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AI Boom Meets Inflation and Tariffs · The SPY Trader

• 0:00
  Welcome back to Spy Trader , your goto podcast for navigating the exciting world of stocks and finance .
• 0:07
  I'm your host , Buckley Bonds , and it's 6 p.m.
• 0:10
  on Tuesday , July 15th , 2025 , Pacific Time .
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  The market's been a whirlwind , so let's dive right into today's action .
• 0:19
  The U.S.
• 0:20
  stock market is certainly keeping us on our toes .
• 0:24
  We've seen a mixed bag of performance recently , with major indices like the Nasdaq Composite hitting new record highs , while the S&P 500 and Dow have experienced some pullbacks .
• 0:36
  For the second quarter , the S&P 500 surged over 10 percent and the Nasdaq composite climbed nearly 18 percent , showing strong underlying momentum .
• 0:48
  However , just yesterday , the Nasdaq closed at another record , propelled by a tech rally , but the S&P 500 slipped slightly , and the Dow Jones Industrial Average dropped over 400 points .
• 1:03
  Looking at specific news , the AI boom is still driving a significant portion of the tech sector's gains .
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  Nvidia , for example , jumped 4 percent today after announcing it would resume H20 AI chip shipments to China , and it even hit a staggering 4 trillion dollar market capitalization last week .
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  Other chip stocks like Advanced Micro Devices and Arm Holdings , and server maker Super Micro Computer , also saw rallies .
• 1:33
  On the macroeconomic front , inflation is ticking up , with the Consumer Price Index for June showing an annual rate of 2.7 percent , which is the highest since February .
• 1:44
  This has dampened hopes for a Federal Reserve rate cut in July , though a September cut still has about 60 percent odds .
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  Employment numbers remain robust , with 147,000 jobs added in June and unemployment at 4.1 percent .
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  However , there's a cloud of uncertainty from the Trump administration's new 30 percent tariffs on imports from Mexico and the European Union , set to begin August 1st , which could spur more inflation and potentially slow growth .
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  Now , let's unpack what all this means for your portfolio .
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  The consistent theme driving the market , especially the Nasdaq's relentless climb , is the Artificial Intelligence momentum .
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  It's not just hype ; it's tangible demand for chips , software , and infrastructure , directly benefiting companies like Nvidia , Advanced Micro Devices , and Super Micro Computer .
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  On the flip side , rising inflation at 2.7 percent , combined with the Federal Reserve's patient stance , means interest rates are likely to stay elevated for longer than some might wish , directly impacting borrowing costs for businesses and consumers .
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  Then there are the tariffs .
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  These new 30 percent tariffs are a significant wild card .
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  They are almost certainly going to contribute to higher prices for consumers and could put a squeeze on corporate profits , especially for companies with complex international supply chains .
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  So , while we're seeing strong revenue beats from some companies and resilience in the tech sector , the broader market , as reflected by the Dow's recent stumble , is grappling with these macroeconomic headwinds .
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  The S&P 500's current valuation at 22.3 times forward earnings is also above historical averages , suggesting that broad market multiple expansion might be limited from here .
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  Given these dynamics , here are some concrete recommendations .
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  For our growthoriented investors , those with a higher risk tolerance and an eye on innovation , you should absolutely maintain or even increase your exposure to the technology sector , particularly in AI .
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  This trend isn't slowing down .
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  Consider ETFs like the Invesco QQQ Trust , or QQQ , which tracks the Nasdaq 100 and is heavily weighted toward tech and growth , or the Technology Select Sector SPDR Fund , XLK .
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  For individual stocks , keep Nvidia , NVDA , on your radar as a direct play on AI infrastructure .
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  Also look at Advanced Micro Devices , AMD , Super Micro Computer , SMCI , and Palantir , PLTR , an AI analytics software maker that's almost doubled this year .
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  Now , for our diversified or core portfolio investors , given the macroeconomic uncertainties , a balanced approach is still smart .
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  You want broad exposure .
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  I'd recommend core broad market ETFs like the Vanguard Total Stock Market ETF , VTI , which gives you comprehensive exposure across the entire U.S.
• 4:58
  market , or the iShares CORE S&P 500 ETF , IVV , or Vanguard S&P 500 ETF , VOO , which track the S&P 500 .
• 5:11
  For our value and defensive investors , a word of caution here .
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  While defensive sectors like Consumer Staples and Healthcare have lagged recently as money flows into riskier assets , they could offer stability if economic growth slows further or if trade tensions really escalate .
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  The Health Care Select Sector SPDR Fund , XLV , and the Consumer Staples Select Sector SPDR Fund , XLP , are worth watching for potential stability .
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  Also , keep an eye on Citigroup , C , whose positive earnings report stood out in an otherwise weak financial sector .
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  And finally , for our fixed income investors , with inflation ticking higher and the Fed likely holding rates steady for a bit , bond yields could remain attractive .
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  Fixed income can provide muchneeded stability amidst equity volatility .
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  Look at broad bond ETFs like the iShares Core U.S.
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  Aggregate Bond ETF , AGG , or the Vanguard Total Bond Market ETF , BND , for diversified exposure to investmentgrade U.S.
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  bonds .
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  If you're betting on a sharper economic slowdown or more aggressive Fed cuts much later in the year , the iShares 20 Year Treasury Bond ETF , TLT , offers longer duration exposure .
• 6:35
  Remember , keep a close eye on those tariff developments from the Trump administration and the Federal Reserve's ongoing commentary .
• 6:43
  These factors will be key in determining market direction in the coming weeks .
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  That's all for this episode of Spy Trader .
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  Thanks for tuning in , and happy trading !