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Market Normalization and the AI Infrastructure Boom · The SPY Trader

• 0:00
  Hello everyone and welcome back to the Spy Trader podcast !
• 0:04
  I am your friendly neighborhood financial guide , Benny Bullish .
• 0:08
  It is currently 2:30 pm on Monday , June 29th , 2026 , out here on the sunny Pacific coast , and we have a lot to talk about as we check the pulse of the markets today .
• 0:20
  We are currently navigating what analysts are calling a normalization phase .
• 0:26
  After the massive AIdriven bull run we saw in 2024 and 2025 , the market character is changing .
• 0:33
  While the major indices are still near alltime highs , investors are shifting their focus from speculative growth toward quality and cash flow .
• 0:42
  As of this afternoon , the S&P 500 , which we track through the SPY ETF , is trading at 5,940 .
• 0:53
  That is up about eight percent yeartodate , though it is mostly consolidating after that record high we hit back in May .
• 0:59
  Meanwhile , the Nasdaq100 , ticker QQQ , is showing some signs of what we call AI exhaustion .
• 1:08
  It is still leading the year , but high valuations are finally meeting some gravity as investors demand to see the return on investment from all that enterprise AI spending .
• 1:19
  The surprise winners this quarter are actually the Utilities sector , XLU , and the Energy sector , XLE .
• 1:27
  Because AI data centers have such massive power requirements , utility stocks have basically become AI infrastructure plays .
• 1:35
  On the other side of the fence , the laggard is Consumer Discretionary , ticker XLY .
• 1:41
  High household debt and the exhaustion of postpandemic savings are finally weighing on retail and luxury brands .
• 1:49
  Looking at the macro picture , our theme for June 2026 is the sticky three percent .
• 1:55
  The Federal Reserve has held the Fed Funds Rate steady at three point seven five percent for three meetings in a row .
• 2:02
  The big pivot we saw in 2025 is over , and we are now in a higher for longer environment compared to the old zerorate days .
• 2:10
  Inflation , as measured by the CPI , is hovering at two point eight percent .
• 2:17
  While it is down from those 2022 peaks , things like aging demographics and the reshoring of manufacturing are keeping structural inflation higher than the old two percent target .
• 2:27
  In the labor market , unemployment has ticked up to four point three percent , which is cooling wage growth and helping us achieve a true soft landing .
• 2:36
  In recent news , we saw a major breakthrough last week .
• 2:40
  Microsoft and OpenAI released Orion , a system capable of autonomous corporate task management .
• 2:48
  This agentic AI shift has moved investor focus from hardware like Nvidia to software applications .
• 2:55
  Another huge story happened on June 25th when Constellation Energy , ticker CEG , announced a massive partnership with Amazon to power new server farms using refurbished nuclear reactors .
• 3:08
  This has been a huge boost for the broader Utilities Select Sector SPDR Fund , XLU .
• 3:14
  In the healthcare space , we saw some volatility today .
• 3:19
  Eli Lilly and Novo Nordisk faced a sellthenews event this morning after the FDA announced a probe into longterm side effects for the latest weight loss pills .
• 3:29
  This caused a three percent dip in the Health Care Select Sector SPDR Fund , XLV .
• 3:35
  For my trading recommendations , I am suggesting a barbell approach .
• 3:40
  On the growth side , move your focus from chips to software .
• 3:45
  I like the Invesco QQQ Trust because it holds the software giants like Microsoft and Alphabet that are now making money from AI .
• 3:53
  Specifically , ServiceNow , ticker NOW , is a big winner as companies use their platform to automate workflows .
• 4:00
  On the defensive side , income is back .
• 4:03
  I recommend the iShares Core U.S.
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  Aggregate Bond ETF , ticker AGG , for a safe four to five percent yield .
• 4:11
  I also think the power grid is the new bottleneck .
• 4:14
  Look at the Vanguard Real Estate ETF , VNQ , specifically for data center REITs like Equinix , ticker EQIX .
• 4:23
  NextEra Energy , ticker NEE , is also a great pick as a major renewable provider for Big Tech .
• 4:30
  Finally , while the U.S.
• 4:31
  is stable , capital is fleeing China due to demographic struggles .
• 4:36
  Consider the Vanguard FTSE Emerging Markets ETF , VWO , to capture growth in India .
• 4:43
  For a balanced portfolio , I recommend ten percent in Utilities via XLU , twenty percent in Core Bonds via BND , and sixty percent in Broad Market Equity via VTI .
• 4:55
  Avoid highleverage retail for now .
• 4:58
  That is all for this update !
• 5:00
  I am Benny Bullish , and this has been Spy Trader .
• 5:03
  Stay smart out there !