Latest / The SPY Trader / Choppy Waters: The Fed, AI, and Your Investments

Transcript

Choppy Waters: The Fed, AI, and Your Investments · The SPY Trader

• 0:00
  Hello , Spy Traders , and welcome back to the only podcast that makes market moves make sense !
• 0:06
  I'm your host , Market Maverick Mike , and it's 6 pm on Thursday , June 19th , 2025 , Pacific Time .
• 0:14
  We've got a lot to unpack after a mixed week and a federal holiday , so let's dive right in .
• 0:20
  The U.S.
• 0:21
  stock market is heading into Friday after a somewhat choppy week .
• 0:26
  Before the Juneteenth holiday , on Wednesday , the Dow Jones Industrial Average dipped slightly by 0.1% , and the S&P 500 was fractionally lower , down 0.03% to 5,980.87 points .
• 0:43
  However , the techheavy Nasdaq Composite managed to nudge up by 0.13% to 19,546.27 points .
• 0:53
  Overall , the S&P 500 is still up 8.33% from a year ago , showing some underlying resilience .
• 1:01
  When we look at sector performance , it's been a tale of two markets .
• 1:05
  Technology and Communication Services continue to be the stars , largely thanks to the strong demand for artificial intelligence , with companies like Marvell Technology jumping 7% after its Custom AI event and IBM shares hitting an alltime high , up nearly 30% this year .
• 1:24
  On the flip side , Consumer Discretionary has seen declines , and Health Care has been a bit of a laggard yeartodate , with losses from big names like Eli Lilly and UnitedHealth .
• 1:36
  The Federal Reserve made headlines on June 18th by keeping the federal funds rate unchanged at 4.25% to 4.50% for the fourth straight meeting .
• 1:46
  They did signal the likelihood of two rate cuts later in 2025 , which is a slight increase from their previous projection .
• 1:55
  But here's the kicker : they also raised their inflation forecast , with core PCE now expected to hit 3.0% by yearend , and they downgraded their GDP growth forecast for 2025 to 1.4% .
• 2:09
  Fed Chair Jerome Powell was clear that inflation remains somewhat elevated , and tariffs could make commodity prices tick higher .
• 2:19
  On the geopolitical front , the ongoing conflict between Israel and Iran continues to be a source of market volatility , stirring concerns about crude oil supply .
• 2:29
  Good news on the trade front , though : there are reports of an agreement reached between the U.S.
• 2:34
  and China on trade and tariffs in London .
• 2:37
  Now , let's get into the analysis and what this all means for your portfolio .
• 2:43
  The market is in a bit of a tugofwar .
• 2:46
  On one side , we have strong corporate earnings , especially from those big tech players , and expectations of easing monetary policy .
• 2:55
  On the other , we're facing significant macroeconomic and geopolitical headwinds .
• 3:00
  The Fed's ' wait and see ' approach , coupled with a split among FOMC members , means the path to lower rates isn't guaranteed and is very much datadependent .
• 3:12
  The raised inflation forecast and lower GDP projections signal a slowing economy , which could put pressure on corporate earnings outside of the strongest sectors .
• 3:22
  And let's not forget those geopolitical risks ; the Middle East conflict has a track record of sparking market volatility .
• 3:30
  While the overall market might appear moderately valued , growth stocks are still trading at a premium , implying that a lot of good news has already been priced in for those high flyers .
• 3:41
  So , what's a savvy Spy Trader to do ?
• 3:44
  Here are our recommendations .
• 3:45
  First , maintain diversification but consider tilting towards value and defensive sectors .
• 3:51
  With a slowing economy and persistent inflation , value stocks , which are currently at a discount , could offer more resilience .
• 3:58
  Think Utilities and certain Consumer Staples .
• 4:01
  Second , selective exposure to highgrowth tech and AI is still a smart move .
• 4:07
  Demand for AI is robust , driving earnings for key players .
• 4:12
  Focus on individual companies with strong balance sheets and clear competitive advantages , not just broadbrush exposure .
• 4:20
  Third , keep a close eye on geopolitical developments .
• 4:24
  The IsraelIran conflict can quickly impact energy markets and overall sentiment .
• 4:29
  Be prepared to adjust if tensions escalate significantly .
• 4:33
  Fourth , always emphasize quality and strong fundamentals .
• 4:38
  In uncertain times , companies with solid balance sheets , consistent cash flows , and proven profitability are your best friends .
• 4:47
  Fifth , don't forget international diversification .
• 4:51
  International markets have actually been outperforming the S&P 500 yeartodate , so exploring global equity funds could enhance your portfolio diversification .
• 5:01
  And finally , stay liquid and patient .
• 5:05
  With volatility likely to continue and the future of monetary policy still somewhat murky , having cash on hand allows you to seize opportunities when market pullbacks occur .
• 5:16
  Avoid overleveraging , and focus on your longterm investment goals .
• 5:21
  That's all for today's Spy Trader .
• 5:23
  Thanks for tuning in , and remember , stay informed , stay diversified , and keep those eyes on the market !