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The Great Rotation: How to Play Sticky Inflation and Slowing GDP · The SPY Trader

• 0:00
  Welcome back to Spy Trader !
• 0:02
  I'm your host , Wally 'The Whiz' Wallstreet .
• 0:05
  It's 5 am on Monday , November 17th , 2025 , Pacific , and we are kicking off the trading week ready to navigate a tricky but opportunityrich market .
• 0:16
  The overarching theme right now is rotation , rotation , rotation .
• 0:21
  Let's jump straight into the data .
• 0:23
  We ended last week with a mixed picture .
• 0:26
  The S&P 500 was essentially flat , down just 0.05% , while the Dow Jones Underperformed , shedding 0.65% .
• 0:38
  The Nasdaq , however , saw a modest gain of 0.13% , signaling continued , though selective , support for big tech names .
• 0:47
  This mixed performance is driving a clear shift under the hood .
• 0:52
  Our strongest performer recently was the Energy sector , with the ENRS ETF up 1.68% , benefiting from commodity rebounds .
• 1:01
  Technology ( XLK ) was positive but is clearly facing rotation pressure .
• 1:07
  On the flip side , the laggards were Materials and Financials , both down almost one percent , reflecting concerns over slowing growth .
• 1:15
  Crucially , the 43day US government shutdown has concluded , removing a major political headwind .
• 1:23
  However , we're not out of the woods yet , as this shutdown is expected to reduce Q4 2025 GDP growth significantly , lowering forecasts to the 1.0% to 1.5% range .
• 1:37
  For company news , all eyes are on NVIDIA ( NVDA ) , whose Q3 results this week will be the definitive barometer for the massive AI infrastructure buildout .
• 1:49
  Separately , Alphabet ( GOOGL ) got a huge vote of confidence , as Warren Buffett’s Berkshire Hathaway disclosed a 4.9 billion stake .
• 1:58
  Now , for the deeper dive .
• 2:00
  We are stuck between persistent inflation and slowing growth .
• 2:04
  October inflation hit 5.5% yearoveryear , which is above expectations .
• 2:10
  This sticky inflation is why the Federal Reserve , despite having cut rates once to 3.75%4.00% , is hesitant to promise more .
• 2:21
  The probability of a December rate cut has fallen , which tends to weigh heavily on highvaluation , ratesensitive growth stocks .
• 2:29
  This brings us back to rotation .
• 2:31
  With high valuations in technology and a slowing economic forecast , investors are moving into sectors that have lagged the rally , particularly defensive names like Health Care and stable cyclicals like Energy and Industrials .
• 2:46
  This suggests we need to be highly selective when approaching largecap tech .
• 2:51
  For trading recommendations this week , we are focused on diversification and rotational plays .
• 2:57
  First , if you have new money or are looking to rebalance away from concentrated tech bets like QQQ , consider broadening your exposure with a diversified fund like the Vanguard Total Stock Market ETF , VTI .
• 3:11
  VTI gives you exposure to mid and smallcap stocks that could see a catchup trade .
• 3:16
  Second , let's play the rotation theme .
• 3:19
  We favor overweighting defensives and industrials .
• 3:23
  Look at the Health Care Select Sector SPDR Fund ( XLV ) for defensive stability , and the Industrial Select Sector SPDR Fund ( XLI ) , which should benefit from the end of the government shutdown and potential infrastructure spending .
• 3:39
  Finally , regarding technology exposure : be selective .
• 3:45
  While NVIDIA ( NVDA ) is a highrisk , highreward AI play , a safer bet is to maintain core exposure in Alphabet ( GOOGL ) , leveraging the signal of confidence provided by Berkshire Hathaway's new stake .
• 3:59
  That’s all the time we have for today .
• 4:02
  Trade smart , stay safe , and we'll catch you on the next episode of Spy Trader !