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Market Normalization: From AI Hype to Real Harvest · The SPY Trader

• 0:00
  Hello everyone and welcome to Spy Trader !
• 0:03
  I am your host , Barnaby Barnacle , and it is exactly 2:30 pm on Tuesday , July 14th , 2026 , here in the sunny Pacific time zone .
• 0:15
  It is great to have you with us for our midday market update .
• 0:18
  We are currently navigating what many are calling the Normalization Phase .
• 0:24
  The wild volatility of the AI boom from the last couple of years has settled down , and investors are now looking for real results rather than just big promises .
• 0:33
  The good news is that the Federal Reserve has officially achieved a soft landing .
• 0:39
  The federal funds rate has stabilized between 3.5 and 3.75 percent , and inflation is holding steady at a comfortable 2.1 percent .
• 0:50
  This has been a huge relief for the bond market , and we are seeing a lot of interest return to fixed income instruments like the iShares Core U.S.
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  Aggregate Bond ETF , or AGG , and the Vanguard Total Bond Market ETF , known as BND .
• 1:07
  In the tech world , we are moving from hype to harvest .
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  The market is finally rewarding companies that can prove they are making money from artificial intelligence .
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  For instance , Microsoft recently shared that its Copilot enterprise subscriptions now account for twenty percent of its total Cloud revenue , which is a massive milestone for the Invesco QQQ Trust .
• 1:29
  Nvidia is also evolving , shifting its focus toward AI software platforms .
• 1:35
  While the Technology Select Sector SPDR Fund , or XLK , is up about eight percent this year , it is trailing the broader market slightly as investors doublecheck those valuations .
• 1:48
  Looking at other sectors , healthcare is absolutely booming .
• 1:52
  The Health Care Select Sector SPDR Fund , or XLV , hit new highs this month thanks to amazing clinical data from Eli Lilly and Novo Nordisk regarding weight loss drugs .
• 2:04
  These treatments are now showing benefits for chronic kidney disease and heart health , making healthcare the topperforming sector so far this quarter .
• 2:12
  We are also seeing a recovery in financials .
• 2:16
  Major banks like JPMorgan Chase and Goldman Sachs reported strong earnings yesterday because the yield curve has finally uninverted , allowing their profit margins to expand .
• 2:28
  This has led to heavy institutional buying in the Financial Select Sector SPDR Fund , or XLF .
• 2:35
  In corporate news , Apple made waves yesterday by announcing the integration of its Vision Pro 3 with autonomous vehicle systems .
• 2:45
  This news has provided a nice lift to the Vanguard Total Stock Market ETF , or VTI , where Apple remains a major player .
• 2:54
  Tesla also hit a huge milestone this morning with its Robotaxi fleet surpassing one billion autonomous miles .
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  Meanwhile , the real estate sector is finally breathing a sigh of relief .
• 3:05
  With interest rates stable , the Vanguard Real Estate ETF , or VNQ , is recovering as commercial companies manage to refinance their debts without the fear of bankruptcy .
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  Now , let's talk about what this means for your portfolio .
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  My first recommendation is to focus on core diversification .
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  In a normalized economy , it is harder to pick a single winner , so I like the Vanguard Total Stock Market ETF , VTI , or the iShares CORE S&P 500 ETF , which goes by IVV .
• 3:39
  These funds allow you to capture the growth of small and midcap companies that are benefiting from lower borrowing costs .
• 3:47
  Second , I recommend looking at the Health Care Select Sector SPDR Fund , XLV .
• 3:52
  Between the aging population and the massive demand for obesity and longevity treatments , companies like Eli Lilly and UnitedHealth offer a great mix of growth and stability .
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  Third , for those looking for income and a bit of a safety net , consider the iShares 20 Year Treasury Bond ETF , or TLT .
• 4:14
  With inflation anchored , the risk of more rate hikes is very low , and TLT will likely gain value if we see any economic hiccups later this year .
• 4:23
  Finally , do not forget about international markets .
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  The U.S.
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  dollar has started to weaken , making the Vanguard FTSE Developed Markets ETF , or VEA , very attractive .
• 4:36
  It gives you access to great European luxury and industrial companies at a significant discount compared to U.S.
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  stocks .
• 4:44
  To wrap things up , the best strategy right now is to avoid chasing the highflying hardware stocks and instead ground your portfolio in broad market funds like VOO or IVV .
• 4:55
  That is all for this episode of Spy Trader .
• 4:58
  I am Barnaby Barnacle , and I will see you next time .
• 5:02
  Stay savvy and happy trading !