  We also cannot ignore the geopolitical drama .
• 2:46
  Markets were rattled by President Trump’s threats of ten percent tariffs on European allies over the Greenland access dispute , though a relief rally kicked in after a framework agreement was reached in Davos .
• 2:58
  In individual stock news , Netflix , ticker NFLX , saw shares slump over seven percent this week .
• 3:06
  Investors are a bit nervous about their eightytwo billion dollar allcash bid for Warner Bros Discovery streaming assets .
• 3:14
  Meanwhile , United Airlines , UAL , surged three and a half percent after beating profit expectations , and U.S.
• 3:21
  Bancorp reported an eighteen percent jump in profit .
• 3:25
  So , what is the game plan ?
• 3:27
  First , I recommend rotating into Defensive Growth .
• 3:31
  The Health Care Select Sector SPDR Fund , XLV , is a great hedge against geopolitical volatility .
• 3:38
  Specifically , Johnson and Johnson is at an attractive entry point right now .
• 3:43
  Second , keep an eye on smallcap momentum with the iShares Russell 2000 ETF , IWM .
• 3:50
  These companies are the primary beneficiaries of the new tax cuts and domesticfocused policy .
• 3:56
  Third , for some stability , look at the iShares Core U.S.
• 4:00
  Aggregate Bond ETF , ticker AGG .
• 4:03
  With the tenyear yield around 4.20 percent , it provides a necessary buffer if the labor market continues to cool .
• 4:11
  Finally , consider ticker GLD as a buy .
• 4:15
  Gold is a classic hedge against the kind of tariffled inflation and geopolitical drama we are seeing with the Greenland situation .
• 4:23
  That is all for this morning's update .
• 4:26
  Stay sharp , watch those levels , and I will see you back here in a few hours .
• 4:31
  This is Penny Bags , signing off for Spy Trader .